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Honda US calls for tax breaks; company’s performance in Asia continuously grows

In order to encourage greater consumer investment in the technology, Honda USA Vice-President, John Mendel, has called for tax-credit schemes aimed at extending hybrid car drivers to buyers of fuel cell-powered cars.

He said in an interview early this week that providing further tax breaks for hybrid car buyers would not be the right move, as hybrid serve as the bridge technology to something else. Instead, he further argued the benefits should be provided to fuel cell car drivers, as fuel cell technology continues to "push the envelope" in the development of energy-saving technology, and should therefore be encouraged.

Mendel's comments follow Toyota's appeal to the US government to extend the current tax-credit scheme for hybrid drivers.

Meanwhile, Asian stocks had their first back- to-back advance this year after U.S. retail sales was climbed by the most in five months and machinery orders in Japan rose. Honda Motor Co. together with Samsung Electronics Co. led gains by exporters.

Another proof of Honda's rising in Asia is its plan to build its second plant in India, the continent's fourth-biggest economy.

N.K. Goila, the vice president of Honda Siel Cars India, the country's company unit said last January 9 that Honda may spend 20 billion rupees (0 million) to set up the second car factory in Rajasthan.

Honda has decided to build the second plant because the existing one in Uttar Pradesh is not large enough to accommodate new facilities necessary to keep pace with the ongoing demand growth.

According to Honda spokeswoman Yasuko Matsuura, the Tokyo-based manufacturer of cars and motorcycles will locate the plant in the northwestern state of Rajasthan, northwestern India. She continued that it has yet to decide on the exact site of the new plant, but it will be selected in coming months, and construction is to begin later this year. That plant will begin operating in the first half of 2009 with an initial capacity of 50,000 cars a year and Honda plans to increase it gradually. The company plans to find a site large enough to produce 200,000 cars annually.

Company officials say they plan to invite affiliated parts vendors to set up near the new factory with a view to boosting the locally procured content of the vehicles assembled there.

Honda's first plant that assembles Accord and Civic sedans in India has the production capacity of 50,000 cars. The company has announced to increase the production capacity to reach 100,000 cars by the end of 2007 and to even increase it to 150,000 vehicles by 2010.

Volkswagen AG, General Motors Corp. and other automakers are starting up production or building more factories in India, Asia's fourth-biggest automobile market, where demand for vehicles is growing with an expanding economy. Automakers last year announced a combined billion of investments in new factories in India by 2012.

India's economy, Asia's fourth-largest, grew 9.1 percent in the half-year ended Sept. 30, the fastest semi-annual pace in 15 years, boosting demand for cars. Northern and eastern India account for 45 percent of the company's sales, the statement said.

India's car market may triple to 3 million units annually by 2015, according to the Society of Indian Automobile Manufacturers. That has attracted manufacturers, including Suzuki Motor Corp., Hyundai Motor Co. and DaimlerChrysler AG. Last year, Renault SA, France's second-largest carmaker, said it will open a factory in India along with Mahindra & Mahindra. Renault's affiliate Nissan Motor Co. may also join.

Honda is also maker of quality Honda tie rods.

About the Author: James Russel grew up in Los Angeles and is 35 years old. He works as a marketing analyst for a supplier of automotive parts in the United States. On his spare time, he loves to spruce up his vehicle.

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