South America Regional Operations
Honda’s growing manufacturing and R&D operations are well situated within the South America Region, with motorcycle and auto production expanding in Brazil, a new auto plant under construction in Argentina, and motorcycle production newly begun in Peru.
Honda has been producing motorcycles in Brazil since 1976 and automobiles since 1997. Research and development activities in the region began in 1980. Reflecting the continued growth of these operations and Honda’s sales activities, in 2000, Honda established a South America Region Operation responsible for developing strategies that reflect the unique economic, cultural and market conditions of the region, and for the management of Honda’s R&D and manufacturing operations in Brazil.
Honda’s strategic positioning in the MERCOSUR, the region’s Southern cone free trade agreement, provides a solid foundation for its growth in the region. MERCOSUR member countries are currently pursuing many trade agreements with other nations within the Americas. Eventually, the ultimate expansion into the larger FTAA (Free Trade Area of the Americas) is targeted for the future.
Honda Motor De Argentina (HAR) in November 2007 broke ground on a new auto plant in the Campana, Buenos Aires province. The new plant plans to employ 400 associates and is slated to begin production in 2010, with processes including stamping, welding, painting and final assembly. The plant will export products to Brazil and will compliment existing automobile production capacity in Brazil.
Honda Automoveis do Brasil, building the Civic Sedan and Fit, completed the first phase of its expansion activities in 2007 with $100 million in new investment and an increase in annual production capacity to 100,000 automobiles. In the summer of 2008, additional investment of approximately $30 million will further increase production capacity to 120,000 units. The factory currently produces the Civic sedan, Fit and City sedan, which was newly introduced to Brazil in summer 2009.
Moto Honda da Amazonia is one of Honda’s largest motorcycle plants in the world. Production was expanded to 1.5 million units in 2007, and was further expanded, to 2 million units, in early 2009.
Currently, Brazil exports the Fit to all left-hand drive markets in South America, Central America and the Caribbean — more than 15 countries in total.
Honda Selva del Peru S.A. (HSP), a wholly-owned manufacturing subsidiary of Honda del Peru S.A. (HDP), began operations in October 2007. The US$2 million plant has an annual capacity of 25,000 units, with the potential to expand to 100,000 units in the future.
Honda motorcycle sales in South America fell 19% to 1.387 million units in 2009, down from a record 1.721 million in 2008. Honda automobile sales decreased 2% to 153,000 in the same period, down from an all-time record 157,000 in 2008.
In March 2009, the CG150 TITAN MIX flex-fuel motorcycle, equipped with a mix fuel injection system, was launched with an annual sales target of 200,000 units.
In late 2006, Honda began sales in Brazil of flex-fuel Civic and Fit models, able to operate on a wide range of ethanol-gasoline mixtures, up to 100% ethanol. The new Brazilian-made City, introduced in 2009, operates using this same system.
R&D activities in the region began in 1980 — a few years after the start of local motorcycle production — to focus not only on supporting local sourcing of assembly component parts, but also to conduct market research, product planning, product homologation, testing and styling design.
Honda R&D Brazil was established in 1997 to place greater focus on automobile market research within the region, to integrate with Honda’s Brazilian automobile plant, and to increase local parts-sourcing efforts.