Honda Motor Co. wants to open a car plant in Japan this July. This is something that Honda hasn’t done for nearly 50 years. The last time was in 1964, which is when Honda inaugurated a factory in Sayama, near Tokyo. Back then, Japan was engaged in preparations to be the host of the Olympic Games. This plant, together with two of its older facilities, was able to meet the surge in the demand in Japan as the country became wealthier.
There was little need to expand as the asset prices plunged since the early 90s, leading to the “lost decade” in Japan. This new plant, with an annual capacity of 250,000 units, will begin operations just as a weaker yen is making Japanese manufacturers like Honda more profitable. Honda disclosed plans to construct the new plant as part of its efforts to roll out smaller, more frugal vehicles.
In the last few months, many investors have been going to Japan, driving the benchmark Nikkei 225 Stock Average to levels unreached since 2008. There’s more proof of a broader recovery as economists anticipate that the economy will exit recession during this quarter.