CorporateNovember 18 , 2003  
 
Honda Begins Production and Sales of Small Car "Jazz" in Thailand  
 
Bangkok, November 18, 2003 --- Honda Automobile (Thailand) Co., Ltd. (HATC), Honda's automobile production and sales subsidiary in Thailand, today announced that it has begun production and sales of the small car "Jazz," for the Thai market. With a price of Baht 542,000 for the 5-speed manual transmission model (S Type), HATC has set a sales target of 16,000 units for calendar year 2004.  
 
Since first introduced in Japan in June 2001 as the "Fit," the Jazz has been marketed in more than 60 countries including in Europe and South American countries and became one of Honda's key strategic global models. Excellent fuel economy and efficient use of interior space have been highly valued by customers, with total global sales reaching 600,000 units within just two and a half years of the model's initial introduction.  
 
The automobile market in Thailand has been recovering rapidly since the currency crisis in 1997, and is expected to reach 500,000 units this year -- growth of 22% from 2002. With the all-new City and Accord models, Honda's 2003 sales is expected to mark a new annual record exceeding 70,000 units, a 30% increase from the previous year. By adding Jazz to the product lineup, Honda expects to develop a new market with a 5-door hatchback and meet the diverse needs of automobile customers in Thailand.  
 
In terms of environmental performance, Jazz conforms to the EURO IV requirement levels -- exhaust emissions standards to be introduced in Europe in 2005. Honda plans to meet EURO IV emissions levels for all models sold in Thailand in the future.
 
HATC's manufacturing plant in Ayutthaya province has been producing Accord, Civic, CR-V and City models, and becomes the third plant in the world to produce the Jazz (Fit), together with Honda plants in Japan and Brazil. In May 2003, HATC's production capacity was nearly doubled from the original 70,000 units to 120,000 units per year in order to meet increasing demand from domestic and overseas markets. HATC currently exports products to ASEAN countries, Japan, Oceania, the Middle East and Africa. Exports of Jazz to ASEAN countries will be considered if demand reaches adequate levels.  
 
 
Outline of the Jazz
 
Price
  S type    
    5MT : Baht 542,000
CVT: Baht 579,000  
   E type    
    5MT : Baht 572,000
CVT: Baht 609,000  
 
Main Features
  1.5 liter 4 cylinder i-DSI engine  
  SRS airbag systems for driver and front-seat passenger (Optional)  
  ABS (4-wheel anti-lock brake system) with EBD (electronic brake force distribution system) (Optional)  
  EPS (Electric power steering system)  
  3-point ELR seatbelt pretensioner  
  Front and rear power window  
  Power center door lock (E type)  
  Air conditioner  
  CD player with AM/FM tuner (E type)  
  Immobilizer system  
 
 
Honda Automobile (Thailand) Co., Ltd. Ayutthaya Plant
Location:  Rojana Industrial Park, Ayutthaya province (70km north of Bangkok)  
Location:  Rojana Industrial Park, Ayutthaya province (70km north of Bangkok)  
Employment:  Approximately 3,100 associates  
Start of Production:  April 1996  
Products:  Accord, Civic, City, CR-V, Jazz  
Annual Capacity:  120,000 units  
 

AutomobileMarch 31, 1997  
 
The Honda City Success Story: Setting the New World Standard for Compact, Four-Door, Family Sedans  
 
Bangkok, March 31, 1997 --- The Asia-Pacific region's successful economic development over the last two decades has resulted in a rapid increase in per capita incomes in many countries and the emergence of a growing middle class.  
These conditions in turn have created a favorable environment for the development of indigenous automobile industries in many countries with mass motorization usually regarded as taking off when per capita incomes reach Baht 100,000 (US$4,000) per year.  
 
Monitoring these developments carefully, Honda Motor Co., Ltd., one of the world's largest manufacturers of engine-powered products, identified a major market opportunity which was not being adequately served by any international automobile manufacturer.  
 
