Dow Jones Newswires (Tokyo) - Honda Motor Co.'s 7267.TO -1.37% chief executive said his company wants to ramp up vehicle exports from the U.S., part of a broader shift of development and production away from Japan to escape the effects of the strong yen.
Chief Executive Takanobu Ito said Honda's plants in the U.S. could export 20% of their vehicle production, up from 6% to 7% currently.
"Our U.S. plants export just 6% to 7% of production. But they should be able to do more than that," CEO Takanobu Ito said in an interview Monday. "If there's enough demand from other regions for larger vehicles, then closer to 20% is conceivable."
As it battles persistent yen strength—which raises the price of exports from Japan and erodes repatriated profits—Japan's third-largest auto maker by sales is also retooling domestic operations to focus on the ever-smaller cars sought by Japanese buyers.
This bifurcated strategy has been a hallmark of Mr. Ito's approach since he took over as president and chief executive in 2009. Since then, the yen has appreciated 15% against the dollar, and small-car sales have increased to 44% of Japan's passenger-vehicle market from 40%.
The Japanese currency has eased from the record highs hit last year, but even if that continues, Mr. Ito said it is unlikely Honda will ramp up exports from its domestic plants. "The old structure of relying on Japan as chief export platform was unnatural," he said.
As part of the shift, the company is relocating engineering responsibilities for its next-generation Civic compact sedan—its top-selling vehicle—to the U.S. It is considering doing the same for its full-size Accord, Mr. Ito said. He also said the auto maker might shift engineering responsibility for a future global car to China, now the world's single-largest auto market.
Honda has already been localizing production in its biggest markets, the U.S. and China, for the past decade, and exports from Japan now account for just 28% of total global sales—an export ratio well below those of the country's No. 1 and No. 2 car makers, Toyota Motor Corp. and Nissan Motor Co.
Honda currently exports five key models from the U.S.—the Accord and Civic sedans, the Pilot and MDX sport-utility vehicles and the Odyssey minivan—primarily to Africa, the Middle East and Russia. Last year, it exported 55,000 vehicles from North America. Company officials have said increased capacity at its existing plants in Canada and the U.S., coupled with a new factory in Mexico, ultimately could raise that total to about 200,000.
Yet the 59-year-old Mr. Ito, an avid motorcycle rider who joined Honda as an engineer in 1978, also wants to gird the company for sudden downturns. To better handle volatility in overseas markets where it increasingly makes and sells vehicles, Honda is gearing its factories to stay profitable even when running far below maximum capacity.
"Our plan is based on the premise that we should be able to make profits even with our plants operating at 70% of capacity, not 100%," Mr. Ito said.
Last year, Honda struggled with production slowdowns triggered by natural disasters in Japan and Thailand that crippled its entire global supply chain. This year, it returned to full production world-wide.
For the first half of this year, the company said production at plants in North America recovered to 90% of capacity from just 68% for last year as a whole. Globally, Honda said, production rebounded to 83% of capacity, from 60% last year.
