Remarks by Takeo Fukui, President & CEO, Honda Motor Co., Ltd.
Honda Technical Review 2006

TOCHIGI, Japan September 23, 2006

Good afternoon, everyone. Thank you very much for taking the time to make the long trip to visit us here at the Tochigi R&D Center.

More than 35 years ago, I began my career at Honda R&D as part of a team creating a cleaner-burning engine. These efforts led to the Civic CVCC ... the first vehicle in the world to meet the 1970 U.S. Clean Air Act based solely on engine performance. I was lucky to be an engineer at Honda at such a challenging and exciting time in the history of the auto industry.

Today, in the face of so many environmental issues, I think it is again a very challenging and exciting time for our engineers at Honda. So, we invited you here today, in the hope of enhancing your understanding of our current research and development activities ... and our plans for the future.

Honda is the world's largest engine manufacturer, reaching some 21 million customers each year. Thus, we see it as our responsibility to minimize the impact of our activities on the environment, so that the convenience and pleasure of mobility can be passed onto future generations. Based on this commitment, in May 2006, we announced global CO2 reduction goals ... both for our products and production activities.

To attain these objectives, we must continue to refine the engine and power train technologies that are fundamental to Honda's success. This continues to be a key focus of our wide-ranging research and development initiatives. Today, it is our pleasure to introduce to you several promising technologies. We will continue applying Honda innovation in developing new products that will greatly exceed the expectations of our customers.

Among the technologies we will present today is the first diesel engine to attain a level of environmental performance equal to a gasoline engine. This new clean diesel engine features a revolutionary new catalytic converter ... and a simple, compact design that makes it ideal for passenger cars. Just as the CVCC engine revolutionized the clean performance of gasoline engines ... today, we're leading the way to cleaner diesel engines.

Honda has always believed that fuel cell technology is vital, as it holds the promise of helping solve both environmental and energy challenges. We continue to make progress toward the large-scale introduction of fuel cell vehicles, which many see as the ultimate in clean mobility for the future.

Today, you will test drive a functional version of the FCX Concept vehicle first displayed at the 2005 Tokyo Motor Show. This vehicle features our new, more advanced fuel cell system. And I am delighted to announce today that in 2008 ... one year earlier than originally planned ... we will introduce a new fuel cell vehicle in Japan and the U.S. based on this concept model. In addition to its environmental performance, I think you will find that this new vehicle will be as fun to drive as any Honda. Honda is also engaged in projects focusing on the production of hydrogen fuel ... including one that uses thin film solar cells developed by Honda. With a fuel cell vehicle running on hydrogen generated with solar panels, no carbon dioxide is emitted either in producing the fuel or operating the vehicle. This is the ultimate scenario.

Also, as we announced last week, we have achieved exciting advances in biotechnology research. Our new technology helps increase yields in bio-ethanol production ... by using the stalks and leaves of plants that would normally be discarded. This improves the potential for wider application of ethanol-powered vehicles and for further CO2 reductions. We plan to maintain this comprehensive focus on both vehicles and fuels in our ongoing research and development.

Finally, at Honda, we remain committed to advancing internal combustion engine technology. So, today, we will present some exciting new advances in the technology that powers the majority of the products we sell today ... the gasoline engine. Specifically, we will present new control technologies that further advance fuel efficiency. Overall ... you will have a number of test drive opportunities.

In research and development, Honda places the highest priority on initiative and innovation ... always setting the bar high. As we continue to develop the environmental technologies that are so critical to the world's future, our efforts will extend beyond environmental performance. We will always strive to make mobility a great joy. We will deliver on two traditional Honda promises: to lead the industry in innovation and advanced technology ... and to provide people with vehicles that are fun to drive. I hope your experience here today will give you a sense of our commitment and the promise of our future technologies. Thank you very much for your attention.