There’s been a great deal of positive attention to some organizational changes at Honda that took effect this month. These changes will strengthen and improve our efforts to bring innovative and affordable new Honda and Acura products to market.  But if there’s one thing that I’ve learned through my career in the auto industry, it’s that sometimes it’s as important for people to understand why a company has embarked on a challenging new direction, as it is to know what the company is doing.

Some have interpreted our strategy as a wholesale shift of our operations out of Southern California. This is not the case at all.  This is an evolutionary step, that will efficiently group key executives under one roof to make high-level decision making close to the major operations in Ohio that are critical to new product introductions. But top executives remain in California as well.  And overall, with more than 2,500 Honda associates on our Torrance campus we expect fewer than 50 jobs will transfer to Ohio.  

In the face of today’s hyper-competitive marketplace, Honda’s operations here in our North America business region now have a greater responsibility within Honda’s global organization.  To fulfill this new and larger role, we have taken steps to centralize decision-making and streamline the new model process. In this way, we will advance our ability to quickly deliver high quality and affordable products to our customers in this region and around the globe. 

One of the key goals of our organizational changes is to shorten the time from when we finalize a product design to when that all-new product reaches our customers.  After all, what seems like a good idea today, might not meet customer expectations tomorrow, if it takes too long, or the cost is too high, to bring that idea to market. So, we must accelerate our ability to introduce new models at more affordable prices to increase our competitiveness.

This strategy led to the organizational changes which serve to centralize decision-making for our North American regional operations in Ohio.  Why Ohio?  After more than 30 years of building and developing products in America, it is already the center point of our engineering capabilities.  We are leveraging our significant investments in Ohio where we have established two major auto plants, our North American purchasing operations, North American Engineering Center and our major R&D center. 

At the same time, our presence in California will remain robust and vibrant. The headquarters of our sales and marketing operations, and a number of other key operations that support them, remain firmly rooted in Torrance, California.  As one recent example, we just announced a new structure for our automobile advertising that will strengthen our marketing efforts with a Honda team in California at the hub of the strategy. 

In fact, we have Honda operations all over North America that will remain in their current locations and focused more than ever on their same core responsibilities.  This is especially true for our efforts to design, build and sell Honda and Acura products.

Our North American operations have been tasked with greater responsibilities within Honda’s global business.  We already have 14 major production operations in North America, building a wide range of Honda and Acura automobiles, automobile engines and transmissions, Honda all-terrain vehicles, and power equipment products such as lawn mowers, mini-tillers and general purpose engines, using domestic and globally sourced parts.

Now, based on investments in just the past two years of about $2.5 billion, our North American auto production network is beginning to take a lead role in launching key global models like the future all-new generation of the Honda Civic.  Our plants here will prepare new models for production and share the production know-how with other Honda plants around the globe.  This is a big deal — because in the past, this lead role was generally done in Japan.

We also have 14 R&D facilities in America that design and develop the majority of the light truck products that we build here.  These operations have taken on increased responsibility to create products that are just right for the needs of our customers in North America, and take even greater advantage of local parts sourcing and manufacturing.  This includes leading development of both the next generation Honda Civic for North America, as well as the Acura NSX supercar. This is a major component of our strategy to increase the speed of development, the affordability of our products, and the competitiveness of the Honda and Acura brands.

We also will be ratcheting up automobile exports from North America to markets around the world.  We expect to double last year’s export total of almost 100-thousand units, so that in the coming years we will be a net exporter – meaning we will export more cars from North America than we import from Japan.

It’s a bold plan that builds on the foundation we have established during the past three decades.  To make all of this work, we took action to streamline our corporate structure, which will help develop a common process across all of our sales, production, R&D and purchasing operations in this region.  And that is something that is not only increasing the competitiveness and stability of Honda in North America – it will improve the quality and affordability of our products for our customers.  And that is the ultimate “why” for these latest steps in our history in North America.

Michael Accavitti
Senior Vice President
American Honda Motor Co., Inc.

Today’s announcement of a new partnership between Honda and SolarCity, America’s largest solar power provider, is an important step forward in Honda’s effort to reduce CO₂ emissions that contribute to global climate change. It is also an important contribution to Honda’s overarching mission to create new value for its customers, so that Honda continues to be a company that society wants to exist.

The potential life-changing impacts of global climate change are far reaching, and it’s our urgent responsibility to offer our customers products and technologies that reduce greenhouse gas emissions. Solar electricity is one of the most important tools we have to significantly reduce CO₂ emissions and, with this program, to do so while reducing customers’ energy costs.

Through this new partnership we will offer our Honda and Acura customers, as well as our U.S. dealers, the opportunity to switch to solar power for the majority of their energy needs with little or no upfront cost. This removes the single largest barrier to the broader adoption of solar power – the prohibitive initial cost for the solar system hardware and installation.

This unique program has the potential to put solar power on the roofs of as many as 2,500 homes and 10-20 dealers, reducing household CO₂ emissions by as a much as 10,000 metric tons per year. Just as importantly, this initiative also creates a pathway for reducing CO₂ emissions from electric vehicles – including all-electric vehicles like our Fit EV, plug-in hybrids like our new Accord Plug-In, and hydrogen fuel cell electric vehicles like our FCX Clarity.  Using solar power for the home and the car, drivers can reduce the daily costs of living and driving, and make progress to the goal of a fully sustainable lifestyle.

This partnership, the first between an automaker and a renewable energy company, is also the first fruit of our business development efforts within American Honda’s newly established Environmental Business Development Office, or EBDO, whose mission it is to think broadly about our environmental challenge and to propose new business and product strategies that help Honda realize its vision for a future of mobility that is sustainable from both an environmental and a business perspective.

With this initiative – and others that we will share in the coming months –  we are envisioning a future in which low-carbon living is easy, and where our customers save money by reducing their CO₂. This new partnership with SolarCity is just the beginning.

It was with no small sense of pride in my company that I read this recent quote from Mr. Tom Cackette of California’s Air Resources Board (ARB):

“Honda has demonstrated that a dedicated commitment to the environment and advanced engineering at every level of the company can deliver the cleanest cars well ahead of schedule.”

The quote was contained in a December 26, 2012, press release from ARB announcing that our new Accord Plug-In is the first vehicle to meet ARB’s new SULEV 20 standard, the most stringent tailpipe emissions regulation in the nation.

Honda’s effort to reduce automobile tailpipe emissions stretches back to the 1970swhen our company founder, Soichiro Honda, decided to end the first era of Honda Formula 1 racing in order to pursue a different race – the race to meet new emissions standards set forth under a 1970 amendment to the U.S. Clean Air Act. Mr. Honda saw this as a new race with everyone starting from the same starting line.

The challenge was strongly embraced by a group of young Honda engineers, who were shocked by reports projecting the harmful effects of air pollution on future generations. These engineers took up the rallying cry “Blue Skies for our Children” and created the now legendary CVCC engine, the first vehicle to meet these new emissions standards without the need for a catalytic converter.

But this proved to be only the first lap of a long race. In the intervening years, the Honda Civic and Accord together achieved a series of important milestones in the drive for cleaner air. This included America’s very first Low Emission Vehicle, or LEV (1996 Civic), the first Ultra Low Emission Vehicle, or ULEV (1998 Accord), the first Super Ultra Low Emission Vehicle or SULEV (2000 Accord), and the first gasoline powered Advanced Technology Partial Zero Emission Vehicle, or AT-PZEV (2003 Civic Hybrid).

While by no means alone in this effort, over a 30-year period in which Honda led the way in introducing automobile emissions controls, tailpipe emissions for U.S. passenger vehicles have dropped 99 percent. We demonstrated through our ingenuity and challenging spirit the path to achieve ever lower levels of tailpipe emissions both affordably and with minimal impact to vehicle performance.

Last year, the CVCC engine marked its 40th birthday, but four decades later the race to reduce the environmental impact of Honda products is still being run, and run with a vengeance. With the Accord Plug-In launching in California and New York this week, tailpipe emissions are reduced to just 7 pounds over 150,000 miles of driving. By comparison, prior to the first LEV vehicle, typical passenger cars produced somewhere around 300 pounds of over the same distance.

