Honda Eyes Hybrid Cars Expansion in Europe

By dancurranjr On September 29th, 2008

Honda Motor is counting on hybrid cars and the soaring Russian market to enter its next phase of expansion in Europe, where an economic slowdown in Western Europe is hurting sales more than expected, an executive said.

Japan’s number two carmaker sold a record 376,477 cars in Europe last year – a rise of 22 per cent – with growth in all major markets except Germany as consumers flocked to its diesel cars.

But sales growth has slowed this year due to weaker overall demand, and also because new taxation methods in Italy, Spain and France based on carbon dioxide output prompted buyers to flee to brands with low-emission cars such as Volkswagen.

“There’s been a sudden shift to cars with low CO2 emissions,” Shigeru Takagi, senior managing director and head of European operations, said yesterday.

“European makers are quickly responding to that trend, and right now we’re a bit behind.”

Takagi said overall demand in Europe was shrinking at a faster pace month after month, with this month also starting off poorly.

New car registrations in Britain, Honda’s biggest market in Europe, had their worst August since 1966, while Germany, Italy and Spain also recorded double-digit drops.

About the only bright spot is Russia, where Honda’s sales jumped 157pc in the first six months of this year, single-handedly absorbing the drops in Western Europe. In all of Europe, Honda’s sales grew 7.5pc to 218,925 cars – which represents just over a tenth of its worldwide sales.

At the current pace, Takagi said Honda’s sales in Russia would exceed 100,000 cars in one or two years, from 38,600 in 2007.

The biggest challenge now was supplying enough Civic and Accord sedans to meet swelling demand, despite plans to produce 60,000 cars at its Turkish factory this year – or 20pc beyond its official capacity, he said.

Source: Gulf Daily News

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