The market opportunity in question was the rapidly growing number of first time automobile owners, who, our extensive market research indicated, were not being well served by the existing range of entry-level models.  
 
Honda's research, carried out in a number of countries throughout the region, identified the following characteristics as being the most important to achieve customer satisfaction in this strategic market segment :  
 
Body size : The desired vehicle should be compact in size but with a minimum wheelbase of 2,500 mm in length and 1690 mm in width to provide ample interior space for a family and excellent driving stability.  
 
Performance : The engine should produce acceleration performance equivalent to 95 bhp with good fuel economy.  
 
Comfort : The vehicle should possess excellent ergonomics, providing a spacious passenger cabin, good ride characteristics and a high level of standard equipment.  
 
Safety : Both active and passive safety systems should be state-of-the-art.  
 
Price : While price was very important, potential customers indicated that excellent "value-for-money" was even more important. They recognized that anybody could build a cheap car, simply by utilizing old technology and providing minimum equipment levels. But this was not what they wanted. They wanted a vehicle that offered modern styling and technology, a vehicle that offered "pride in ownership".  
 
It was with these customer-driven requirements in mind that Honda set out to create "the new world standard, compact, four-door, family sedan."  
 
At the early stages of development Honda's engineers expected to use an existing model's platform on which to build this new model. Such an approach would have minimized development costs.  
 
However, this idea was quickly abandoned as it became clear that the only efficient way to meet this new customer segment's expectations was to design an entirely new model from the ground up.  
 
Thus the City was born.  
 
In April, 1996 the world launch of the Honda City took place in Bangkok. These first City sedans were manufactured at Honda's new Baht 4,000 million auto manufacturing facility in Ayutthaya. Working closely with local parts suppliers Honda's engineers achieved an unprecedented 70 per cent local content which contributed to the City's competitive pricing.  
 
With the City, Honda's engineers and product development team achieved, in fact, exceeded the performance targets established by the earlier market research.  
 
In terms of performance, safety, comfort, body size and "best value-for-money" the City excelled.  
 
Customer reaction was exceptional. Through February 1997 14,353 units have been sold in Thailand and the City achieved a dominant 66 per cent market share in the under Baht 450,000 price segment in 1996.  
 
In addition to its success in Thailand, the City has also taken other Asian auto markets by storm. It has been launched with local production in Indonesia, Taiwan, the Philippines, Malaysia, and, most recently, in January 1997, in Pakistan, supported by Honda's regional parts complementation programme.  
 
Total City units sold and delivered across Asia up until the end of February 1997 amount to 25,614, helping Honda to achieve record sales in Thailand, Malaysia, the Philippines and Taiwan.  
 
And now comes the City 1500 with more power and enhanced safety and comfort features, offering even greater "value-for-money".  
 
With the City, Honda has established a new world standard for compact, four-door, family sedans. With the City 1500 Honda aims to confirm the City's status as the car by which all others in its class are judged.  
 
"Best-in-class" performance, "best-in-class" comfort and "best-in-class" safety. The Honda City 1500 delivers.  
 

HERE COMES THE ASIAN CAR
It is cheap and designed for the region, but will people buy?
By Matthew Fletcher
 
 
--------------------------------------------------------------------------------
 
 
(Sankalan)
NEW DELHI SHOW These car fans will have something else to look at when the Toyota Soluna, right, makes its debut in India  
 
 
Pizazz. Glitter. Repeated blasts of the rock song Joy to the World. Was Bangkok's Queen Sirikit Center the venue of yet another swank fashion collection? Wrong. The star of the show: the Soluna, a 1.5-liter four-door "Asian Car" unveiled last week by Toyota Motor, Japan's largest -- and the world's No. 3 -- automaker. At $12,700, the most basic Soluna model is the cheapest medium-size Toyota sedan you can buy in Asia. "But low price doesn't mean low quality," carol Toyota's ads in Thailand. The new car, they stress, is a Toyota product through and through.
 