While these are important markers in our race for a more sustainable mobility future, there’s no real finish line to this race, no checkered flag, no spray of champagne or chugging of milk. But it’s a race that, in true Honda spirit, we love to run, knowing that every lap brings new challenges, new learning, and new chances to live up to the great legacy of those who first took up the rallying cry “Blue Skies for Our Children.” I think Mr. Honda would be proud of our efforts to reduce smog-forming tailpipe emissions – but I imagine his next words would be “Get ready for the next race!” And so we will.

Steven Center
Vice President
American Honda Environmental Business Development Office

Our Perspectives
Rick Schostek, SVP Honda of America Mfg., Inc.

As we celebrate Honda’s 30th year of making cars in the U.S., I am reminded of a story I was told by a Honda associate – that’s what we call all our employees – at our auto plant in Alabama.

Whenever a new project began at his previous employer, he said that everyone received explicit instructions on how to do their jobs: “Here’s how to build a forging line, follow this blueprint!” This associate told me he was very surprised when he received a new assignment at Honda and his instruction was simply: “Go to the Honda engine plant in Ohio and see what they have done. Then make sure this new one is better.”

This has been our path in North America over the past 30 years, ever since that first Honda Accord rolled off the line at our Marysville, Ohio auto plant on November 1, 1982. There is no cookbook at Honda, no predetermined way of doing things that would dampen the initiative and creativity of our associates. This makes the “Honda Way,” a bigger challenge in some respects, but it also creates a bigger opportunity by encouraging innovative thinking and fostering the growth of our people – our most precious asset.

I clearly remember from my early days in Ohio, how we opened our doors to the leadership of factories from the Detroit automakers. After all, many skeptics thought it was a risky move for Americans to build Honda products in America. Well, the skeptics were wrong. Soon our competition wanted to tour our new Marysville Plant to understand how we built high quality vehicles in the U.S. with such efficiency and flexibility. It didn’t take long before the industry, and our customers, began to view Honda as the benchmark auto producer in North America. We have never looked back.

Today – we have seven auto plants in North America with an annual capacity of 1.63 million units. This spring, we broke ground for a new plant in Mexico that will build Honda sub-compacts like Fit, and increase our capacity to 1.92 million in 2014. And we are expanding and innovating our existing production operations in Ohio, Alabama and Indiana. Over the past 18 months alone, we’ve invested more than $2 billion. So in the coming years, well above 90 percent of the Honda and Acura vehicles our customers purchase will be made in North America.

In an auto industry whose history is pockmarked with plant closures, Honda’s story in North America has been one of continued growth and ongoing investment in our existing plants to keep them on the leading edge of quality, efficiency and flexibility. It’s really an investment in the nearly 26,000 people working in our plants. And it’s a never-ending commitment.

Through the years we have worked to keep our original Marysville Auto Plant state-of-the-art. This includes major investments over the past decade in all-new weld, paint, assembly and stamping operations. In fact, about the only thing that hasn’t changed about the Marysville Auto Plant is that it still builds the Honda Accord, the car that started it all back in 1982. We just launched production of the all-new 2013 Accord. Through it all, we’ve navigated through good economic times, and bad, without a single associate layoff.

So, I think it’s significant that, 30 years later, the Marysville Auto Plant took home the Silver award in this year’s J.D. Power and Associates Initial Quality Study. When you consider that our production associates achieved such high quality while coping with the stops and starts caused by two unprecedented natural disasters last year — a tragic earthquake and tsunami in Japan, and devastating floods in Thailand — it’s really an extraordinary achievement. Our associates constantly seek to exceed our customers’ expectations. Their pride is on display every day.

In the coming years, our associates will take on a new role that is unprecedented for an international automaker in the U.S., a role that is both challenging and humbling. In the past, our team has been responsible for the launch of numerous products that are developed and built exclusively in America, including the Honda Odyssey minivan, Ridgeline truck and Pilot SUV. This new responsibility calls on Honda associates in North America to set the standards for production processes for key global products that also are made in other regions – and then to share their knowledge and expertise with those Honda plants all around the globe.

Based on this new leadership role, we also will increase exports from North America to global markets. This fall, Honda will reach the one million mark in total automobile exports from the U.S. Further, we’re expecting an almost 70 percent increase this year in the export of major auto parts from the U.S. to Honda plants in South America, Europe and Asia. This is a substantial increase in business for North American suppliers that will grow even greater in the coming years.

The continued expansion of our North American manufacturing operations, combined with the new leadership role we will play, speaks volumes about our confident outlook for the future.

After three decades of building cars in America, using both domestic and globally sourced parts, what’s important is not so much a major milestone like the 30th anniversary of Honda auto production in Ohio, but what it represents – through deep associate involvement and teamwork we are committed to our original vision: achieving the highest levels of quality for our customers in America and around the world.

That’s the only blueprint Honda will ever need. # # #

As I stood in the stands watching the final moments of the Honda-powered victory on Sunday at the Indianapolis Motor Speedway, I couldn’t help but think about how life sometimes imitates sport.

After all, many pundits had counted Honda out before the race started, just as skeptics have speculated about the strength of our auto business in the face of tough competition and some epic natural disasters. I like to think that Dario Franchitti’s exciting win at Indy mirrors our own “comeback” success of late.

For example:

• KBB recognized the Honda Accord, Civic and CR-V as three of the top four most-visited new cars during the first quarter of 2012 on its website. CR-V and Civic, both all-new for 2012, ranked 1-2 in the entire industry.
• Edmunds gave Honda its 2012 award for Best Retained Value (surely due to the fact that we have by far the highest percentage of retail sales in the industry).
• Honda captured three of AutoPacific’s 2012 Vehicle Satisfaction Awards for the 2012 Honda CR-V, Odyssey and Pilot.
• Total Car Score gave Honda four of its inaugural Top Scoring Car Awards – for the 2012 Honda, Fit, Odyssey, CR-V and Ridgeline.
• And KBB named Honda the “Most Trusted Brand” for 2012.

While we’re certainly thrilled by these accolades, where you can really see our strength and momentum is with customers during the first four months of 2012:

• Three Honda models ranked among the top 10 best-selling vehicles in the industry.
• The all-new 2012 CR-V is, again, America’s best-selling SUV and the third best selling light truck in the industry.
• Civic is the best-selling compact car in the industry (over the past six months).
• And in April, Accord regained its momentum, finishing third among all cars and light trucks and outselling all but one vehicle in the midsize segment, despite being in the fifth and final year of its current model cycle.

And, we’ve got more good news on the way, including a groundbreaking all-new 2013 Accord that arrives in dealer showrooms this fall.

So, just like at Indy, competition fuels our passion to create something new and innovative for our customers. On the track and in the marketplace, our racing spirit is alive and well.

John Mendel
Executive Vice President
American Honda Motor Co., Inc.

I’m excited to launch our Honda Environmental Leadership Award and Acura Environmental Leadership Award programs. The awards go to Honda and Acura dealers who have voluntarily reduced their energy use by 10 percent or more, developed water conservation measures, and implemented a recycling program.  

The Environmental Leadership Award programs are the logical next step in our effort to reduce our company’s environmental footprint in North America. Of course, Honda is known for its fuel-efficient vehicles. But we’ve also spent years continuously improving the energy-efficiency of our manufacturing plants and logistics operations for the shipment of vehicles and parts.  From achieving 10 zero-waste-to-landfill manufacturing facilities in North America, to deploying fuel-saving technologies on our delivery trucks, we’ve taken a variety of steps both big and small to reduce our environmental impact.

Now we are asking our independently-owned Honda and Acura dealers to join us in reducing the environmental impact of their dealerships. Many of them have already taken us up on this challenge. So far, nearly a dozen dealers have earned the award, and many more have applied to be in the program.

Some of our dealers have taken independent steps to minimize their environmental impact by installing solar panels, planting rooftop gardens, installing more energy-efficient air-conditioning and lighting systems, and setting up water-reclaiming car washes.  Others have gone so far as to seek or achieve LEED certification from the U.S. Green Building Council for their facilities.

Of course, saving energy is also a good business strategy for our dealers. In addition to reducing their environmental impact, we believe our dealers will save money on their energy bills due to reduced use of electricity and water.

We’ve designed this program around what we feel are both challenging but achievable targets that are within the reach of most of our 1,300 U.S. Honda and Acura dealers. Now our goal is to engage as many of them as possible in our program, and together achieve the broadest possible benefit for our environment.

