December 22^nd, 1999                          

GM & Honda to `cross-supply’ each other with engines

Honda Motor Co., Ltd and General Motors Corporation (GM) yesterday confirmed plans for a powertrain cross-supply arrangement, the first step in a relationship that may lead to future cooperation in other areas.

Honda will supply GM with advanced V6 Ultra Low Emission Vehicle (ULEV) engines and automatic transmissions. Similarly, Isuzu Motors Limited, a GM group company, will supply diesel engines to Honda for sale principally in Europe. Specific terms and details of each engine agreement are to be determined.

GM and Honda also will discuss collaboration on future technological and business opportunities of mutual benefit. Potential opportunities will include recycling in Europe and local parts procurement in different regions around the world.

The agreement includes no equity stake by either company in the other and each will continue independent technology development activities.

"GM has a well-earned reputation for technological and industry leadership. These discussions are a first step in exploring areas of mutual interest that will benefit our customers in the future," said Hiroyuki Yoshino, president and CEO of Honda Motor Co., Ltd.

"Honda is firmly committed to an independent path. This relationship will strengthen our ability to maintain this course."

G. Richard Wagoner Jr, GM president and chief operating officer, said the new relationship reflects GM’s aggressive strategy to utilise the best global opportunities to bring innovative products to market fast.

"We have tremendous respect for Honda’s technical heritage," he said. "Together we can strengthen our abilities to develop future technologies."

Honda also confirmed that it would invest 15 billion yen ($A226 million) in a plan to increase the efficiency and flexibility of its global engine manufacturing system.

While replacing its current engine line up with a series of next generation engines by the year 2005, Honda also plans to innovate the manufacturing system used to build these power trains to strengthen the competitiveness in the production area.

It intends to transfer some of its manufacturing equipment and techniques to overseas facilities to increase local parts sourcing and expand production capacity.

The new investment will establish efficient, flexible engine production lines with minimal impact on the environment. This is consistent with the "Green Factory" concept, first announced in 1997, which was initiated to achieve more efficient overall use of resources in the production area.

Together with a previously announced 36 billion yen ($A544 million) investment plan to strengthen vehicle production, Honda will implement a comprehensive engine-to-body production system in its Suzuka and Sayama factories.

This new system will consolidate the current production lines to a capacity of 1.2 million units per year. The production capacity utilisation rate for engine assembly lines will be improved from present 75 per cent to nearly 100 per cent