And it is proudly made in Thailand, with many parts manufactured there as well. At last week's launch, red-jacketed Thai engineers talked about their role in designing the Soluna. "We were even involved in choosing the name, which comes from the Spanish for sun and moon," says Ninnart Chaithirapinyo, Toyota's chief project engineer in Bangkok. That's one reason why industry watchers call the Soluna Toyota's Asian Car. Here's another: the sedan is targeted at Asia's first-time family buyers. These purchasers are expected to drive Asian car sales up 50% to 9 million units by 2000, overtaking Japan's 7-million market.
 
Toyota is not the only one looking at Asia's emerging car-owning class. Last April, Honda Motor launched the 1.3 liter four-door compact City, a best-seller in Thailand with its affordable $15,500 price tag. Mitsubishi hopes to introduce an Asian Car -- no official word yet about what it will be -- while General Motors is looking at a 1999 roll-out for its "Car for Asia," which is based on the Opel Astra. Profit margins are thin, but the carmakers are counting on big volumes. There is also the matter of customer loyalty. "You have to be ready with a car that a first-time buyer can afford," says Mike Dunne of Bangkok-based consultancy Auto Resources Asia. "People tend to stick with one brand."
 
No one can ignore Asia's fast-growing auto market. According to GM, total vehicle sales across the region will be as big as those in the U.S. or Europe by 2005. The majors are rethinking strategies. Prompted by the strong yen in recent years, the Japanese shifted production facilities to Thailand, Indonesia and other Asian neighbors. But most have kept their sights firmly on sales to the U.S. and Europe, markets that have now matured. "Like a one-legged [baseball] batter, the Japanese auto industry has long depended on exports to the U.S. market," says Honda president Kawamoto Nobuhiko. "It is only natural to put the other leg down and the place for it is in Asia."
 
Thus the Asian Car. Unlike the Toyota Corollas and Honda Civics, which are essentially designed and engineered for Japan and the West, the for-Asia auto is specifically meant for the region. The carmakers say their Asian Car models can withstand tough road and climatic conditions, typically with extra-strength suspension and air-conditioning. The engine and electronics will be mounted high in case of floods. The vehicle will also be roomy. "We made the Soluna big enough for a family to use for a week traveling upcountry," says Ninnart. Toyota says the Soluna can comfortably seat five people.
 
Above all, the Asian Car is about a third cheaper than mid-range sedans, which are out of reach for those with small wallets. "The market is like a pyramid, with luxury cars at the top and the Camrys, Corona and Civics down a notch," says Dennis Meseroll, an auto analyst at Bangkok-based business consultancy Brooker Group. "There's a finite number of people who can afford these cars -- and they've already got them." Not that the Asian Car is completely new. The Soluna is based on the Tercel. The City uses an engine similar to the Civic, though it is less powerful. That may not matter much. "You can't drive very fast in Bangkok anyway because of the traffic jams," says Kuwata Kaoru, a Goldman Sachs analyst in Tokyo.
 
Asian Car prices are kept down by dispensing with expensive standard items in the U.S., like safety air bags. The Soluna and the City also have a high proportion of non-Japanese components. "We use 70% locally-made parts, especially bulky parts such as bumpers," says engineer Ninnart. Cars like the Toyota Corolla have only 55% local content. For the Soluna, transmission, axle and seat parts are imported from Indonesia and the Philippines. The City, which like the Soluna is assembled in Thailand, sources wheels and bumpers from Malaysia and the Philippines. The seven ASEAN countries grant each other tax breaks on car parts made by member nations under the grouping's Brand-to-Brand Complementation program and the new ASEAN Industrial Cooperation scheme. And ASEAN-made parts are cheap to begin with, since labor and other expenses in Southeast Asia remain relatively low, despite worries, especially in Thailand and Malaysia, about the rising cost of doing business.  
 
