Honda to open its first Japanese plant in half a century

Honda Motor Company plans to open a car factory in Japan, something it hasn’t done for almost 50 years.

Honda inaugurated its last Japanese plant in 1964 in Sayama, near Tokyo.The plant, along with two older facilities, satisfied domestic demand as the Asian country prospered. But since the early 1990s, when asset prices collapsed, carmakers didn’t feel the need to expand anymore.

Honda’s new factory will open at a time when the Japanese yen is weakening, making domestic carmakers more profitable. The currency’s depreciation brought back investors to Japan, with analysts predicting the economy will emerge from recession this quarter. The Japanese yen has dropped more than 12 percent against the dollar since mid-November, boosting the value of Japanese products sold overseas.

The plant, located in Yorii, a town of about 36,000 two hours northwest of Tokyo, will have an annual capacity of 250,000. According to Honda, the new factory is part of a reorganization of its domestic operations that includes scaling back production at the Sayama plant. The new facility in Yorii will use more efficient technology and allow Honda to consolidate production of compact models such as the Fit (called the Jazz in Europe), the best-selling Honda vehicle in Japan.

Honda plants outside Japan account for about three-quarters of the company’s annual output of 4 million cars.

Source: Bloomberg