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Rising Yen Drives Up Honda Prices Despite U.S. Shift : Autos: Although it now builds more than 60% of its cars in North America, Honda is caught in an exchange-rate squeeze.

April 13, 1993|From Bloomberg Business News

TORRANCE — American Honda Motor Co. said Monday that a rising Japanese yen is forcing it to raise U.S. prices on its 1993-model cars, even though more than 60% of its automobiles are assembled in North America using local parts and labor.

Prices for Honda automobiles were increased an average 1.17%, or $194 per car, on a sales weighted basis. Prices of Honda's Acura luxury cars were increased an average 1%, or $244 a vehicle, for a combined increase averaging 1.1%, or $202 a car.

Separately, Honda said it is recalling 45,000 1991-93 Accord wagons to fix a defect in the rear outboard seat belt assemblies. Honda said that occupants may not be able to pull out and fasten the rear seat belts when the vehicle is parked on a steep slope. The belts operate normally when the car is moved to level ground.

Honda, which last raised prices about 1.1% in February, cited the unfavorable U.S. dollar-Japanese yen exchange rate as the reason behind its latest price hike. Honda also increased destination charges on all vehicles to $350 from $330.

The Japanese yen has appreciated 10% against the U.S. dollar since Jan. 1, squeezing profits of all Japanese car makers. The yen was recently trading today at a post World War II high of 112.80. Despite the historic high, trading today was limited because of the Easter Monday holiday in Europe.

The increase comes as Honda and other Japanese auto makers in the United States tout their status as U.S. car makers because of the billions of dollars they have invested in American assembly, stamping and engine plants, as well as billions spent with U.S.-based parts suppliers.

"We're less dependent on the exchange rate than we used to be," said company spokesman Jeff Leestma from Honda's Detroit office. "But we're not free from it, and we have to price our vehicles the same, no matter where they come from."

About 70% of all Honda cars sold in the United States are made in North America, not counting its Acura luxury cars, all of which are made in Japan. About 80% of all Honda Accords sold in the United States are made in Ohio, with the remainder shipped to West Coast markets from Japan.

"Otherwise, you'd have West Coast buyers driving to the Midwest to buy an Accord because the U.S.-made models were cheaper," Leestma said.

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