* Looking to build more CR-Vs in N.America to reduce exports
* Honda exported 35,000 CR-Vs from Japan to U.S. in 2010
* Honda boosting light trucks output at Alabama plant-CFO
* To raise low-cost parts ratio with new models-CFO
* Better pricing power helping overall profit margins-CFO
(Recasts, updates with details of U.S. factory utilisation)
By Chang-Ran Kim, Asia autos correspondent
TOKYO, Feb 2 Honda Motor Co (7267.T) is looking
to make small investments in North America to build more of its
popular CR-V crossovers there, reducing exports from Japan to
cushion the blow from a strong yen, an executive said.
"Our profit structure has improved mainly thanks to robust
overseas operations, and the toughest area remains exports from
Japan," Chief Financial Officer Yoichi Hojo told a small group of
reporters at Honda's headquarters on Wednesday.
"With a little investment, we would be able to increase
production of the CR-V in the United States, so that's the most
probable course of action (to reduce yen exposure)," he said.
Japanese automakers are reeling from a strong yen, now
trading at around 81-82 to the dollar JPY=, losing money on
lower-margin models that are exported from domestic factories.
Honda already has the least currency exposure among Japan's
top automakers given its relatively low export ratio of 30
percent. Last year, Toyota Motor Corp (7203.T) shipped 53 percent
of its Japan-made vehicles, and Nissan Motor Co (7201.T) exported
Honda, Japan's third-biggest automaker, built about 72,000
CR-Vs in Japan last year, exporting about 35,000 of them to the
United States. Honda also builds the model in Mexico and East
Hojo said Honda was looking at various options for raising
production of the CR-V in the United States, where two of its
four assembly plants, including the East Liberty factory, are
operating at full capacity while the adjacent Marysville plant is
working at around 80 percent.
Honda also has a factory in Indiana working at half of its
full capacity and a plant in Canada at around 88 percent.
With gasoline prices still relatively stable, more U.S.
consumers are driving away with light trucks instead of passenger
cars, and Hojo said Honda was boosting daily production at one of
its two lines at its Alabama plant by 50 units to 650 units from
this month to meet demand for the Odyssey minivan and Pilot SUV.
COST, PRICING STRUCTURE IMPROVING
Rivals are also taking similar steps to reduce exports from
Japan. Nissan said last month it would shift production of its
Rogue crossover from Japan to the United States at its next
remodelling in 2013. [ID:nN09213093]
Hojo said Honda, like other Japanese automakers, would look
to use more components from low-cost countries such as China and
India to take advantage of the strong yen, also making those
adjustments when vehicles are renewed.
Honda is due to revamp its high-volume Civic this spring, and
Hojo said he expected new low-cost parts to account for at least
10 percent of the car, from virtually none now.
Honda has already raised that ratio on the low-margin Fit
subcompact to 17 percent, and is aiming to boost that to about 30
percent, Hojo said.
Honda on Monday delivered better-than-expected third-quarter
earnings and lifted its annual profit forecasts beyond the market
consensus, largely due to the popularity of light trucks in North
Honda this week forecast an operating profit of 620 billion
yen ($7.62 billion) for the business year ending on March 31, for
an operating margin of 7.0 percent -- at the top end of the
industry -- despite an 8-yen fall in the dollar.
Executive Vice President Koichi Kondo said this week Honda
had achieved an earnings structure under which it could make a
profit of 100 billion yen per quarter at a dollar rate of 85 yen
and car sales of 900,000 units. A year ago, it had strived to
achieve that level of profitability at 90 yen to the dollar.
Hojo attributed the stronger earnings structure to the
company's ability to raise its product prices -- by around 1-2
percent a year in the United States -- and a better cost
structure partly helped by greater economies of scale.
Honda's shares have jumped 27 percent in the past three
months, outperforming a gain of about 20 percent for both Toyota
In mid-afternoon trade on Wednesday, Honda was up 2.1 percent
at 3,620 yen, mirroring a rise in the broader Tokyo market.
(Editing by Joseph Radford)