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Last Updated: Wednesday, 17 May 2006, 06:15 GMT 07:15 UK
Honda unveils $1bn expansion plan
Takeo Fukui, president of Honda Motor
Hybrid cars have helped boost Asian car sales in the US
Japanese car giant Honda has unveiled sweeping expansion plans for new plants in Japan and North America.

The Tokyo-based group plans to pump more than $1.2bn (634m) into two new factories in Japan, one in the US and an engine plant in Canada.

The new plants would help Honda's plans to accelerate sales by 34% by 2010, chief executive Takeo Fukui said.

Elsewhere the group also plans to boost production in India and Brazil, as well as raise motorcycle production in Asia.

Under the proposals, Honda will open a new US plant, at an undisclosed location, by 2008 at a cost of $400m.

The site will have a production capacity of 200,000 units and employ more than 1,500 people.

A $140m engine plant will also open in Ontario, Canada in 2008, producing 200,000 units.

Meanwhile Honda will open its first new plant in Japan for 25 years in Saitama, outside Tokyo at a cost of 70bn yen ($640m; 338m).

Output boost

"We have been looking at changes in demand and decided to expand our capacity," Mr Fukui told a news conference.

"Competition on a global scale is expected to intensify."

By 2010, the firm expects global car sales to exceed 4.5 million units, while motorcycle sales should hit at least 18 million, Mr Fukui added.

He added that the firm had been developing a new low-cost hybrid car that should go on sale by 2009.

The clean four-cylinder diesel engine vehicle aims to meet new emissions laws that will come into force in California in the US.

US competition

US consumers have been turning increasingly to smaller, more fuel-efficient cars in the face of surging oil prices.

Japanese car manufacturers are increasing their market share at the expense of big European and US car makers.

Toyota is expected to take over the number one spot from GM - with some experts expecting the development to take place this year.

Profits have suffered at the US giants as discount drives aimed at boosting sales ate into margins while the pair are also creaking under the weight of rising labour costs.

In April GM revealed that sales sank 14% in March to 365,375 vehicles compared with a year earlier, while Ford's overall sales fell 4.6%.

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