TOKYO -- Amid reports that Toyota Motor Corp. and Nissan Motor Co. will slash capacity in Japan because a strong yen is devastating export profits, rival Honda Motor Co. is on track to open an assembly plant in Japan next year.
But it's not at odds with the industry trend. The new plant is part of a plan to keep domestic capacity in check but make it more efficient.
The Yorii factory, north of Tokyo near Honda's existing Sayama plant in Saitama prefecture, will have an annual capacity of 200,000 vehicles. It will feature cutting-edge technology for eco-friendly vehicles such as hybrids.
Honda put the project on ice during the global financial crisis. But President Takanobu Ito resurrected it in 2010.
Since then, however, the yen has continued its surge against the dollar and other currencies, undercutting profits on Japan-made vehicles shipped overseas. Suddenly it does not seem so smart to be building new factories in the homeland.
Nissan said last week that it will trim its domestic capacity 14 percent to about 1.16 million units, from 1.35 million, after ending production at one line at its Oppama plant south of Tokyo.
The Nikkei newspaper reported that Toyota aims to cut its Japan capacity 10 percent to around 3.1 million units as early as 2014. A Toyota spokesman responded: "No concrete decision has been made regarding reducing domestic production capacity."
While Honda might seem to be bucking the trend, it too has no intention to expand at home -- despite opening Yorii.
After Yorii opens Honda aims to keep capacity steady at 1.3 million units by trimming capacity elsewhere in Japan.
The first target is the Sayama plant, with current annual capacity of 530,000 units. After Yorii opens, Honda wants capacity at both factories to total 530,000 units. To get there, Honda will, in effect, be swapping manufacturing output at the older Sayama plant for output at the new and more efficient Yorii one.
How the two plants' combined capacity will be divvied up, and what models will be made at the plants, are still undecided, spokeswoman Akiko Itoga says.
Meanwhile, Honda will further whittle away at its Japan capacity of 1.3 million units by cutting capacity at its Yachiyo minicar factory. That plant has capacity of 240,000 units.
Honda already has begun transferring minicar production from Yachiyo to its Suzuka plant in central Japan. That shift is expected to stretch over several years.
CFO Fumihiko Ike said last month that Honda wants to keep annual capacity of 1 million in Japan. So there's still room to shrink.
And Honda is adding capacity outside of Japan. In 2014, it will open an $800 million plant in Mexico capable of building 200,000 Fits a year. That will boost Honda's North American capacity to 1.87 million from 1.63 million today.