Honda to reduce vehicle output in North America

Los Angeles: Honda Motor Co. is cutting 119,000 vehicles from its North American production plan, tripling its reduction for this fiscal year as plunging sales push US based competitors to the brink of collapse.

The automaker expects to build 1.29 million cars and light trucks in the US, Canada and Mexico, in its year ending March 31, down from an initial goal of 1.47 million, spokesman Ed Miller said Friday in an e-mail. The latest reductions bring the total to 175,000 vehicles from the Tokyo-based company's earlier cuts of 56,000. No layoffs are planned, Miller said.

"Everyone is hurting," said Dennis Virag, president of Automotive Consulting Group Inc. in Ann Arbor, Michigan. "Sales are down across the industry 30 per cent to 35 per cent since September. That pain is being shared equally by all companies."

Lower sales

Honda and Japan-based Toyota Motor Corp. and Nissan Motor Co. have slashed production plans this year as the US recession dragged the annual auto sales rate last month to a 26-year low. Through November, those companies built about 300,000 fewer autos in North America than a year earlier, led by Toyota's three-month shutdown of a San Antonio pickup plant.

"Showroom traffic is down for everyone," Miller said.

Honda will trim production through slower line speed and eliminating some scheduled assembly days, Miller said. Plants will extend a scheduled holiday shutdown this month by two days, and in January between four and seven days of output will be cut at factories in Ohio, Alabama, Indiana and Ontario, he said.

US sales for Honda, which last had an annual drop in its biggest market 15 years ago, fell 5.4 per cent through November from a year earlier. Honda, Japan's second-largest carmaker, last month posted a 32 per cent decline, its steepest since 1981.

Across the industry sales this year are down 16 per cent, led by declines of 28 per cent for Chrysler LLC, 22 per cent for General Motors Corp. and 19 per cent for Ford Motor Co.

US peers

GM and Chrysler have said they need US aid this month to avoid running short of cash for operations.

President George W. Bush's administration said it may tap the $700 billion (Dh2.6 trillion) bank bailout fund to prevent an industry collapse, after the Senate yesterday failed to approve $14 billion in emergency loans.

Ford has said it doesn't need emergency federal aid, though Chief Executive Officer Alan Mulally said last week that his company could be dragged into bankruptcy by a GM failure.

While Honda and Toyota are in better shape financially than the US companies, they would suffer should GM fail, Virag said.

"If GM collapsed, it would take out parts suppliers that Honda also uses," he said. "It could knock sales for the industry down another 20 per cent to 25 per cent."

Honda's US operations are based in California. The company's American depositary receipts fell $1.07, or 4.7 per cent, to $21.93 in New York Stock Exchange composite trading on Friday.