Steven Center
Vice President
American Honda Environmental Business Development Office

Nearly 30 years after we began building the Honda Accord in America, the news that Honda will build the fuel-efficient Honda Fit in our new plant in Mexico is an important addition to the existing portfolio of passenger cars and light trucks we already produce in North America.

Along with the announcement in January that we will build the Acura NSX in Ohio, the news about Fit means Honda will soon produce everything from subcompacts to super cars in North America – increasing our ability to more quickly meet the needs of our customers for fuel-efficient and affordable products.

Last year, more than 85 percent of the Honda and Acura models sold in America were built in the U.S., Canada and Mexico, using domestic and globally sourced parts, and this will reach more than 90 percent in the coming years.

We are investing $800 million in the new plant in Mexico – building upon our longstanding commitment to our existing operations in North America. And we are currently investing virtually the equivalent amount to expand and innovate our existing production operations in Ohio, Alabama and Indiana.

For example, in Ohio, we are investing more than $500 million at four different plants. This includes expanding our engine and transmission plants to produce the new, more fuel-efficient Honda Earth Dreams powertrain series. This series includes an all-new direct injection engine and highly fuel-efficient CVT transmission that will debut this fall on the all-new 2013 Honda Accord.

In Ohio, we also are expanding the assembly line, adding new vehicle painting technologies and constructing an on-site parts consolidation center at our East Liberty Plant. We have added a sophisticated new stamping press at the Marysville Auto Plant as well. We also returned the Marysville plant to full 2-shift production on both lines for the first time in the more than two years since the economic recession began.

In Alabama, we are investing $275 million to expand our auto plant and add a third stamping line that will help increase capacity by 40,000 units. This will add 140 jobs and introduce production of a fourth model next year, the Acura MDX, to go alongside the Honda Odyssey, Pilot and Ridgeline models.

In Indiana, 1,000 new jobs were created with the addition of a second production shift that doubled annual production volume to 200,000 units. This will lead to production next month of the all-new Acura ILX and ILX Hybrid sedans – the first hybrid car we will build in North America, and the first Indiana-built Acura.

And in Canada, we recently added production of the Honda CR-V to the lineup of products built there to help us meet demand for America’s most popular SUV, which we also produce in Ohio and Mexico.

Together with the new plant in Mexico, these investments will increase our annual auto production capacity in North America from the existing 1.63 million units to 1.87 million units, enhance our flexibility and increase our ability to satisfy the needs of our customers in this ultra-competitive marketplace.

At the same time, this ongoing commitment to our North American manufacturing operations places the 33,000 Honda associates who live and work here, and the more than 600 suppliers who support our efforts, right in the middle of Honda’s global strategy. That’s a great place to be – and a perfect fit.

Rick Schostek
Senior Vice President
Honda of America Mfg., Inc.

One year after the devastating earthquake and tsunami that struck Northeastern Japan on March 11, 2011, our thoughts remain with those whose lives were lost and the people of Japan who continue the effort to recover from this devastating natural disaster.

We also very much appreciate the patience of our customers who were willing to experience a delay in the delivery of some products due to severe parts shortages caused by the earthquake. We are thankful for their loyalty and for the expressions of support we received during the difficult times.

Thanks to the incredible dedication and teamwork of our associates, suppliers, and dealers, Honda has not only recovered from this difficult challenge, we are rapidly bringing new fuel efficient and fun-to-drive Honda and Acura vehicles to market. Further, even as we faced the most critical parts supply issues last year, we continued to make critical investments in our flexible manufacturing operations and research and development operations in America that will enable us to meet the needs of our customers in the future.

In Ohio, we are in the midst of an investment of more than $500 million in production facilities that are building both our advanced Earth Dreams powertrain technologies and vehicles for our customers here and to be exported abroad.

In Alabama, we are investing more than $275 million to increase production and add a fourth light truck model. In Indiana, we added a new production shift, virtually doubling employment, and began production of the Civic Natural Gas sedan.

We aren’t stopping there. Our U.S. R&D operations, which have played the lead role in developing many of our light truck products and Acura models over the last two decades, have a new responsibility to develop the Acura NSX supercar here in America. And this new NSX will be built in Ohio as well.

But we have another exciting new model going into production in Ohio, as this fall, we will celebrate the 30th anniversary of automobile production at our Marysville, Ohio auto plant with production of the all-new 2013 Honda Accord.

We will never forget the tragedy that struck Japan on March 11, 2011. But the challenging spirit our team of associates, suppliers and dealers demonstrated in its aftermath, is now creating new value for our customers and is powering Honda into the future.

Tetsuo Iwamura
President & CEO
American Honda Motor Co., Inc.

We continue to believe that the class action settlement pertaining to the fuel economy of some early-model Civic Hybrid vehicles represents a very good resolution for our customers. We look forward to a discussion with the State Attorneys General concerning the benefits that our customers will receive from the settlement. 

In recent weeks, a number of news stories have generated some confusion concerning the details of the settlement.  This confusion includes incorrect information that the benefits to members of the class are limited to a $100 cash payment.

Honda has engaged in good faith negotiations with class action lawsuit plaintiffs’ attorneys in an effort to reach an agreement that clearly reflects our desire to preserve our good relationship with customers who are participating in this class action.  Depending on the class member’s circumstances, this settlement provides for multiple benefits and paths of resolution as detailed below.

• All settlement class members are entitled to either a $100 or $200 cash payment.  Further, class members are also eligible to receive rebate certificates of no less than $500 and up to $1,500 applicable to the purchase of a new Honda or Acura automobile.

• Class members of 2003 through 2008 model vehicles will also receive an extension of 12,000 miles or 12 months of the original written warranty for their vehicle’s IMA (hybrid) battery system, whichever comes first.

• As part of the warranty extension, any class member entitled to the extension who has already incurred some expense resulting from the replacement of the IMA battery, outside of the original warranty period, is also entitled to a full reimbursement of that expense.

• Subclass members—those with a 2006, 2007 or 2008 model year vehicle—who have had the recommended update to their vehicle’s battery module control software but remain dissatisfied with their vehicle’s fuel economy performance are also entitled to participate in binding dispute resolution by judicial arbitration, with or without an attorney, where additional remedies can be pursued based on each individual’s situation and without predetermined limits.

We are sorry for any inconvenience or other hardships experienced by our customers as a result of this issue. And, we want to ensure they have a full, clear understanding of the settlement.  More detailed information regarding this class action settlement is available online at http://www.hchsettlement.com/

American Honda intends to appeal the decision in Peters v. American Honda due to the substantial factual and legal errors reflected in the written decision.

We regret that Ms. Peters is unhappy with the reported mileage for her particular driving experience. However, it is clearly pointed out on the federally required window label that accompanied her car that mileage will vary depending upon a number of factors including options, driving conditions, driving habits and vehicle condition. Those factors affect gas mileage for every car on the road today, hybrid or not. American Honda’s advertising regarding fuel economy of Civic Hybrids was accurate when the vehicles were sold and remains accurate today.

There are a number of points of disagreement with the ruling, but the court stated in error that advertising EPA fuel economy estimates is misleading unless the advertising also explains the effects of stop-and-go driving and the use of air conditioning. In fact, federal law does not permit states or state courts to impose additional requirements of this kind. Thus, a Honda advertisement that accurately referenced EPA mileage estimates, truthfully stated that a driver can get “up to 50 mpg” and carefully noted that mileage will vary is not misleading as a matter of law.

American Honda is proud of the fuel saving capability of the Honda Civic Hybrid and is grateful to the many hybrid owners who have written to let us know how pleased they have been in achieving 50 mpg or more in real world driving conditions. In fact, Honda presented evidence of those customer letters in court to help demonstrate the real world capability of the vehicle. Our customers should rest assured that Honda will continue to pursue cutting-edge technologies and strategies to enhance their ability to achieve high levels of fuel efficiency in all of our products.

In conclusion and with all due respect to the court, American Honda believes that the judgment in this case is a radical and unprecedented departure from California and federal law, and, as stated above, we intend to vigorously appeal this decision.

