Thursday, October 31, 2013
Honda Dropping Subsidiaries To Focus On Core
TOKYO (Nikkei)--Honda Motor Co. (7267) said Wednesday it will sell Honda Elesys Co., a parts-making subsidiary, to Nidec Corp. (6594), and also withdraw from solar cells, as it looks to concentrate on its main business.
The automaker holds a 60.8% stake in Elesys, with the remainder owned by NEC Corp. (6701) and Honda affiliates Showa Corp. (7274) and Nissin Kogyo Co. (7230). All outstanding shares will be purchased by Nidec by the end of this fiscal year.
Elesys was established in 2002. One of its specialties is safety technologies, such as collision mitigation systems and antilock brakes. As buyers grow more safety-conscious, these features are becoming more important in setting cars apart from their competition. But the company generated only about 30 billion yen in sales last fiscal year, and Honda accounted for 95% of this figure.
Autoparts are more frequently being packaged into modules to reduce costs. If Nidec combines electronic control technology with motors, a company specialty, and sells them to clients, Honda expects to pay less than it would by continuing production in the group.
The automaker also announced the dissolution of subsidiary Honda Soltec Co. as of next March and its withdrawal from the solar cell business. Although Japan's solar cell market expanded thanks to the government's feed-in tariff for renewable energy, Soltec's sales flagged amid fierce price competition. It will stop taking orders in February and shutter its facilities when production is finished.
The company is looking to cut costs further so that even the low-cost cars popular in developing nations can earn a profit. It also plans to concentrate on developing environmentally friendly cars, including hybrids and fuel cell vehicles.
(The Nikkei, Oct. 31 morning edition)