Thailand is the first stop in the automakers' Asianization strategy. Its flourishing components industry makes the country the production base of choice for the majors. Toyota aims to eventually manufacture the Soluna engine in Thailand. That's why the company built the $120-million Gateway plant outside Bangkok and is training a corps of Thai engineers in Japan. "New, smaller cars like the Soluna help Thailand move from auto assembly to manufacturing, adding a lot more value," says analyst Meseroll. "That builds scale, as it becomes more profitable for more parts makers to come here."
 
With its 61.4 million people and growing affluence, Thailand is also a key market for the Asian Car. Pick-up trucks, which dominate sales in the rugged countryside, account for two-thirds of the nation's annual production of more than 559,000 vehicles. "You could call this new generation of cheaper passenger cars the Ôpick-up killers' because they are in a similar price range," says Meseroll. The pick-up and jeep makers, which include Japan's Nissan and Isuzu, may have reason to worry. The Honda City sold more than 11,000 units in Thailand last year.
 
The thinking is that a hit in Thailand will do well in the rest of Asia. Honda already sells the City in Indonesia, Malaysia, Pakistan, Taiwan and the Philippines. Sales in India will begin later this year. Honda aims to move a total of 20,000 units in 1997. In April, Toyota will export the Soluna to Singapore and Brunei. Indonesia and the Philippines will follow. The plans are to assemble 40,000 units this year, and go up to 60,000 by 1998. If the Soluna meets with success, "we could possibly take it to other regions outside Asia," says Toyota president Okuda Hiroshi.  
 
But some Asian markets may not be easy to crack. China is basically closed to foreign carmakers because the government closely controls vehicle production and sales. India deregulated its car industry only recently. Malaysia levies high tariffs on foreign autos to protect its national carmaker Proton, a tie-up with Mitsubishi. Last year, Indonesia granted Timor, an automaker owned by President Suharto's youngest son, Hutomo Mandala Putra, exemptions on sales tax and tariffs to develop a national car with South Korea's Kia Motors. The Timor sedan, which can squeeze in five passengers, sells for about $16,000 -- a third lower than the City's price in Indonesia.  
 
Still, the response to the Timor -- and the City -- has been lukewarm. Industry analysts say some 1,800 Timor units are sold every month, less than half the monthly target. Many Indonesians are sticking with utility vehicles such as the Kijang, which Toyota makes with local partner Astra. Last week, Toyota Astra Motors came out with a redesigned Kijang that features a streamlined frame. Buyers immediately placed some 10,000 orders. "One dealer in Surabaya who offered 52 units to cash buyers was sold out within an hour," says a company spokesman.
 
The Asian Car makers are undaunted. "Consumers want to choose the car they buy, and they will pay more for the car they want," says Hasebe Shozo, manager of Toyota's Thai operations. "As for national-car policies, that is up to the governments concerned. What can Toyota do?" Build brand loyalty, for one. The Kijang is helping burnish Toyota's reputation in Indonesia. The company has also established a good track record in Thailand. Asked about the Soluna, Bangkok taxi driver Cheuy Pongkri was quick to answer: "I'd buy it. Toyota is the best because it runs well, is not too expensive and is cheaper to get fixed."
 
For the Japanese, the Asian Car drive may bring a bonus -- it could make them more competitive price-wise with Korean marques. South Korea's carmakers have been undercutting them with discounted models, starting with Hyundai's Excel in 1993. "The Koreans entered [Asian markets] with some very affordable cars," says Dunne. "Now, the Japanese are roaring back saying Ôget out of our market.'" A Kia four-door model sells for $18,500 in Bangkok, cheaper than a Honda Civic or Toyota Corolla, but pricier than either the City or Soluna.
 
Who will win the Asian Car wars? "The Japanese have the advantage because they have been there longer," says Andrew Blair-Smith of BZW Securities in Tokyo. "The Americans and Koreans are late starters." Adds Kuwata: "It will take many years before GM and other U.S. and European carmakers establish parts supply sources, start production and perfect market channels." But the race has just begun. The only clear victor, at this point, is the Asian car buyer.
 
-- Reported by Michele Zack/Bangkok, Murakami Mutsuko/Tokyo and Keith Loveard/Jakarta