I would like to lay to rest any rumors about the future of the Honda Ridgeline. In no uncertain terms, the reports in the media that we have plans to discontinue the Ridgeline pick-up truck are false. To the contrary, Ridgeline has a significant role in the Honda line-up and it is expected to continue in the foreseeable future. Ridgeline was developed to meet the needs of our customers. They have told us that it is important to offer a pick-up truck and Honda will remain committed to both the vehicle and the segment. Evidence to that fact is that we have announced the new 2012 Ridgeline will receive fresh styling cues, improved fuel efficiency, and even a new Sport model that promises to attract attention.

Winning both North American and Motor Trend Truck of the Year, Ridgeline was launched to critical acclaim. It offers a combination of passenger and cargo-hauling capability, on-road dynamics, and great packaging with its exclusive in-bed trunk, which remains completely unique in the truck marketplace. Most recently the 2011 Ridgeline has continued to receive industry-leading scores in the midsize pickup segment, achieving a #1 rating in 2011 J.D. Power IQS and APEAL studies.

And, while it is too early to talk publicly about the details of our future plans for Ridgeline, I can reassure that it will continue to build onto its fundamental strengths, and will remain an important part of the Honda product portfolio.

Sincerely,

Sage Marie
Manager, Honda Truck Product Planning

Over the past ten years, Honda has made a strong commitment to reduce greenhouse gas emissions that contribute to global climate change.

To enable key stakeholders to assess and take measure of our efforts to reduce our environmental impact – especially to reduce CO2 emissions – we also have made it a priority to disclose our strategies and activities on a regular basis.

This week we were recognized by the Carbon Disclosure Project (CDP) in their 2011 Global 500 Report for our efforts to disclose and reduce our CO2 emissions. This report, in its ninth year, compiles survey data from the world’s 500 largest companies and evaluates their strategies and corporate governance practices to address global climate change and reduce greenhouse gas emissions.

In the 2011 study, Honda finished second among all automakers and first among all Japanese companies included in the survey. Honda was also listed as one of only 52 companies in the CDP’s Carbon Disclosure Leadership Index (CDLI) and one of only 29 companies in the Carbon Performance Leadership Index (CLPI), for companies indicating a “strong commitment to strategy, governance, stakeholder communications and emissions reduction” in their survey responses.

While we welcome the commendation from the Carbon Disclosure Project, we accept it as a challenge to continue to strengthen our environmental management and to elevate the discussion and disclosure of our environmental performance.

Toward these goals, we recently announced the attainment of our voluntary goal, set in 2006, set in 2006, to reduce our global CO2 emissions arising from the use of our automobiles, motorcycles, and power equipment products by 10 percent by the end of 2010 (as compared to year 2000 levels). And we have set a new goal: to reduce CO2 emissions from our automobile, motorcycle and power equipment products on a global basis by 30 percent by 2020, again, as compared to year 2000 levels.

Honda’s efforts in the mid-1990s with the battery-electric Honda EV Plus and the natural gas-powered Civic GX and, later, with our FCX fuel cell electric vehicle, played a critical role in our understanding the vehicle technology, infrastructure and marketing challenges of these advanced technologies. Even in those early years we recognized that creating appealing alternatives to gasoline is challenging, especially since our gasoline technology innovations never stand still.

Today, Honda’s environmental technology efforts are even broader based, covering everything from advanced gasoline and diesel engines to natural gas and hybrids, battery electrics and plug-in hybrids to fuel cell electric vehicles and solar cells. While making revolutionary changes to reduce greenhouse gas emissions is our dream, we are constantly making evolutionary improvements that are important, effective and notable.

Still, there is more to be done. As technology evolves, we continue to work to create new value for our customers by developing real-world solutions that address both our customers’ need for mobility and society’s energy and environmental challenges, using technology developed from the original thinking of Honda associates.

In this way, we not only gain recognition from groups like the Carbon Disclosure Project, but we also do our part to contribute positively to the race for a cleaner, more sustainable future.

Sincerely,

Steve Center
Vice President, Environmental Business Development Office
American Honda Motor Co., Inc.

John Mendel
Executive Vice President of Sales
American Honda Motor Co., Inc.

08/02/2011

In life, sometimes you disagree even with those for whom you have the greatest respect. And it seems as if that is what has occurred with the Consumer Reports review of the 2012 Honda Civic LX.

We have great respect for the magazine and its editors, but we fundamentally disagree with their suggestion that Civic doesn’t rank among their recommended small cars. As for Consumer Reports, well, the magazine has named Civic as the “top pick” in its segment six times over the past 15 years. So, they are definitely finding fault with someone they have shown a lot of love in the past.

Interestingly, even using Consumer Reports own results, consumers can find ample reason to purchase a new 2012 Civic. The new Civic truly excels in areas that matter to small car customers, including fuel efficiency, safety, and reliability.

• Consumer Reports own testing found that Civic’s smooth and efficient powertrain returned “… an impressive 30 mpg overall on regular fuel and 47 mpg on the highway.” Only one other compact car the magazine tested did better.
• In the area of safety, the magazine pointed out that Civic has earned a class-leading ‘Top Safety Pick’ rating from the Insurance Institute for Highway Safety. Further, as noted in Consumer Reports findings, the Civic excels with a long list of important safety features that are standard on all trim levels.
• Civic has a stellar reliability history with Consumer Reports, and we have complete confidence that the new Civic will be a reliability leader as well. In fact, one of our plants building Civic (in Indiana) earned the top “platinum” award in the 2011 J.D. Power & Associates Initial Quality Study. So, Civic’s quality and reliability story has a solid foundation.

It is also important to point out that Consumer Reports reviewed only one Civic model – the Civic LX Sedan. There are actually six different versions of Civic – the Civic Sedan (in DX, LX and EX trim levels), Civic Coupe, sporty Civic Si (Coupe and Sedan), Civic HF high fuel economy model, the Civic Natural gas, and the Civic Hybrid. Consumer Reports has indicated they also plan to test the Civic Hybrid.  Customers can literally find a Civic model that meets a variety of needs and interests.

Finally, among many other very positive reviews of the Civic lineup, Motor Trend magazine recently tested eight compact cars, including Civic. The respected auto enthusiast magazine – which knows a thing or two about ride and handling – ranked Civic second among eight compact cars in the comparison drive. Many would be thrilled with this result. However, we disagree with Motor Trend as well – we think there is no better compact car than Civic.

Is the small sedan segment more competitive than ever? Without question. But in virtually every way, the completely redesigned 2012 Civic is a step forward that our customers will value and enjoy.  So, while we will continue to have great respect for Consumer Reports, regarding their editors’ review of the Civic LX – we will just have to agree to disagree… strenuously.

When people think of Honda’s environmental leadership, their attention naturally turns to our leading product fuel efficiency or the company’s pioneering efforts to reduce tailpipe emissions and advance alternative-fuel technologies.  What they may not realize is that Honda’s commitment to the environment includes significant and often industry-leading efforts to reduce the environmental impact of the factories that manufacture our products.

We recently achieved an important milestone in our longstanding “green factory” initiative—with the achievement of zero waste-to-landfill for 10 of the 14 manufacturing plants operating in North America.  Taken together, these plants have the capacity to produce more than 3 million Honda and Acura products – automobiles, all-terrain vehicles, engines and power equipment products – in a single year, and do it while sending less than one-half of one percent of all manufacturing waste to landfills, with the vast majority of the remaining waste being recycled and reused in either our own plants or as material in other company’s products.

Our drive to zero waste has been more than a decade in the making and began in earnest with the establishment of our sixth North American auto plant, in Lincoln, Alabama, which became the very first zero-waste-to-landfill auto plant in North America when it began operations in 2001. Our seventh and newest auto plant in the region, in Greensburg, Indiana, was also designed from the ground up to be a zero-waste-to-landfill facility.  What’s especially noteworthy, however, about what we’ve accomplished is that this level of waste prevention is not only happening at our newer auto plants but also at our older facilities, which were designed long before zero waste was a goal.

For example, our auto plant in Marysville, Ohio, started producing Honda cars in America in 1982.  Nearly 29 years later, Honda’s first U.S. auto plant is capable of turning out 440,000 Honda and Acura cars and light trucks in a single year with no paper, metal or plastic scrap sent to landfills.  Its only waste stream is a byproduct of the paint pre-treatment process for aluminum body panels, which is non-recyclable due to EPA regulations. Honda’s second U.S. plant, the Anna Engine Plant in Anna, Ohio, likewise is transforming raw aluminum and steel into engines for Honda and Acura products, upwards of 1 million engines each year, without contributing a single scrap of paper or any other waste to landfills.

