Feb. 18 (Bloomberg) -- Honda Motor Co., which is expecting its third year of record earnings for the 12 months ending on March 31, said the demand by its labor union for a bonus payment is a ``tall order.''

Honda's labor union, which represents about a third of the Tokyo-based carmaker's workers, wants to be paid a one-time bonus equivalent to 6.6 months' average wages, 3.4 percent more than last year. The request for bonus includes a 1.6-month worth increase based on Honda's business performance, the company said.

``We have to consider the bonus from the international competition point of view and come up with a conclusion,'' said Honda's Director Mikio Yoshimi in Tokyo. ``I guess the labor union is basing its request on the company's earnings outlook.''

Like its competitor Nissan Motor Co., Honda wants to hold back the demands by its labor union to keep costs low. The maker of the Odyssey minivans sedan and Fit compact car, Japan's second- biggest assembler by production, is expecting its parent's current profit to rise 14 percent in the year ending March 31 to 276 billion yen ($2.6 billion).

Honda raised its annual group net income forecast last month to 473 billion yen from the earlier 470 billion yen outlook and is expecting a third consecutive record results. Honda is expanding across Asia to counter slowing U.S. sales of aging models such as the Civic compact and Odyssey minivan. Growth in China and India also helped make up for a domestic sale drop and the effect of the stronger yen against the U.S. dollar.

Japan's labor unions are losing power and may struggle to attract members after the nation's biggest companies such as Honda skip requests for wage increases during annual salary negotiations even their sales and profits keep rising. The union's negotiation is based on the outlook of the parent company's current profit, or pretax profit from operations, which is also a record for this business year ending in March.

Nissan, which has met its labor union's pay demands for two straight years, yesterday said it wants to ``carefully consider'' whether or not to raise workers' salaries for a third year.

Honda shares, which have fallen 4.8 percent this year, fell 1.1 percent to 4,530 yen in Tokyo.

To contact the reporter on this story: Kae Inoue in Tokyo at kinoue@bloomberg.net.

Last Updated: February 18, 2004 06:21 EST