The innovative HONDA MOTOR CO., LTD. hybrid-powered Insight car went on sale in the United States in December. The powertrain for the high-mile-age two-seater combines a standard 1-liter, three-cylin-der gasoline engine with an electric motor that draws its power from a nickel-metal hydride battery pack charged by the engine. Honda expects to sell 400 Insights a month starting in March 2000, when a more adequate supply of cars will be available. The competing gasoline-electric hybrid Prius will arrive in TOYOTA MOTOR CORP. dealer showrooms in the spring.
HONDA MOTOR CO., LTD. could beat NISSAN MOTOR CO., LTD. as the first automotive maker to meet the California Air Resources Board's stringent super low emission vehicle standards for gasoline-powered vehicles (see Japan-U.S. Business Report No. 360, September 1999, p. 10). Honda had a January 2000 launch date for a SULEV version of its mainstay Accord sedan, which will emit little in the way of unburned hydrocarbons, nitrogen oxides and carbon dioxide vapors. Significantly, the SULEV variant of the Accord will be priced in the same general range as today's regular models. That is one reason Honda believes that it can sell 500 of the environmentally friendly Accords a month.
For a company that certainly could use extra North American production capacity, especially for its trucks, HONDA MOTOR CO., LTD. is taking its time in announcing details about its planned $400 million factory in Lincoln, Alabama (see Japan-U.S. Business Report No. 357, June 1999, pp. 11-12). At least the plant's operator now has a name: HONDA MANUFACTURING OF ALABAMA LLC. Whether the new company will build minivans or sport-utility vehicles when it starts assembly in the spring 2002 still has not been released.
Also bumping up against production ceilings in North America, TOYOTA MOTOR CORP. will add 200,000 units of capacity within five years to its current infrastructure for 1,250,000 vehicles. Most of the expansion will take place at Toyota's newest plant, the Tundra full-size pickup truck factory in Princeton, Indiana. About $800 million will be spent to double potential output at TOYOTA MOTOR MANUFACTURING INDIANA, INC. to 300,000 units a year by building a factory adjacent to the existing one. That facility only began Tundra production in December 1998 (see Japan-U.S. Business Report No. 352, January 1999, p. 8), working toward a full-capacity output of 100,000 pickups a year. In October 2000, TMMI will launch production of the Sequoia full-size sport-utility vehicle at an eventual annual rate of 50,000 units. Toyota apparently has not decided how it will use the new capacity coming on-line at TMMI, although more trucks are a strong possibility. Whatever is built there will boost employment from 2,000 or so currently and 2,300 once Sequoia output begins to 4,300 in the mid-2000s. The remaining 50,000 units of capacity that Toyota expects to add in North America will be squeezed out of one or more of its other plants. These are located in Georgetown, Kentucky (500,000 units of annual capacity), Fremont, California (400,000 units) and Cambridge, Ontario (200,000 units).
In a deal that would have been unimaginable not long ago, a fiercely self-reliant, technologically proud HONDA MOTOR CO., LTD. has agreed to a powertrain swap with GENERAL MOTORS CORP. Under it, the Japanese automotive maker, which bills itself as the world's biggest maker of internal-combustion engines with an output of more than 10 million units a year, will supply its V-6 ULEV (ultra low emission vehicle) engines and automatic transmissions to GM for use in North American-manufactured products. In turn, ISUZU MOTORS LTD., in which the number-one vehicle builder has a 49 percent stake, will ship direct fuel-injection diesel engines to Honda for sale principally in Europe. The engines presumably will come from Isuzu's new diesel engine factory in Poland. Honda does not produce diesel engines. Specific terms and details of each engine agreement still must be worked out. Honda and GM describe the cross-supply arrangement, which had been in the works for months, as the first step in a new relationship that could lead to cooperation in other areas, such as vehicle recycling in Europe and local parts procurement in different regions of the world. Against the backdrop of a rapidly consolidating international automotive industry, the head of Honda felt compelled to state that the company "is firmly committed to an independent path. This relationship will strengthen our ability to maintain this course." For his part, GM's president described the deal as part of the firm's "aggressive strategy" to tap the best global opportunities to bring innovative products to market quickly.
With orders increasing from FORD MOTOR CO. for torque converters for automatic transmissions, DAIKIN DRIVETRAIN COMPONENTS CORP. is forecasting higher production and sales in the next few years. Orders from Ford could hit 350,000 units a year in 2000 from 240,000 at present. That projected expansion plus DDC's sale of torque converters to NISSAN MOTOR CO., LTD.'s big assembly complex in Smyrna, Tennessee are expected to boost revenues from $35.9 million in FY 1998 to $50.5 million in FY 1999 and $61.2 million in FY 2000. More significantly, the Mascot, Tennessee subsidiary of EXEDY CORP. hopes to start making money, something that has eluded it since operations began in March 1996. To that end, DDC plans to raise local content to 72 percent from 67 percent, in part by investing $16.5 million to build additional torque converter components internally but also by purchasing other inputs from suppliers in the United States.
