The Wall Street Journal reported earlier that Japan’s second-largest automaker planned to double production capacity at its Alabama light truck assembly plant to 300,000 vehicles a year.
Such an expansion by Honda would only be the latest effort in a formidable drive by Japanese automakers into the highly profitable US light truck segment, which covers sports utility vehicles, minivans and pickup trucks.
The segment has traditionally been the domain of the BigThree — General Motors Corp, Ford Motor Co and the Chrysler arm of DaimlerChrysler AG.
But analysts say the greater brand power and smaller light truck line-ups of Japanese automakers, especially Honda and Nissan Motor Co, represent opportunity for the Japanese and trouble for US automakers.
“Basically, every unit that Japanese automakers build represents an excess unit of capacity for the Big Three,” said Christopher Richter, auto analyst at HSBC Securities in Tokyo.
The Wall Street Journal said the expansion would increase Honda’s output of medium-size light trucks, with boosted production beginning in 2004 and the number of workers likely to rise by 2,000 to 4,300.
An Alabama newspaper, the Birmingham News, has reported that Honda would invest up to $500 million for the expansion and that the state would pledge $90 million in incentives, mostly in tax breaks and worker training.
The reports follow Honda’s announcement in December that it would boost annual capacity at the Alabama plant, which builds the Odyssey minivan, by 30,000 to 150,000 vehicles.
Nissan Motor Co also announced last month that it would spend $500 million to boost the planned annual output of its as-yet unfinished light truck plant in Canton, Mississippi, by 150,000 vehicles to 400,000.
Japan’s largest automaker, Toyota Motor Corp, said it would double capacity at its Indiana plant, which makes the Tundra and Sequoia SUVs, to 300,000 by next year.
Capacity at its Canadian plant, which makes the Lexus RX300, is also being lifted by 20,000 to 220,000. Toyota is building a new factory in New Mexico to make truckbeds, and the site could eventually be developed into a full assembly plant.