As the engineer in charge of Honda’s “green factory” initiatives in North America, I’ve been able to witness first-hand the incredible spirit of invention and innovation contributed by Honda associates at plants throughout the region to make this achievement possible.  Honda associates in our Marysville plant, for example, created a new process for significantly reducing the metal scrap from body panel stamping operations, a process which Honda plants in Japan and other countries are studying for future implementation.

This, of course, is not the end of the race for Honda or our commitment to reducing the environmental impact of manufacturing in North America.  Our “green factory” focus is broad and includes ongoing efforts to reduce waste, cut emissions and minimize the use of precious natural resources.

As a member of the Honda family, I am incredibly proud of what our associates have accomplished for the environment and for our customers.

Of course, our customers will always know us first and foremost through the products we produce.  But I also hope that they can share in the pride we feel in knowing that Honda and Acura products are being produced at factories that are among the most environmentally responsible plants in the world.

Karen Heyob
Associate Chief Engineer, N.A. Green Factory Leader
Honda of America Mfg., Inc.
Marysville, Ohio

Honda has adopted a global environmental slogan — Blue Skies for Our Children — to inspire our company to achieve new targets we have established to reduce CO2 emissions from our products and the operations that produce them. These words arouse strong emotions in Honda engineers, and take me back to a time four decades ago when the same phrase served as the rallying cry for Honda’s first effort to tackle a challenging environmental issue.

I joined Honda as a young engineer in 1976. What attracted me, as with so many Honda customers and fans, was a brand that showed a can-do spirit in creating something the rest of the auto industry argued couldn’t be done – a vehicle with cleaner emissions and high fuel economy that was also fun to drive.

This vehicle was the Honda Civic – and it had something else that was truly revolutionary — CVCC engine technology, for Compound Vortex Combustion Controlled. That’s a mouthful of complex engineering, but what CVCC helped create is simpler — a lean burn engine that made Civic the first car to meet the stringent tailpipe emissions standards of the U.S. Clean Air Act without the need for after treatment of the exhaust. The Civic CVCC was also #1 on the U.S. Environmental Protection Agency’s (EPA) very first list of the most fuel efficient vehicles in America.

Based on his own belief in the importance of advancing mobility to address the issue of environmental sustainability, Honda founder Soichiro Honda pulled our company out of Formula One racing in 1969 in order to devote Honda’s full engineering resources to developing advanced environmental technologies. He then challenged Honda engineers to create a cleaner-burning engine to address air pollution – which was then the most serious environmental sustainability issue facing the automobile industry.

Honda engineers were reading reports about the serious impact pollution would have on the health of children. A group of doctors in Japan published a report about high levels of lead in the blood streams of children. The Club of Rome, founded in Italy in April 1968 by a small international group of academics, scientists, government and industry leaders, focused global attention on negative environmental consequences, forecasting limits to human expansion within less than 100 years if no major change in society occurred. In 1970, Congress passed the 1970 Clean Air Act, creating stringent new emissions standards and the U.S. government created the EPA.

Mr. Honda saw this as a great way to compete against more established companies. But Honda engineers suggested that their real motivation and goal was to ensure “Blue Skies for Our Children,” in other words, to ensure the future of mobility and the health of the planet for future generations. This phrase became the team’s rallying cry in the effort to find and develop technology that could improve air quality.

Mr. Honda was proud that his engineers had looked at this challenge as more than a competitive challenge. With a great deal of passion and energy, the team of Honda engineers addressed the challenge of sustainable mobility. And this led to the breakthrough with the CVCC engine that powered the Honda Civic. When I learned of these events, it helped deepen my appreciation that the purpose of our technology was to help people and society. That certainly made Honda a company I wanted to contribute my best efforts to.

In the ensuing years, Honda continued to advance its engine technologies. Over the past four decades, we led the global auto industry in meeting a series of increasingly stringent tailpipe emissions requirements, starting with the first gasoline-powered Low Emission Vehicle (LEV) in the hands of consumers, sparking an era of fundamental improvements to air quality. Of course, we were proud to be first, but Honda’s strategy for reducing emissions was something of our gift to the world. We provided the auto industry with a practical and economical pathway to reducing exhaust emissions on a broad scale that no one thought possible. At the same time, we have been a consistent leader in fuel-efficiency, topping fuel-economy rankings for 22 of the past 36 years

Today, the challenge of environmental sustainability is much broader than air pollution – encompassing numerous energy and environmental issues, including the reduction of greenhouse gas emissions (primarily CO2) that contribute to global climate change and the transition from fossil fuels to renewable forms of energy, among other issues.

But I am excited that Honda’s environmental vision to pursue the joy of mobility and a sustainable society where people can enjoy life continues to be inspired by the original rallying cry of Honda engineers – something that Honda associates throughout our company embrace on a daily basis. Once again, our effort to achieve a challenging target to reduce CO2 emissions is guided by our mission to leave “Blue Skies for Our Children.”

Ben Knight
Vice President
Honda R&D Americas, Inc.

William Walton
Manager of Honda Product Planning
American Honda Motor Co., Inc.

02/08/2011

Our colleagues overseas at Honda Motor Co. recently announced that the Civic will no longer be sold in Japan. We’ve seen that spur some online conversation and wanted to set the record straight as it relates to the U.S. and American Honda.

In Japan, the popularity of mini-cars has led to the evolution of Honda’s vehicle lineup. Over there, we meet consumers’ small car needs with a variety of smaller vehicles and Civic has not played a major sales role in many years.

It’s a decidedly different story in North America. Production and sales of the award-winning Honda Civic will continue in the U.S. and Canada. In fact, our customers are continuing to make Civic a top-ten selling vehicle in the U.S. in 2011 and Civic is our number one-selling vehicle in Canada.

Further, an all-new Civic lineup will be introduced in the Spring of 2011. While we can’t say much about it at this point, we did announce that the next generation Civic Hybrid will be our first with a lithium-ion battery. So, Civic also will continue its role as a technology leader in the U.S. auto industry. Stay tuned for more information.

But we are confident that when America celebrates the end of 2011, Civic will once again rank as one of America’s best-selling cars.

Christina Ra
Manager, Honda Public Relations
American Honda Motor Co., Inc.
9/24/2010

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Kurt Antonius
Assistant Vice President, Honda Public Relations
American Honda Motor Co., Inc.

It is not corporate hubris that tells us people have very high expectations for the Honda brand. It is acknowledging the obvious. And that’s not a lament. What we call our “Challenging Spirit” is alive and well – and we welcome the challenge to exceed the “high bar” we have set for ourselves.

Even on those occasions when media or customers express their frustration that we haven’t met their expectations, we realize that it’s recognition of our history of innovation and focusing on the customer that has always challenged our industry to move in positive new directions. Honda continues to prioritize advancing power train technologies, fuel efficiency, more ergonomic and customer-friendly interiors, and we’ve always focused on developing vehicles that are fun to drive and fun to own.

We also understand that speculation – in the world of politics, athletics and, yes, the auto industry – has become something of a sport. People look at one or two data points and quickly jump to a conclusion — forecasting gloom and doom or crowning the latest champion – whether or not the facts support that view.

Importantly, in today’s 24/7 news environment, such viewpoints can quickly be perceived as reality – unless you dispel the myths and false assumptions. So, let’s begin by addressing some of the concern about Honda’s ability to rise to the challenge of new competition and the requirement for product innovation.

First of all, there are many ways to spin sales numbers, but here are a few facts:

• Accord is one of the industry’s best selling cars in 2010 – probably THE best-selling to retail customers.
• CR-V remains the best-selling utility vehicle in America, 3+ years and running.
• Odyssey, in its 5th year on the market, remains an award-winning customer favorite.
• Civic, in its 5th year on the market, saw sales go up 26% in June and is up more than 13% for the year.

To provide further context, you simply can’t do an apples-to-apples comparison of industry sales without considering that some competitors have increasingly turned to fleet sales (selling to rental car companies) and direct cash incentives to customers in order to boost sales volume, while Honda has achieved solid sales gains in 2010 without resorting to either tactic.

We don’t begrudge anyone doing what they must to move their metal. But we don’t sell to fleets and we don’t offer cash to customers – because these short term strategies would negatively impact the value of the vehicles in our customers’ driveways. Call us crazy, but Honda will continue to rely on retail customers to make informed purchase decisions – and we’ll continue to protect the value of their investments.

