April 10, 2012 / 10:59 AM / 5 years ago

Honda eyes new models, strong growth in China

3 Min Read

A man is silhouetted against a logo of Honda Motor at the company showroom in Tokyo January 31, 2012.Toru Hanai

BEIJING (Reuters) - Honda Motor Co Ltd will launch 10 more car models in China by 2015 and expects sales in the country to double over the same period, a senior executive said on Tuesday, as it moves to narrow the gap with foreign rivals in the world's largest auto market.

Honda (7267.T) is looking to China to help it recover after the car maker was buffeted by natural disasters in Japan and Thailand last year, which caused its global output to plummet by a fifth to 2.91 million cars.

"We've been too cautious in China, this is undeniable," the head of Honda's China operations, Kuraishi Seiji, told reporters in Beijing.

"We will step up efforts to bring in new products developed for the Chinese market."

The new upgraded models it plans to bring in to the country include some China-focused small cars, he said.

Honda, which make cars in partnership with Dongfeng Motor Group Co (0489.HK) and Guangzhou Automobile Group Co 2238.HK, is a relative late-comer in China, where General Motors (GM.N) and Volkswagen AG (VOWG.DE) have built a sizeable lead.

Honda sold 617,764 cars in China last year, compared with Volkswagen's 2.26 million and GM's 2.55 million.

Peers Nissan Motor (7201.T) delivered twice as much in the country during the period, while Toyota Motor (7203.T) sold 43 percent more.

To help improve Honda's competitiveness, Seiji also wants to aggressively cut procurement costs and lower vehicle selling prices in China, where small cars remain a major growth driver.

Honda's Civic now sells for 160,000 yuan to 170,000 yuan ($25,400-26,900) in China, higher than some competing brands in the segment which fetch 120,000-150,000 yuan.

"In order to boost Civic sales volume, we need to put the car right in that sweet-spot range", Seiji told reporters.

Luxury Cars and Electrics

The Chinese market has been growing more slowly after Beijing scrapped incentives for small cars last year. Overall sales climbed 5.2 percent last year, the slowest pace since China's car culture took off at the turn of this century.

Luxury cars, however, continue to race ahead thanks to the growing ranks of the moneyed class. BMW <BMWG.DE, Mercedes-Benz and Audi all registered more than 35 percent gains in car sales in China last year.

Honda plans to bring the more high-end Acura line to the country to ride on the luxury car bull run.

Its Acura ILX and RDX will hit showrooms this year, followed by the RLX in 2013, said Seiji.

The Japanese automaker will also begin producing electric vehicles by the end of the year in partnership with Guangzhou Auto, joining Volkswagen, Nissan and other rivals to tap China's green car potential.

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