The yen's rapid rise against the dollar has caused Honda Motor Co.'s profit margins to become even smaller so in order to cut its losses, production of the Fit small car may be moved to the US.
President Takanobu Ito confirmed that that is a direction that the company is considering due to losses suffered from the foreign exchange trend. Compared to bigger cars in Honda's lineup, sales of the Fit model had been good at resisting the effects of the US market slump.
The fuel-efficient Fit hatchback recorded a 12% drop in sales to 55,475 units from January to September 2009. The rest of American Honda's lineup reported a 25% drop in sales.
Currently, all the Fits are imports from Japan. Since August, the yen has had an 8% increase in value against the dollar.
A higher yen reduces the value of dollar-denominated revenues that are repatriated to Japan. Of the Honda cars being sold in the US, 80% are made in the US while 20% is imported.
Ito wants to maintain this ratio. However, he said that he prefers that imports would be composed more of high-tech models such as hybrid vehicles, which require the special suppliers and manufacturing plants found in Japan.