You can also see this focus on the customer in our focus on quality. In the J.D. Power & Associates 2010 Initial Quality Study, Acura ranked 2nd overall, with Honda 6th – and both Accord and Accord Crosstour were #1 in their segments.

Another myth to dispel is the notion that the delay in the introduction of the next-generation Civic – due out in 2011 – is indication of a hasty decision made in recent days based on present market conditions. As first reported by Automotive News in October 2009, our decision to delay the new Civic launch was made several years ago, not as a knee-jerk response to the current sales situation. And what is a “delay,” anyway, when our primary objective is to deliver the best possible product to our customers?

We’re confident in our strategy for the next-generation Civic. But the reality is that it is the success of the current model that enabled us to consider changing the launch timing of the upcoming model. The current Civic continues to offer customers a very competitive combination of style, fuel economy, safety and value – and Civic’s current sales numbers support the point.

Which brings this discussion back to the only thing that really matters – what customers want. The auto industry has emerged from arguably its toughest 24 months ever. What does this mean? Customers pushed the pause button on purchases. They reprioritized, and while they’re recovering, they’re moving with new cautiousness in prioritizing new purchase considerations.

We’re all collectively working to understand what customers now want and need. But the reality is that customers don’t “need” specific technologies. They need affordable products that provide the performance and comfort they desire, with higher fuel economy levels that help them cope with escalating fuel prices and that reduce the threat of global warming.

Toward this end:

• A stylish, all-new 2011 Honda Odyssey debuts this fall with a V-6 engine that offers higher fuel economy than a top competitor’s 4-cylinder minivan.
• Accord, already the #1 midsize sedan in 2010 IQS, will debut a revised 2011 model in August, with up to 3 mpg higher fuel economy.
• CR-Z, a genre-busting sport hybrid model, debuts next month – available to customers chock full of content for less than $20,000.

The marketplace has and will continue to evolve. But our focus on creating real, new value for our customers through innovation and original thinking remains unchanged. And we are accelerating our efforts to develop and deploy new technologies and business strategies that will continue to show that Honda remains a leader in our industry.

John Mendel
Executive Vice President
American Honda Motor Co., Inc.

American Honda’s Executive Vice President of Sales John Mendel, along with other business leaders and academics, gathered at The Ohio State University May 3 to discuss ways of reducing gasoline in transportation in a three-day conference called: Moving Ahead 2010. Following are his excerpted remarks.

It’s great to be in Columbus… a real hometown for Honda. Our first U.S. manufacturing operations were established here 30-plus years ago … and we have a major R&D center that creates many of the products we build here.

Both our manufacturing and R&D operations have a strong relationship with our host, Ohio State University. We have partnered with OSU in advanced research … we employ their graduates … and our associates root fanatically for the Buckeyes. So, we’re very happy that this important new event is kicking off here.

And this is a critically important event. The realization of more efficient and sustainable forms of mobility is key to the future of our planet … and to the future of personal transportation for millions of people around the world.

It’s also key to the future of the auto industry. I’ve been a part of the industry for more than 30 years now. And I think I can say that for all automakers … the ability to develop advanced environmental technologies is no longer just a means to gain competitive advantage. The truth is that any manufacturer without these technologies will not long survive. And you can look at the mergers and joint technology ventures in our industry over the past year as proof of this new reality.

This pursuit of sustainable transportation solutions amounts to something of a new race for our business, with many promising technologies vying for the lead and various companies racing to bring these technologies to market.

But in our view this shouldn’t be the kind of race where different companies or technologies are pitted against one another. Rather, we should race with each other toward a common goal … of creating technology that provides the world with greater mobility … while dramatically reducing CO₂ emissions and creating a more sustainable energy future for generations to come.

“The effort to promote the virtues of one technology should not result in the demonizing of another”
In our view … the key to winning this race is not declaring a winner until the technology has actually run the race. That’s a critical distinction, because the race for a cleaner and more sustainable future is a marathon, not a sprint. It will be decades before any new technology can be called the all-out winner. And while there are a lot of opinions … and even more desires … no one can say with certainty today which technology or combination of technologies will be first to the finish line. The effort to promote the virtues of one technology should not result in the demonizing of another. … or in policymakers laying all of their chips on the technology du jour … rather than promoting fair and open competition among all the players and all promising technologies.

This is a crucial point. Because rushing to select a winner could lead us in the wrong direction … resulting in the loss not only of time and substantial investment of development resources … but, more importantly, the trust of our customers and society.

Regulators and legislators at both the federal and state levels should adopt this perspective. To put the country on a course toward a single technology without fully understanding the implications … including whether consumers will buy it … will put us behind in achieving our objectives. And in the long run will be very costly to boot.

Rather, the critical role of policymakers should be to tell industry what goals must be met … a performance standard if you will … and leave it to the industry to figure out how to get there. To do that, we will vigorously pursue a variety of viable technologies for the near-, mid- and long-term to determine which approaches best meet the multiple challenges of air quality … climate change … and energy sustainability.

Certainly, there is a lot riding on the ability of the auto industry to create a new technology pathway. But it would be wrong to believe that the right path to the future of the automobile rests solely with the automakers. Indeed, real progress can not be achieved without the efforts of energy companies, governments and NGOs. And all of us must keep our focus on the customer.

Automakers can’t just build technologically advanced automobiles. We must make automobiles fully functioning … so people want to buy them … and affordable … so people can buy them. Government can have tremendous influence on this outcome through regulations and energy policies that foster a marketplace that will remain open to a fair competition among the various technologies. This will allow the marketplace to do its job as the ultimate judge of who wins and who loses.

As a case in point, a little more than ten years since Honda introduced America’s first hybrid vehicle, there are some 26 distinct hybrid models on the market … but they still represent just around 2 percent of the total market. And even this level of penetration has benefited from generous incentives from the government and industry.

The reality is that the price of gasoline is the single greatest influence on the sales of more fuel-efficient vehicles including hybrids. If we can’t convince people to move to a hybrid … which is as fully-functioning and as easy to refuel as an internal combustion engine vehicle … we have to seriously consider what will get them to accept battery electric and plug-in hybrid vehicles with their myriad limitations including cost, driving range, and re-fueling or recharging issues.

“We must ultimately replace petroleum as the fuel that powers personal transportation.”
What we do know … is that we must ultimately replace petroleum as the fuel that powers personal transportation. But accomplishing this challenge requires that we focus on two critical needs … a reduction of petroleum use and a reduction of greenhouse gas emissions. These are related goals in many cases because burning less gasoline reduces CO₂ emissions. But the size of that reduction depends on which alternative is adopted and how it is deployed.

Looking at the technology race … will this mean hybrids … plug-in hybrids … biofuel … battery electric vehicles … fuel cell electric vehicles? The answer is … well … “yes.” Because we need to manage short, mid- and long-range demands of society in balance with the evolution of all these technologies. And the reality is that each technology has unique challenges somewhere along that timeline. And even long term solutions require step-by-step progress that must begin today.

So, developing multiple pathways makes more sense than trying to pick tomorrow’s winner today. And by the way, there may well be more than one winner. For instance, we might find that small battery electric vehicles work for commuting … with a fuel cell electric vehicle a better solution for heavier vehicles or for longer trips.

Surely, the internal combustion engine will continue to play a role in personal transportation … and can be made more efficient. Additionally, bio-fuels represent a great potential alternative to gasoline. But it has to be the right biofuel. The key to the success of biofuels is that we should be able to simply “drop it in” to the existing fleet using the existing infrastructure.

But the drive for bio-ethanol derived from food stocks was a case where prematurely picking a winner may not have made a big contribution to the reduction of greenhouse gas emissions. And while I realize that it was good business for our nation’s farmers, it actually created a host of unintended problems … and undermined credibility with consumers.

Honda is now working on so-called second-generation biofuels – which means the sustainable production of alcohol-based fuels from plant waste material, instead of edible plants. The potential for algae-derived bio-gasoline is also promising because it would offer the additional merit of not needing to change-over cars to run on ethanol…and avoids new infrastructure costs. But these technologies are a long way from mass production.

