Remarks by John Mendel, Senior Vice President, American Honda Motor Co., Inc.

Chicago Auto Show February 09, 2006


Good afternoon everyone, and thank you for joining us. It seems like just yesterday we were in Detroit taking the wraps off 'Fit', but we're delighted to be in front of you again - exactly one month later - to debut yet another exciting new concept from Honda.

But before we get into that, I'd like to make a few remarks about our business situation. At Honda, We're coming off an amazing year that saw the introduction of our first pickup truck a total redesign of the Civic - which made it's debut in concept form here last year -and substantial updates to the Accord and Pilot.

And it was a year full of awards. Ridgeline and Civic captured Motor Trend's car and truck of the year awards... This marked the first time a manufacturer has claimed both in the same year.

Our good fortune continued into Detroit as Honda won the North American Car and Truck of the year awards also the first time one manufacturer has won both awards. These awards are extremely gratifying for us as they acknowledge the hard work of our associates. They also validate Civic's bold new direction, and Ridgeline's totally unique approach to the pickup truck segment. The addition of Ridgeline helped us push Honda to a 10th straight year of record sales - a winning streak we plan to continue into 2006.

This year we intend to grow sales to 1.3 million on the way to yet another record. Contributing to our sales growth will be the 2007 Honda 'Fit'. This is a new product for American Honda, and fills the gap in the subcompact segment that Civic left, as it moved up market. We will also be launching an all-new, completely redesigned CR-V later this year. The 'Fit' will go on sale in April as a 2007 model, and we're projecting sales of approximately 33,000 this year and 50,000 on an annual basis. Pricing will start at between $13,000 and $14,000. The 'Fit' represents a tremendous value for our customers, plus it holds true to our Honda brand values. These values can be clearly and succinctly summarized as "Clean, Safe, and Fun." Fit comes to market as a clear expression of these values that we at Honda take very seriously. At 38 miles per gallon on the highway, it's one of the most fuel efficient vehicles on the road, and it delivers on safety with the most standard safety content in its class. It's fun-to-drive character, and unique fun-to-use seating configurations are sure to put smiles on customers' faces. We believe that these "Clean, Safe, and Fun" values not only pay dividends in the marketplace... ...but that they contribute to our fundamental objective of being a company that society wants to exist.

Speaking of safety, I'd like to give you a quick update on the progress we've made with our "Safety for Everyone" initiative. Back in 2003, we launched the "Safety for Everyone" strategy to the media and to consumers. This initiative included a core suite of standard safety features for every model regardless of size or price. Now, with our 2006 models, I can tell you that we did what we said we would. We've applied front side airbags and ABS to all of our vehicles, standard. By the end of this calendar year, we will have completed the first five elements of our commitment for every vehicle except a couple of small volume specialty models. We will also have applied the ACE body structure to nearly half of our models. We've even added features beyond our original commitment. All our models now have a driver's seatbelt reminder, and by the end of this year we'll also have front passenger seatbelt reminders on every model. We aren't ready to say what the next phase of 'Safety for Everyone' will be, but we are confident that our progress so far speaks for itself.

As the latest expression of Honda's 'Safety for Everyone' initiative, the just-released 2006 Civic is showing the world that small cars can indeed be safe. In fact, the Civic is one of only 5 vehicles tested by the I I H S throughout the entire industry to earn a "Top Safety Pick - Gold Award" the institute's highest rating. Civic is the only small car to earn a Top Safety Pick award from I I H S, and importantly, its only one of 3 cars in the industry to do so with standard equipment.

Yes, as we enter 2006, things are good at Honda. However, we're not a company that likes to stand still. We're always seeking opportunities to reach out to new customers, expose more customers to the Honda brand, and ultimately achieve steady, sustainable growth. Which brings us to the reason were here today - the Civic Si. This year we're celebrating the 20th anniversary of the Si in America. Beginning with the 1986 Si Hatch Back and proceeding through six generations, the Civic Si has played a critical role in the performance image of Civic and Honda.

So there's a lot of heritage that we had to carefully consider in order to underscore its appeal to young enthusiasts and automotive opinion leaders, the Civic Si made it's debut to the specialty equipment industry at SEMA as the 2005 Vehicle of the Show. Delivering a new level of performance and styling, the 2006 Si has truly resonated with this audience.

And, of course the Racing Spirit is an important part of Honda's heritage, and the 2006 Civic Si is now part of that legacy. Validating the performance potential of Si, two race prepared versions, campaigned by Honda associates, placed first and second in class at the grueling 25 Hours of 'Thunderhill' endurance race in December. Not a bad result for the car's first appearance in a sanctioned motorsports event. The 2006 Civic Si is certainly off to a strong start with consumers, media, and the aftermarket, but we think the Civic Si has potential for even broader appeal. Last year we introduced the Civic Si coupe concept here in Chicago, well before launching the production coupe, Sedan, Hybrid, and Si models. Ladies and Gentlemen, I'd like to introduce our newest Civic Si Concept.

We think the Chicago auto show is the perfect venue to debut the next variation on the Si theme building on the momentum that the Civic started right here, last year. Fortunately, this concept has a rich heritage to draw from. The Civic Si, and now the sedan concept, incorporates ideas like a unique powertrain, high-performance suspension, stylish and recognizable exterior and sporty interior from previous generations Civic Si's. The 2007 model year marks the first time in the Civic Si's 20 year history that it will be available with four doors. It also marks the first time that two Si body styles will be available at once. Along with the Si Coupe, the Si Sedan will join the Civic lineup as a performance halo for the Civic nameplate. The Civic Si Sedan concept shares basic powertrain components with the coupe, including a 197 horsepower, iVTEC engine, 6-speed manual transmission and a limited slip differential. This concept also includes 18-inch aluminum wheels, 225/40/ZR18 tires, and large Brembo disk brakes on all 4 wheels. Like the coupe, we expect that the Civic Si Sedan will appeal to a true enthusiast customer seeking a high level of fun and performance for the money.

We expect that the buyers will be 80 percent male, and slightly older than the coupe buyers. They might be newly married or have a young family, and seek the added flexibility that four doors offer. We're not yet ready to announce pricing or sales volume, but we can tell you that the production version of the Civic Si Sedan will go on sale this fall. We think this concept expresses a unique merger between the interior space, passenger capacity and functionality customers look for in a Civic sedan and the performance, style and character associated with the Si badge. Without a doubt, it will be a car worthy of its legacy and a welcome addition to the Civic line-up. Thank you for coming this afternoon and enjoy the rest of your day.

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