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Last Updated: Wednesday, 18 July 2007, 10:48 GMT 11:48 UK
Honda expands global production
Honda car
Honda is enjoying strong sales growth around the world
Honda, Japan's second biggest carmaker, has announced a major global expansion to meet fast-growing overseas demand.

Honda plans to build new plants in Thailand, Vietnam, India and Argentina, as well as a research centre in China.

Honda has forecast its global car sales this year will exceed 2006's record 3.55 million units, as it continues to increase output in North America.

Japanese carmakers have also been expanding overseas production plants as costs, including wages, are lower.

'Low-priced car'

On Wednesday Honda unveiled plans for a $246m research and development centre in China.

Honda will design a new Guangzhou brand vehicle with its joint venture partner specifically for the Chinese market to go on sale from 2010.

"It will be a low-priced car unlike anything Honda would sell on its own," said Honda president Takeo Fukui.

Our export business is our main driving force
Honda president Takeo Fukui

Honda also revealed it had begun construction of a second car plant - due to start up in late 2008 - in Thailand at a cost of about $200m.

It would eventually double Honda's production in the country to 240,000 vehicles a year.

The carmaker has also said it will plough in an investment of $65m to raise its production of motorbikes in Vietnam by 50% to 1.5 million units from the second half of 2008.

'Weak domestic demand'

On Wednesday it confirmed a $230m investment for a second car plant in India, which will make about 60,000 vehicles a year from late 2009.

And in Argentina Honda plans to spend $100m on a new carmaking production plant.

It is set to start up in 2009 with an annual production capacity of 300,000 compact vehicles to meet growing demand in South America.

Honda's earnings slipped slightly in the last financial year to March amid tough competition in its home market and higher raw material costs.

"Weak domestic demand is a very large issue," Mr Fukui said. "Our domestic sales are in a severe situation. Our export business is our main driving force."

Honda is also expanding in North America as Asian carmakers step up the pressure on US rivals such as General Motors and Ford.

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