One of the best alternative fuel opportunities in our grasp today is natural gas. I don’t suggest this to promote the fact that Honda is the only automaker mass-producing a natural gas vehicle … the Civic GX. Natural gas is an inexpensive, clean burning and abundant domestic fuel. The Civic GX is the cleanest vehicle powered by an internal combustion engine that the EPA has ever certified for everyday use. And natural gas results in 25 percent lower CO₂ emissions than gasoline.

However, without a convenient and affordable refueling infrastructure natural gas cannot succeed. It’s an important lesson. When it comes to an alternative fuel … no matter how good the technology … no automaker can go down the path alone.

For the near-term, expanded use of hybrid technology represents the best direction to reduce petroleum use … because hybrids leverage both existing internal combustion engine technology and our existing petroleum refueling infrastructure … and represent a bridge to the next generation of electromotive technologies.

But even with hybrids, cost and affordability must continue to be addressed. As I said earlier, there is a strong correlation between hybrid sales and the price of gasoline which demonstrates that consumers are looking closely at the cost benefit ratio … and many still don’t see the overall benefit.

“Honda’s strategy is focused on affordability”
That’s why Honda’s strategy is focused on affordability, with the goal to make hybrid technology available and appealing to more people. We have created a family of hybrid models that meet a variety of needs and interests … high fuel economy … a fun-to-drive sporty coupe … and a mainstream family sedan … with additional plans to introduce hybrid technology to our luxury Acura brand lineup in the coming years.

Looking ahead, what will advance and extend the contribution of hybrid vehicles is the introduction of lithium ion battery technology. But improvements in both the performance and cost of batteries are required. Toward this end, Honda has invested in a joint venture to accelerate our ability to introduce lithium ion batteries in future hybrids.

Plug-in hybrids are also being looked to with increasing interest. Certainly, plug-ins would contribute positively to energy sustainability and energy security concerns. But in some areas plug-ins are actually worse than regular hybrids in reducing CO₂ emissions.

Also, the larger battery required for a plug-in hybrid vehicle increases the vehicle weight and cost, reducing overall efficiency, while raising additional concerns about battery durability and cost. These issues diminish the payback for a smaller-sized plug-in hybrid vehicle. I don’t mean to suggest that Honda doesn’t believe in plug-ins … with our focus on original technology, we obviously have a few things in the kitchen. But any near-term alternative energy technology we green light for production must offer promise in reducing CO₂ emissions and be affordable and practical for the customer.

Of course, there is renewed excitement about battery electric vehicles. And Honda understands electromotive technologies as well as anyone. Starting in 1997, we leased some 340 Honda EV Plus electric vehicles to customers … primarily in California. We developed the EV Plus from scratch as an electric car and it was the first to use non-lead acid batteries.

Looking at real world electric range … which includes the EPA’s 30 percent downward adjustment … our 1997 EV Plus had superior or at least comparable driving range to most of the models now coming “to market.” Fifteen years later, even with the advent of lithium ion batteries, the cost of the battery remains extremely high … as much as half the cost of the vehicle. So, despite legitimate advancements … the technology and the infrastructure remain significant hurdles to high-volume market appeal.

Battery electric vehicles contribute to energy security and the reduced use of petroleum … but like plug-ins they’re not the best solution to reducing greenhouse gas emissions until there are fundamental changes in the nation’s grid. This is a concern shared in other regions of the world. A top executive with a Chinese automaker said just last week that with China deriving 83 percent of its electricity from coal that now is “not the right time to promote pure electric vehicles” in that country.

“Honda is conducting research on a short-distance battery electric vehicle as a ‘city commuter car’”
There remains hope for the future … and that’s why Honda is conducting research on a short-distance battery electric vehicle as a “city commuter car” – which we see as the practical limit of the technology at the present time. We’re now studying the U.S. market with a view to introducing this electric commuter car in the future.

But we continue to believe that a fuel cell electric vehicle is the ultimate solution to reduce CO₂ emissions … and meet the real world needs and expectations of consumers. A fuel cell car is a full electric vehicle. But rather than use electricity from the grid, it generates electricity on board.

Among all electromotive technology options fuel cell electric vehicles are about as close to identical to the functionality of existing gasoline-powered automobiles as you can get. As a practical daily driver, the Honda FCX Clarity is a fuel cell electric vehicle with 240 miles driving range … nearly triple that of today’s EVs. And compared to the slow recharging requirements of a battery electric vehicle, the fuel cell electric car can be refilled with hydrogen in minutes. Clarity is also a spacious and comfortable mid-size sedan that has surprised the people who have driven it … including our 15 lease customers in California now driving it on a daily basis.

Importantly, even using natural gas to produce the hydrogen, the Clarity achieves a 62 percent reduction in CO₂ emissions. And a 40% reduction versus a battery electric vehicle that uses electricity from the U.S average power grid. For the long-term, we are working on producing hydrogen from renewable sources. One such interesting approach is Honda’s long-term investment to develop a next-generation prototype solar hydrogen station … now operating at our Los Angeles R&D center. This compact system was designed with the idea of daily home refueling of a fuel cell electric vehicle.

Certainly, as with other alternative fuel technologies, fuel cell electric vehicles have challenges to overcome … including a refueling infrastructure and cost reduction. But the full functionality of the vehicle and the potential of a solar hydrogen station are the reasons we view the fuel cell electric vehicle as the ultimate alternative to petroleum … and the best path to reduce CO₂ emissions in the long run.

But as I said at the outset … when it comes to alternative fuels, no automaker can be successful without support from energy companies, policymakers and consumers. For fuel cell electric vehicles, there was the promise of a hydrogen highway in California … as well as federal support for fuel cell technology. But this seems to be in constant peril … whether due to the difficult economy or as some new technology comes along. There must be consistent and sustained policy in the near term … to realize the tremendous benefits that fuel cell electric vehicles offer for the long term.

“Policymakers must play an expansive role by defining the goals but not the specific technologies.”
Policymakers must play an expansive role, not a limiting role … by defining the goals … but not the specific technologies. Government can also contribute through effective energy policies that support both near and longer-tem solutions, and working in partnership with all the key players … while avoiding the temptation to pre-determine the winners and losers before the race has been run.

You know … I realize there is a lot of skepticism about the will and skill of the traditional auto industry to make a real contribution to the reduction of greenhouse gas emissions … and to wean America and the world from its dependence on petroleum. After all, we have earned a reputation … as an industry … as being anti anything the government wanted us to do. Years ago, this actually prompted a quote from our founder Mr. Honda that I will paraphrase for you … he said “when the government passes new regulations, some companies hire 50 more lawyers while Honda hires 50 more engineers.”

I know that the industry CAN lead. Air quality advances over the last 40 years have been nothing short of astounding. And I’m proud to say that Honda led the way … or as some have said … showed the way in meeting virtually every low emission vehicle standard established by the federal government and the state of California.

I’m talking about a thousand-fold reduction in hydrocarbon emissions that the entire industry has now achieved … to the point where we have gasoline internal combustion engines that can achieve credit as Partial Zero Emission Vehicles.

I cannot make the case that this success is an indication of what we can do on every issue … but I think it demonstrates what can be accomplished when the industry and policy makers focus on a key objective. And that’s what we must do now.

The challenges we now face are different … but by entering into a race with each other. by focusing on the same finish line … and by making certain our technology solutions meet the needs of our customers … I know we can advance personal mobility … and protect our planet. And that will make winners out of us all.

Thank you for your attention. And enjoy the rest of the conference.

John Mendel
Executive Vice President
American Honda Motor Co., Inc.

The recently announced Toyota recall has prompted some customer questions to you, our Honda and Acura dealers, regarding the effect on or applicability to their Honda or Acura vehicles. In fact, Toyota’s recall, while serious, has no impact whatsoever on Honda or Acura customers.

American Honda Motor Co., Inc., is not aware of any reports for either Honda or Acura vehicles, regarding the type of failure Toyota is citing as the cause for its recall. Additionally, while we use the same supplier as Toyota for some of our products (as do other manufacturers), we do not use the same components.

As this issue relates to one of our competitors, we will not be making any further comment regarding Toyota’s circumstances. Additionally, we will not react in a predatory way toward either Toyota or Toyota customers. I would ask that you and your sales and service teams refrain from comment other than the facts outlined above, and only then, in response to customer inquiries.

Thank you in advance for your cooperation,

John Mendel

Marcos Frommer
Manager, Corporate Affairs
American Honda Motor Co., Inc.

