U.S. production, a clear advantage for Honda as Yen surges

Article by Christian Andrei, on August 30, 2010

Honda Motor Co. considers its high rate of local production in the US as a clear advantage that has protected its profits from the yen's advance to a 15-year high against the dollar, according to Yoshihiro Okumura, who helps manage the equivalent of $365 million at Chiba-Gin Asset Management Co. in Tokyo.

Honda was the first among Japanese carmakers to produce cars in the US. About 28 years ago, founder Soichiro Honda was able to achieve his goal of making cars in the US.

Honda said that about 89% of Honda and Acura-brand autos that were sold in the US through July were produced in Honda's plants in the US, Canada and Mexico.

A year earlier, Honda posted an 82.2% figure for this item. Meanwhile, Japanese rivals, Toyota Motor Corp. and Nissan Motor Co., each manufactured 68% of vehicles sold in the US at North American plants.

Okumura added that as the market recovers in the US, Honda will benefit even more. In order to fight the impact of the yen's increase of at least 4.4% against the world's 16 major currencies this year, the carmakers and other exporters in Japan have been cutting costs, raising efficiency, and shifting production to more affordable regions.

Last Friday, the yen traded at 85.25 against the US dollar, down from 84.73 on Aug. 11. Data show that it reached the highest since July 5, 1995.

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