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Honda to Add New U.S. Auto Plant and New Environmentally Friendly Products

New U.S. Auto Plant and Canadian Engine Plant to Begin Production in 2008; Advancements in Fuel Efficiency Including New Hybrid Car and Clean Diesel Technology

Honda plans to advance toward its “2010 Vision” for North American automobile operations, in conjunction with a wider global strategy announced in Japan by Honda Motor Co., Ltd.

Honda’s North American plan includes the following new corporate initiatives:

– Construction of a new auto plant in the U.S. with an investment of approximately $400 million to begin production in 2008, with employment of more than 1,500 associates at full capacity.

-Construction of a new engine plant in Canada to begin production of four-cylinder engines in 2008 with an investment of $140 million and employment of 340 associates.

– Expansion of U.S. engine, transmission and powertrain component production in Ohio and Georgia, with additional investment of $125 million and additional employment of 80 associates.

– Introduction in the U.S. and Canada in 2009 of a new, more affordable, dedicated hybrid car.

– Introduction in the U.S. and Canada within the next three years of new diesel engine technology that meets U.S. EPA Tier 2 Bin 5 emissions standards.

– Establishment of a goal to increase American Honda’s Corporate Average Fuel Economy (CAFE) by five percent over 2005 levels by the year 2010.

“We continue to experience record demand for Honda and Acura vehicles in North America,” said Koichi Kondo, COO of Honda’s North American region and president & CEO of American Honda. “To meet the needs of our customers and in accordance with our company’s vision for the future, we will introduce new fuel efficient vehicles and deepen our commitment to production in North America and we will do this in an environmentally responsible way regarding our products and the operations that produce them.”

“2010 Vision” — Creating New Value for the Customer

Honda’s 2010 Vision is a long-term corporate initiative “to become a company that society wants to exist.” Initiated in 1998, this three-part 2010 Vision calls for the expansion of Honda’s global operations through the year 2010 through “creating new value” for the customer, expanding local operations through “glocalization” and advancing environmental and safety technologies through a “commitment for the future.”

“With nine consecutive years of record Honda and Acura auto sales in North America, we will now further strengthen Honda’s foundation in North America to meet the future needs of our customers and fulfill the ultimate objective of our 2010 Vision,” said Kondo.

“2010 Vision” — Glocalization (Expansion of North American Production)

Honda will invest approximately $665 million and increase employment by more than 1,900 associates to expand North American automobile, engine and transmission production operations(1), further strengthening its capability to respond flexibly and efficiently to customer demand and changing market conditions, and to create a foundation for future growth. Specific details of the expansion of local production are as follows:

* With an investment of approximately $400 million and employment of more than 1,500 associates at full capacity, Honda will construct a new auto plant in the U.S. with an annual capacity of approximately 200,000 vehicles, with production to begin in 2008. The plant — Honda’s sixth auto plant in North America and 14th production facility in North America — will feature Honda’s most advanced, efficient and flexible production technologies and will have the smallest environmental impact of any Honda automobile plant in North America. Site selection for the new facility has already entered its final stage. Additional details of the new facility, including location and product production plans will be announced at a later date.

* As a result of this expansion, Honda’s automobile production capacity in North America will increase from 1.4 million to 1.6 million units in 2008.

* In conjunction with increased vehicle production, Honda will also invest $140 million to expand engine production in North America with the construction of a new engine plant neighboring the existing Honda of Canada Mfg. (HCM) operations in Alliston, Ontario, Canada. The plant will begin production in 2008, with an annual capacity of approximately 200,000 four-cylinder engines for supply to HCM-built vehicles. Investment in the facility will total $140 million with new employment of 340 associates

Concurrent with the expansion of engine production in North America, Honda will continue to increase local production of powertrain components, including transmissions. Key areas of expansion are as follows:

* Honda of America Mfg. will invest $75 million in the Anna Engine Plant (AEP) in Anna, Ohio, to increase the number and types of engine parts it produces in Ohio, including engine components currently supplied by plants in Japan. This expansion will include the creation of approximately 40 new jobs and construction of a new building on the same site as AEP. Production of the new components is targeted to begin in 2008.

* Beginning in 2008, the Anna Engine Plant will also supply engine components for the new engine plant in Ontario, Canada, and complete engines for the new U.S. automobile plant.

* As previously announced, May 12, 2006, further localization activities will be pursued in the area of transmission production. Honda Precision Parts of Georgia (HPPG) will further expand its capabilities by adding casting and machining of transmission cases and other in-house operations to its current capabilities. HPPG began assembly of automatic transmissions for the Honda Pilot and Odyssey, May 1, 2006. This expansion represents a new investment of $50 million and hiring of 40 new associates (to reach $150 million and 440 associates at full capacity).

* As previously announced, Honda Transmission Manufacturing of America (HTM) in Russells Point, Ohio, is now completing a $100 million expansion for production of primary transmission gears. Further, in July 2006, HTM will begin production of high precision gears.

“2010 Vision” — Commitment for the Future (Environmental Initiatives)

In conjunction with plans to grow its operations through 2010, Honda will seek to further reduce the environmental footprint of its products and production activities. Honda has long been committed to reducing the environmental impact of its products and operations through increased fuel efficiency, development of advanced environmental technologies, reduction of harmful emissions and elimination of waste. In accordance with this effort, the company will undertake the following activities:

* On a global basis, Honda will introduce an all-new, more affordable, dedicated hybrid car to be launched in North America in 2009. This new hybrid vehicle, to be produced at Honda’s Suzuka plant in Japan, will have an annual North American sales volume target of 100,000 units (200,000 units worldwide) and a target price significantly lower than the current Civic Hybrid.

* Based on its highly successful direct injection diesel engine technology, currently offered in Europe, Honda will introduce in the U.S. and Canada within three years a new 4-cylinder diesel engine that meets the U.S. EPA’s stringent Tier 2 BIN 5 emissions standards.

* In addition to new vehicle introductions, Honda will seek to achieve top-level fuel economy for existing models with the aim of improving Honda’s already industry-leading Corporate Average Fuel Economy (CAFE) by five percent in 2010, from its 29.2 mpg 2005 model year CAFE rating for passenger cars and light trucks. This effort will include new products and technologies and the previously announced commitment to introduce within the next two years a more advanced version of Honda’s four-cylinder i-VTEC(TM) technology with up to a 13 percent improvement in fuel efficiency over 2005 levels, and a more advanced Variable Cylinder Management(TM) (VCM) technology for six-cylinder engines with up to an 11 percent improvement in fuel efficiency versus the current VCM system in the Honda Odyssey minivan and Honda Pilot sport utility vehicle.

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