Honda exits Formula One due to industry slump

Honda exits Formula One due to industry slump

Tokyo: Honda Motors said on Friday slumping car sales were behind its decision to withdraw from the prestigious Formula One, a move that reflects the automaker’s determination to adapt to survive.

“Not only sales of our automobiles, but also sales of motorcycles and power products nosedived at an accelerated speed in North America and around the world in October and November," Honda president Takeo Fukui said.

“This was absolutely beyond our imagination. We had absolutely no idea what was coming," he said.

Honda, like other Japanese automakers, is reducing production and cutting hundreds of jobs in response to slumping car sales.

Japanese manufacturers have expanded rapidly in recent years to meet brisk demand for their smaller, fuel-efficient cars, but they have not been immune to the financial crisis, even if they are in better shape than their US rivals.

“If this situation continues for another year, the auto industry will be in a serious mess. We cannot do business with optimism alone. The situation can get worse," Fukui said, adding that a rising yen has also battered Honda.

Honda first joined the Grand Prix circuit in the 1960s out of the passion of late founder Soichiro Honda, who remains highly admired as a legendary industrialist engineer among the Japanese public.

Fukui left the door open to more downsizing.

“We are reviewing all areas of our business. I have nothing today ready for an official announcement," he said.

“We must ride out the crisis, find a way out, and survive. Not only that, we have to prepare ourselves for the new era so that we will have new products and technology ready to go," he said.

Honda will put renewed focus on hybrid vehicles, clean and small diesel engines, and cheap and fuel-efficient vehicles for emerging markets.