There are few calculations more confusing in the auto industry than the statistical ratings used by the government to measure and report on automobile fuel economy. There are adjusted and unadjusted numbers, label values, CAFE (Corporate Average Fuel Economy) ratings, CO2 emissions data and more. These are then re-positioned by various carmakers to claim bragging rights as the most “fuel efficient” car company in America. You’ve got a recipe for confusion and, potentially, for the misreporting of the facts.

So let’s stick to the facts. The U.S. EPA recently released its annual report on fuel economy trends: “Light-Duty Automotive Technology, Carbon Dioxide Emissions, and Fuel Economy Trends: 1975 – 2009,” Executive Summary, page VII (November, 2009) Here’s what the EPA says:

• “In MY [Model Year] 2008, the last year for which EPA has essentially complete formal production data, [American] Honda had the lowest fleetwide adjusted composite CO2 emissions (and highest fuel economy) performance …” (This includes both Honda and Acura vehicles.)

This is all very clear. No footnotes. No fine print.

The EPA also recently released “preliminary” data for Model Year 2009. So, why not use MY 2009 numbers? Because the EPA bases its final judgment of fuel economy leadership for any given year on the complete year-end results, and 2009 complete data won’t be available until next year. The EPA has stated that it cannot adequately judge fuel economy leadership on preliminary data:

• “EPA has less confidence in the MY2009 data as it is based on automaker projections of production volumes submitted to EPA prior to the start of the 2009 model year. EPA anticipates this data will change for all automakers after the final MY2009 data has been submitted to EPA . . . .” [p. 27].
• “It is impossible to predict whether actual MY2009 fuel efficiency data will be higher or lower than the preliminary MY2009 value.” [p. ii];

So, the EPA has made it abundantly clear that it makes little sense for any automaker to determine a fuel economy claim on preliminary data. We agree. And even though EPA says “preliminary MY2009 values suggest that [American] Honda will continue to have the lowest fleetwide CO2 emissions (and highest fuel economy),” we’ll wait until EPA provides complete data for 2009.

But let’s provide a little additional context.

Looking back: the EPA’s very first ranking of America’s most fuel efficient vehicles in 1976, had the Honda Civic ranked number one. That means that for more than 30 years, Honda has made fuel efficiency a priority in our products.

Looking forward: fuel efficiency has become a major focus of every automaker. And that is a very good thing. More fuel efficient vehicles are a win-win for customers and society as a whole.

We’re thrilled to see it. At Honda, we love nothing more than a good race – especially when everyone ends up a winner.

- Marcos

Kurt Antonius
Assistant Vice President
Honda Public Relations
8/7/2009
9:30 AM PT

American Honda welcomes you to the newest addition to Hondanews.com – the Our Perspective media forum. As the name implies, this media forum is where you’ll find our views on many topics important to Honda and to our industry with posts from a variety of Honda associates. Look for future postings to include a wide range of discussions on our products, technologies, the environment, safety, and other relevant subjects.

Our goal with this new forum is to expand our dialogue with you the media and to provide context to the news that wouldn’t typically appear in a press release or other formal communication. We hope this will provide you with the opportunity to share your own perspectives on happenings at Honda. Only registered media with the ability to download content can make comments, but the entire entry and all comments are viewable by anyone visiting this media Web site.

Another important function of this forum is to provide a convenient resource for all types of on-line communities to reference and potentially begin their own discussions. In the near future, Our Perspective will also be hosted for the general consumer audience on www.honda.com where we will provide convenient links to our social media sites and more. Please feel free to share any comments, questions or concerns. You’re more than welcome to use old-fashioned e-mail, or you can post your thoughts here.

- Kurt

Sage Marie
Manager
Honda Public Relations

In the PR business you have to take your lumps every once in a while. The occasional bad review is not only expected, it’s pretty much inevitable. One notable example is the recent Consumer Reports review of the Insight, which essentially is the reason I felt compelled to write this post.

Keeping things in perspective, one bad review doesn’t have to spoil the whole bunch. In fact, since the Insight launch, the media reaction and product reviews have been overwhelmingly positive – exceeding even our own expectations. According to a recent analysis by the company that does our media monitoring, since the Insight debuted at the Detroit auto show, there have been 1,124 positive stories, 207 neutral stories, and only 12 negative stories – a favorable mix for sure.

Additionally, Insight has won hybrid comparison tests in major automotive enthusiast publications, including Car and Driver, Motor Trend, and Automobile. It has done so based on fuel economy that consistently exceeds expectations, engaging driving dynamics that separate it from other hybrids, and the unique hybrid value proposition created by its low cost.

The Consumer Reports review – one of the few less-than-positive ones – was a biggie though. Unfortunately, the whole matter became more visible when they aggressively publicized the review with a press release containing a headline and a quote from their chief of auto testing that were apparently designed to be more sensational than the review. No doubt, they have a sharp PR staff that deserves credit for recognizing that there can be more news value in a negative review of an important and highly visible car than there is in a positive one.

I should be clear that we have a lot of respect for the publication. In fact, our research suggests that the demographics of CR readers very closely mirror those of Honda customers. A Honda customer is very likely to be a CR reader and vice versa, so more often than not this has played to our favor.

However in this case, I have to respectfully offer an alternative viewpoint. We designed the Insight to deliver sporty handling with a fun-to-drive hybrid character that would create an engaging experience for the driver. While they criticize Insight’s handling dynamics, we contend that we hit our targets and that Insight’s handling is one of its competitive advantages. In support of this, we can cite opinions from major, well-respected automotive publications that directly contradict those issued by Consumer Reports:

Car and Driver
“The Insight drives like a Honda, with tight suspension motions, a firm ride, well-connected steering, and a no-fat musculature. Interior sound levels are mild and well controlled, especially at freeway speeds.”

Motor Trend
“Is Honda’s new Insight Hybrid merely a 7/8th-size Prius that delivers 7/8ths the fuel economy? No, the Insight is, quite simply, more fun to drive.”

“Honda worked hard to make the Insight the driver’s choice. There is a hollow stiffness to the chassis, but the overall sensation is road feel, not harshness. Steering is light and precise, and the Insight changes direction happily without keeling over as the Prius is wont to do. Throttle and brake response are smoother too: Powertrain engineers focused on keeping the pedal feel and position consistent with the performance of the CVT and brake-regeneration system.”

Automobile
“Both the accelerator pedal and the brake pedal have a natural feel and feedback, with none of the weird surging and artificialness that we’ve seen in some hybrids. The powertrain itself provides linear, predictable power. The electric steering is a bit dead on-center, but then it tightens up nicely. Body control and ride quality are impressive, especially given the fact that the Insight rides on skinny, low-resistance tires to maximize fuel economy.”

While Consumer Reports’ opinion is highly visible, it’s ultimately only the opinion of their editors, and it’s in the minority. I’d like to propose that you take a test drive and judge for yourself.

—Sage

Sage Marie
Manager
Honda Public Relations
6/23/2009
7:30 PM PT

It seems that there’s been a little confusion out there regarding the price/value equation between the 2010 Insight and the Prius that I’d like to clear up. Recently, I saw a post claiming the price difference between the two cars equipped “as customers want” is only 700 dollars more for the Prius. This was based on an MSRP of 21,300 for an Insight EX, and of $22,000 for a 2010 Prius II, which currently is the least expensive 2010 Prius available.

According to the Power Information Network (PIN), an affiliate of J.D. Power and Associates, the average transaction price of the 2010 Insight in June* was $21,526, while it was $26,436 for the 2010 Prius. “Average transaction price” is the average price paid for a car, including, transportation charges, options and accessories, but not including taxes or fees. So, in this case Prius buyers are paying $4,910 more for the keys to a Prius equipped “as customers want.” Generally speaking, the difference will grow even bigger when sales tax is applied. In the world of entry-level vehicles, hybrids or otherwise, $5000 is a big gap, and while it’s inevitable that there will be cross shopping between the two cars, we think this suggests that they will continue to attract different buyers.

Like the numbers above provided by PIN, third-party evaluations are a very helpful tool for car shoppers. All car consumers should research sources like J.D. Power, Edmunds and Kelley Blue Book (kbb.com) to help make the right choice. In the case of the Insight’s price, the numbers speak for themselves.