Honda aims to reduce its Japanese car production by 4% in October

To cope with the dreaded end of government subsidies, Honda Motor Co. aims to reduce its Japanese car production by 4% in October compared with the July-September quarter.

A double-digit drop in domestic car sales is expected when subsidies expire on September 30. Media reports in Japan reveal that Toyota Motor Corp. told its suppliers that its domestic daily production could decrease by around 20% from October when compared to current levels. The government’s stimulus measures have benefited Toyota the most because the next-generation vehicles such as hybrids are favored.

Toyota’s Prius model, its topseller, dominates this segment. Last Tuesday, Nikkei business daily reported that Toyota is cutting production at its Saitama factory to 1,800 units a day in October from the current 1,950 units. This was later confirmed by a Honda spokeswoman. But when compared to figures a year ago, this would still be 24% higher.

Toyota had suffered due to weak exports – a result of the economic crisis. The spokeswoman also said that output at its other major plant, the Suzuka factory, will be the same. This means that overall domestic output would drop only 4%, a move that is in line with Honda’s revised financial plans. Japan’s government subsidies will soon end but there is a separate scheme offering tax incentives on purchases of cleaner vehicles. The tax incentives will be effective until March 2012.

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