Honda Aims to Recoup Lost Japan Auto Production to Hit U.S. Sales Target

Honda Motor Co. is sticking to its sales plan for the U.S., where the carmaker earns most of its profit, as the company aims to make up for lost output after Japan’s record earthquake disrupted production worldwide.

Honda expects U.S. customers to buy 1.35 million Honda and Acura-brand cars and light trucks this year, maintaining a target set at the start of the year, said John Mendel, the company’s U.S. executive vice president. That’s 9.8 percent more than the 1.23 million autos Tokyo-based Honda sold in 2010.

“I’m counting on the fact that we would be able to make up the majority of any losses we have in the near term in the second half of the year,” Mendel said in an interview yesterday in Landover, Maryland. “Obviously, it’s going to change if somebody says, ‘You’re going to go four months without any production,’ but right now I’m holding to that.”

While Honda, Toyota Motor Corp. (7203) and Nissan Motor Co. had only minor damage at car factories in Japan from the 9-magnitude quake and tsunami on March 11, they all temporarily adjusted production at plants in North America as supplies of some Japan- made parts shrink. Last week, Honda began reducing shifts at North American auto and engine plants, which supply more than 80 percent of the autos it sells in the U.S.

In Japan, Honda’s two auto-assembly plants are scheduled to reopen on April 11 after a monthlong shutdown.

Inventory

Honda, ranked fourth in U.S. sales, has about a 40-day supply of vehicles at dealers in the country and another 80 days’ worth scheduled for delivery into May, Mendel said.

“We’ve got pretty fair inventory right now,” he said.

Still, the sales pace at dealerships may begin falling after another month if inventory levels don’t appear likely to be replenished in a reasonable amount of time, he said.

“The dealers will start to slow down the throughput as they see they have less and less vehicles to sell,” he said.

Honda will also review its sales incentives and make adjustments after mid-April, when most of its current loan and lease offers expire, he said.

Shares in Honda fell 1.4 percent to 2,886 yen as of 9:05 a.m. in Tokyo. The stock has lost 11 percent this year.

The company’s U.S. unit is based in Torrance, California.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net