Honda Widens North American Output Cuts by 119,000 (Update4)

By Alan Ohnsman

Dec. 12 (Bloomberg) -- Honda Motor Co. is cutting 119,000 vehicles
from its North American production plan, tripling its reduction for
this fiscal year as plunging sales push U.S.-based competitors to the
brink of collapse.

The automaker expects to build 1.29 million cars and light trucks in
the U.S., Canada and Mexico, in its year ending March 31, down from an
initial goal of 1.47 million, spokesman Ed Miller said today in an
e-mail. The latest reductions bring the total to 175,000 vehicles from
the Tokyo-based company's earlier cuts of 56,000. No layoffs are
planned, Miller said.

"Everyone is hurting," said Dennis Virag, president of Automotive
Consulting Group Inc. in Ann Arbor, Michigan. "Sales are down across
the industry 30 percent to 35 percent since September. That pain is
being shared equally by all companies."

Honda and Japan-based Toyota Motor Corp. and Nissan Motor Co. have
slashed production plans this year as the U.S. recession dragged the
annual auto sales rate last month to a 26-year low. Through November,
those companies built about 300,000 fewer autos in North America than
a year earlier, led by Toyota's three-month shutdown of a San Antonio
pickup-truck plant.

"Showroom traffic is down for everyone," Miller said.

Honda will trim production through slower line speed and eliminating
some scheduled assembly days, Miller said. Plants will extend a
scheduled holiday shutdown this month by two days, and in January
between four and seven days of output will be cut at factories in
Ohio, Alabama, Indiana and Ontario, he said.

Declining Sales

U.S. sales for Honda, which last had an annual drop in its biggest
market 15 years ago, fell 5.4 percent through November from a year
earlier. Honda, Japan's second-largest carmaker, last month posted a
32 percent decline, its steepest since 1981.

Across the industry sales this year are down 16 percent, led by
declines of 28 percent for Chrysler LLC, 22 percent for General Motors
Corp. and 19 percent for Ford Motor Co.

GM and Chrysler have said they need U.S. aid this month to avoid
running short of cash for operations. President George W. Bush's
administration said it may tap the $700 billion bank- bailout fund to
prevent an industry collapse, after the Senate yesterday failed to
approve $14 billion in emergency loans.

Ford has said it doesn't need emergency federal aid, though Chief
Executive Officer Alan Mulally said last week that his company could
be dragged into bankruptcy by a GM failure.

While Honda and Toyota are in better shape financially than the U.S.
companies, they would suffer should GM fail, Virag said.

"If GM collapsed, it would take out parts suppliers that Honda also
uses," he said. "It could knock sales for the industry down another 20
percent to 25 percent."

Honda's U.S. operations are based in Torrance, California. The
company's American depositary receipts fell $1.07, or 4.7 percent, to
$21.93 at 4:15 p.m. in New York Stock Exchange composite trading.

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