Honda to delay auto production in Argentina amid global slump

TOKYO, Jan. 7 Kyodo -
Honda Motor Co. said Wednesday it will delay the start of production at its new
car factory being built in Argentina for more than six months until around
mid-2010 due to shrinking auto sales.
In an investment project worth about $100 million, Japan's second-largest
carmaker initially planned to start operations in late 2009 with an annual
output capacity of 30,000 vehicles, but was forced to put off the plan amid the
global economic downturn.
''We decided on the postponement in consideration of recent circumstances in
regard to auto sales,'' a Honda spokesperson said, adding demand for vehicles
has dropped not only in industrialized countries, but also in emerging
economies like those in South America.
Honda had already announced plans to postpone expanding both domestic and
overseas output including in places like Turkey and India as it faced the
prospect of incurring a group operating loss for the second half of the current
business year.
The automaker also recently withdrew from all Formula One activities as
business conditions deteriorated rapidly for the entire auto industry due to
the yen's sharp appreciation against key currencies and the worldwide economic
storm.
The Honda spokesperson said the company is pinning hopes for a recovery in
South American markets by mid-2010, emphasizing that long-term growth in auto
demand can be expected in the region.
During the delayed period, Honda will sell cars in Argentina and export to
other South American countries through its existing factory in Brazil.
==Kyodo