The strength of North American automotive production and the increasing recognition of the benefits of forged steel crankshafts are working to the benefit of INTERNATIONAL CRANKSHAFT INC. In operation since 1992, the Georgetown, Kentucky subsidiary of SUMITOMO METAL INDUSTRIES, LTD. currently makes 1.2 million forged crankshafts a year. In 2000, production will rise to 1.3 million units, bringing output close to the plant's annual capacity of 1.4 million units.
SAS RUBBER CO. of Painesville, Ohio has started deliveries of power steering hose to DAIMLERCHRYSLER AG for the Chrysler Cirrus sedan and the Chrysler Sebring coupe. The YOKOHAMA RUBBER CO., LTD. subsidiary already ships hose to FORD MOTOR CO.
Beginning in the summer of 2000, OTICS CORP. will ship such engine parts as rocker arms, rocker shafts and support parts to DMAX LTD. That timing is keyed to the August start of production of 6.6-liter, direct-injection diesel V-8 engines at the Moraine, Ohio venture between ISUZU MOTORS LTD. (60 percent) and GENERAL MOTORS CORP. (40 percent). The engines will be installed in GM's full-size pickups and other light- duty trucks. DMAX, which was formed in September 1998, expects to turn out 70,000 engines in its first year of operation, working up to full-capacity production of 200,000 units in 2004. Interestingly, the DMAX contract is the first business that Aichi prefecture-based Otics has done with Isuzu.
Encouraged by the contract that its Bardstown, Kentucky manufacturing unit won from GENERAL MOTORS CORP. for an integrated windshield washer system (see Japan- U.S. Business Report No. 360, September 1999, p. 10), JIDOSHA DENKI KOGYO CO., LTD. established a freestanding marketing unit in Detroit in the hope of doing more business with U.S. automotive makers. Until now, marketing had been handled by JIDECO OF BARDSTOWN, INC. as an adjunct to its production of power window motors, ABS (antilock braking system) motors and wiper motors. Jidosha Denki is a NISSAN MOTOR CO., LTD. affiliate.
With a $86.7 million order in hand from the Santa Clara Valley Transportation Authority for 30 light rail vehicle cars, the team made up of the Wellesley Hills, Massachusetts subsidiary of KINKI SHARYO CO., LTD. and ITOCHU CORP.'s New York City unit formed a company in San Jose, California to oversee the contract. The VTA car shells will be built in Japan and shipped to KINKI SHARYO INTERNATIONAL LLC for final assembly. The joint venture, in which the rolling stock maker has a 60 percent stake, is looking for a facility to use for this work. The 30 cars are scheduled for delivery to VTA in the latter part of 2001. They are said to be similar to the cars that Kinki Sharyo is delivering to New Jersey Transit under a 1998 contract. Those are 90 feet long and double-articulated. Under Buy America rules for federally funded transportation projects, about 60 percent of the value of the VTA light rail vehicles must be U.S.-derived.
Industry sources say that ISHIKAWAJIMA-HARI-MA HEAVY INDUSTRIES CO., LTD. will be a risk- and revenue-sharing partner on a multinational aircraft engine project headed by GENERAL ELECTRIC CO. The goal of the team is to design an engine to power 90- seat jetliners. The propulsion system of the CF34-10, a derivative of the CF34-8 engine for 70-seat planes, will be engineered to deliver 18,500 pounds of thrust, or about 30 percent more than the existing powerplant. IHI reportedly will be responsible for developing and producing 27 percent of the parts for the CF34-10. That undertaking will require an investment on the order of $291.3 million. KAWASAKI HEAVY INDUSTRIES, LTD., which worked on the CF34-8 engine, is expected to join the CF34-10 project, which has a 2002 date for the start of certification testing.
Passengers flying on any of six 747 jumbo jets owned by an unnamed airline will have access at their seats to inflight entertainment systems under a memorandum of understanding that BOEING CO. signed with SONY TRANS COM, INC. of Irvine, California. Options for up to 44 additional IFE systems also are covered by the deal. Sony Trans Com's P@ssport system is a full digital video on-demand entertainment unit. It also provides audio on demand as well as games, shopping and recently downloaded Web pages. SONY CORP. acquired the rechristened Sony Trans Com in 1989.
An exchange rate of ¥103=$1.00 was used in this report. aaa