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Reuters / January 07, 2003

DETROIT - Honda Motor Co., like many of its Japanese peers, is looking at another rosy year in the United States.

After increasing its U.S. sales volume by 3.3 percent in 2002, Japan's second-largest automaker is looking to boost sales by another 8 percent this year to 1.35 million vehicles, with almost all of that growth expected in the profitable light truck segment.

Even with its strong brand image and good track record in North America, that is no mean feat for an automaker with no new model launches in the United States this year, apart from the new TSX sedan in its Acura luxury division.

That, at a time when others are flooding the fast-growing light truck segment with brand new products, and in a market that is widely expected to shrink in 2003.

"It shouldn't be a problem growing our sales because we'll have a full contribution from all the models we launched last year," Koichi Amemiya, head of Honda's U.S. unit, told Reuters in an interview on Monday.

Indeed, Honda has enjoyed brisk sales of the Pilot sport-utility launched in June, and has plans to double output capacity at its Alabama plant, which makes light trucks for the North American market, to 300,000 units by the spring of 2004.

While it's plain to everyone that not all automakers will meet their forecasts this year, Amemiya said Honda would have no difficulty since it was growing in a popular segment in which it has had a conspicuously low profile so far.

"I can't say we won't be completely unaffected by the entry of Toyota Motor Corp. and Nissan Motor Co. into the light truck segment," said Amemiya, who celebrates 40 years with Honda this year.

"But I'd have to say Chrysler, Ford Motor Co. and General Motors are the most likely to get hit."

Light trucks accounted for about a third of Honda's total sales last year, compared with more than half for the overall market.

And in contrast to what is in store for the Big 3, Honda is expecting sales incentives to stay low or even fall this year, boding well for its profits.

In 2002, Honda spent by far the least in sales incentives, amounting to roughly a third of what Ford spent, according to one industry study.

That has helped Honda's operating profit in North America rise to 9.6 percent last year from 7.9 percent the year before.

Amemiya said that with growth occurring mostly in the profitable light truck area, Honda's profit margin still had room to grow, although it would take some time to recover investment costs for boosting output capacity.

With Honda leading the industry in so many ways, Amemiya said one of the only challenges left was to become the number-one-rated automaker for customer satisfaction -- an enviable wish-list for its U.S. counterparts.

"Lexus still has the top spot in that arena. We need to get there as soon as possible."

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