Honda Aims to Recoup Lost Japan Auto Production to Hit U.S. Sales Target

Honda Motor Co. is sticking to its sales plan for the U.S., where the carmaker earns most of its profit, as the company aims to make up for lost output after Japan’s record earthquake disrupted production worldwide.

Honda expects U.S. customers to buy 1.35 million Honda and Acura cars and light trucks this year, maintaining a target set at the start of the year, said John Mendel, the company’s U.S. executive vice president. That’s 9.8 percent more than the 1.23 million autos Tokyo-based Honda sold in 2010.

“I’m counting on the fact that we would be able to make up the majority of any losses we have in the near term in the second half of the year,” Mendel said in an interview yesterday in Landover, Maryland. “Obviously, it’s going to change if somebody says, ‘You’re going to go four months without any production,’ but right now I’m holding to that.”

While Honda, Toyota Motor Corp. (7203) and Nissan Motor Co. had only minor damage at car factories in Japan from the 9-magnitude quake and tsunami on March 11, they all temporarily adjusted production at plants in North America as supplies of some Japan- made parts shrank. Last week, Honda began reducing shifts at North American auto and engine plants, which supply more than 80 percent of the vehicles it sells in the U.S.

In Japan, Honda’s two auto-assembly plants are scheduled to reopen on April 11 after a month long shutdown.

Inventory

Honda’s American depositary receipts, each representing one ordinary share, rose 45 cents, or 1.3 percent, to $34.65 at 4:01 p.m. in New York Stock Exchange trading, the first increase since March 30. The ADRs have fallen 15 percent since March 10, the day before the earthquake.

Honda, ranked fourth in U.S. sales last year, has about a 40-day supply of vehicles at dealers in the country and an additional 80 days’ worth scheduled for delivery into May, Mendel said.

“We’ve got pretty fair inventory right now,” he said.

The sales pace at dealerships may begin falling after another month if inventory levels don’t appear likely to be replenished in a reasonable amount of time, he said.

“The dealers will start to slow down the throughput as they see they have less and less vehicles to sell,” he said.

Honda also will review its sales incentives and make adjustments after mid-April, when most of its current loan and lease offers expire, he said.

Discounted finance offers on its Insight and Civic Hybrid models that were to run until May 2 will end on April 18 because of declining inventory, the company said today.

“Inventory levels were dropping owing to rising fuel prices,” said Christina Ra, a spokeswoman for the company’s U.S. unit.

The company also said today that production adjustments at North American plants will continue through April 22, a week longer than its initial target.

The company’s U.S. sales unit is based in Torrance, California.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net

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