Japan’s Honda to cut exports on high yen: report
Honda Motor intends to slash its exports from Japan by about half over the next decade as it looks to cope with a high yen, its president said in an interview published Wednesday.
He added the Japanese automaker would focus on smaller vehicles at home in order to boost domestic sales in the near term.
“Battered by such appreciation of the yen, the company sees clearly that Japan can no longer be the world centre of its production and exports,” Honda president Takanobu Ito told the leading Asahi Shimbun newspaper.
“Honda currently exports 30-40 percent of its domestic production, but it is hard to sell overseas while fretting over currency movements,” he said.
“The company will continue exporting, but up to 10-20 percent of domestic output.”
The safe haven yen has soared on eurozone debt worries and a slowdown in the US economy, as investors move into the unit to escape global market turmoil, which also attracts speculative funds.
Despite efforts by Tokyo to intervene in markets, the yen hit a postwar high of 75.95 against the US dollar in August and this week fetched fresh 10-year highs versus the euro.
Prime Minister Yoshihiko Noda has warned of a possible “hollowing out” of Japanese industry as manufacturers, seeing repatriated profits eroded, consider shifting more production overseas in search of cheaper labour costs.
Japan has unveiled a plan to make $100 billion available to help companies acquire assets overseas while boosting its oversight of foreign exchange markets against speculative moves.
Honda has a policy to promote local production and sales as it expands business overseas.
Ito said the automaker will work to equalise its Japan output and sales with its other regions around the world — North America, China, Asia, South America and Europe.
“The company will gradually shift to the system, in which we balance out the scales of production and sales among the regions, over the next 10 years.”
Ito stressed it is still vital for the company to retain manufacturing in Japan and will maintain its current annual production scale of around one million units at home by boosting domestic sales, despite fierce domestic competition.
“The key is small cars,” Ito said. “The company intends to more than double the sales (of small cars at home). Unless we have such a resolve to focus only on small cars domestically, we wouldn’t be able to survive in Japan.”