Honda brings luxury to China

Japanese automaker launches Acura brand in expanding auto market, says it hopes to sell 3,000 units in first year of sales.
September 27 2006: 9:42 AM EDT

SHANGHAI (Reuters) -- Honda Motor Co. launched its top-line sedan Acura in China on Wednesday, joining BMW and other foreign luxury car brands to compete in the world's second-largest auto market.

The imported Acura RL and TL are priced at 680,000 yuan ($86,024) and 430,000 yuan, respectively, a Honda executive told Reuters, adding that the firm had set a sales target in the first full-year at 3,000 units.

This is the first time that Honda has introduced Acura, a hot-seller in North America, to China, hoping to grab customers from Volkswagen's Audi models, and DaimlerChrysler's (Charts) Mercedes cars.

The first dealership for Acura was opened on Wednesday in the southern boomtown of Shenzhen, with 10 more planned throughout China in the next 12 months, Honda said in a statement.

Meanwhile, Honda is also expanding capacity in China, a market where a total of 2.51 million cars were sold in the first half of 2006, up 37 percent from the same period in 2005.

Earlier this month, the Japanese auto maker added 120,000 units of annual capacity in a venture in south China, bringing its capacity to 360,000 units.

It is now capable of making 530,000 vehicles a year in the country, including its manufacturing in a facility in central China, with 50,000 units catering for overseas markets only, a company executive said.

In the first eight months, Honda sold 193,582 vehicles in China, up 17.1 percent year-on-year, lagging a 31.77 percent growth of the overall market.

Still, the company maintained its target to sell 353,000 vehicles in the country for the full-year, up from 257,000 units in 2005, the executive said, banking on a seasonal sales pick-up near the end of the year.

Honda (Charts) stock edged lower in Tuesday trade on the New York Stock Exchange, as did shares of rival Toyota (Charts), while GM (Charts) shares were up 2.6 percent.