Honda Motor Co. Ltd.’s (HMC - Analyst Report) worldwide production for the month of Oct 2013 stood at 419,232 units, increasing 21% from Oct 2012. Production outside Japan escalated 23.4% to 328,525 units. Production in Japan escalated 13.3% to 90,707 units.
Higher production outside Japan was driven by a 71.6% increase in production in Asia and a 7.5% rise in North America. This was partially offset by an 11.2% decline in production in Europe and a 6.7% decline in other regions. The year-over-year improvement in Asia was mainly due to a 201.8% increase in production in China.
Japanese market sales went up 48.9% y/y to 65,337 units. New vehicle registrations surged 90% to 38,008 units. Mini vehicles sales augmented 14.4% to 27,329 units. Fit was the best selling vehicle among new vehicle registrations in Oct 2013 with sales of 23,281 units. Step WGN was the ninth top selling vehicle with sales of 5,304 units, followed by Freed, which sold 4,881 units.
Under the Mini vehicles category, N BOX was the best-selling vehicle with sales of 17,599 units. N-ONE was the ninth best-selling vehicle with sales of 5,522 units.
Export from Japan jumped 65.7% y/y to 11,401 units in October. The increase was driven by higher exports to North America and Others, partially offset by decrease in exports to Europe and Asia.
In separate news, Honda’s production and sales subsidiary in Brazil, Honda Automoveis do Brasil Ltda. (HAB), initiated the construction of a new automobile production plant. The new plant will be located in Itirapina, which is 200km northwest of the city of Sao Paulo.
Honda’s new plant will be operational from 2015 and will have annual production capacity of 120,000 units. The company has to invest ¥43 billion ($421 million) for the construction of the new plant. The total investment includes cost associated with the acquisition of the 5.8 million square meter site, purchase price of equipment and construction charges of the plant building.
Honda, with the help of automation technologies, plans to create an efficient production system at the new plant. The company will use shorter production processes and latest painting technologies to reduce environmental damage. With 2,000 employees, Honda will initially be producing the all-new Fit vehicle in the plant.
Honda has a plant in Brazil at Sumare, which has a production capacity of 120,000 units. With this new plant, the total capacity of Honda in Brazil will double to 240,000 units.
Moreover, Honda plans to strengthen its local development capabilities in Brazil. Thus, by the end of 2013, the company will be launching a new automobile R&D center in the Sumare plant. The R&D center will help Honda meet the product requirements of local customers in Brazil. This will eventually boost the sales of the company in South America.
Currently, Honda retains a Zacks Rank #2 (Buy). Stocks from the same industry like Daimler AG (DDAIF - Snapshot Report), Tata Motors Ltd (TTM - Snapshot Report) and Fuji Heavy Industries Ltd. (FUJHY - Snapshot Report), each carrying a Zacks Rank #2 (Buy), are worth a look at the moment.