Honda to Double Auto Sales Over 5 Years Led by Small Cars

Honda Motor Co. (7267), Japan’s third- biggest carmaker, plans to double sales in five years, driven by demand for small cars such as the Fit compact and new models in emerging markets including China and India.

Honda is targeting to sell 6 million vehicles annually by March 2017, up from 3.1 million last fiscal year, President Takanobu Ito said today. The maker of the Accord sedan will introduce 10 new and refreshed models in China by 2016, and a diesel car in India in the year ending March 2014, he said.

“To reach sales of 6 million units, our Fit compact will be very important and be the leader in volume sales,” Ito said at a briefing at the Tokyo-based automaker’s headquarters. “In terms of volume sales, our Brio compact, which we expect to expand sales of in emerging markets, will be the next biggest.”

Honda, recovering from last year’s natural disasters that hobbled supply chains in Japan and Thailand, is banking on a broadened lineup to bolster sales in emerging markets. The company is also counting on lower priced compact models such as the Fit to support sales in Japan as government subsidies come to an end.

“The target seems feasible, and looks like a target that will match global growth,” Satoru Takada, a Tokyo-based auto analyst at Toward the Infinite World Inc., a securities research company, said by telephone. “It also shows that small vehicles will be Honda’s focus.”

Worldwide Sales

Global sales of passenger vehicles, excluding trucks and buses, will climb to 100.3 million units in 2017, a 27 percent increase from this year, according to estimates by industry researcher IHS Automotive.

Honda fell 0.4 percent to 2,612 yen as of 2:33 p.m. in Tokyo trading, compared with the 0.7 percent gain for Japan’s Nikkei 225 Stock Average.

Honda will build the new Fit, its best seller in Japan this year, and another compact model at a Mexico factory slated to open in the spring of 2014, Ito said. The company will introduce a new sports car in Japan in 2013 and redesigned versions of its luxury Acura brand in the next three years, he said.

Ito said Honda hasn’t fully recovered in China, where it reopened factories after anti-Japan protests eased. There are still safety concerns and problems with parts procurement, he said, without being more specific. The automaker’s plans for the world’s largest vehicle market remain unchanged, Ito said.

Angry mobs attacked dealerships and smashed Japanese cars in Chinese cities after tensions between China and Japan flared up over ownership of a group of islands. A Honda Civic was set ablaze in front of a dealership in Shanghai on Sept 13.

Honda targets expanding deliveries of motorcycles to 25 million units by March 2017 from 15 million in the period ended March this year, Ito said. The world’s largest motorcycle maker, which is developing a super sports bike, plans to produce large two-wheelers in Japan next year for sale to North America, and strengthen sales in Brazil, he said.

To contact the reporters on this story: Anna Mukai in Tokyo at amukai1@bloomberg.net; Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net; Ma Jie in Tokyo at jma124@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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