Honda Motor

Honda Update November 2007
2008 Accord
(for North American Market)
Table of Contents
FY07* Financial Results Outline Profit Analysis Segment Information FY08* Financial Forecasts Outline (Sales units / Profit analysis / Capital Expenditures / R&D, etc.) Returning Profit to Shareholders Highlights of Major Strategies for Business Growth Automobile Business : North America BRICs Japan Motorcycle Business : Asia Brazil - Steady Growth of Hondas subsidiaries - Strong position in the market P. 38 - 41 P. 42 - Stable increase in slowing market - Steady Growth - Improving margin of Fit, highest-selling model P. 27 - 29 P. 30 - 34 P. 35 P. 36 - 37 P. 20 - 23 P. 24 - 25 P. 3 - 4 P. 5 - 6 P. 7 - 19
Production capacity - Continuous growth
*FY07: Fiscal year ended March 31, 2007,
FY08: Fiscal year ending March 31, 2008
Outline of 2nd Quarter Financial Results (Consolidated)

2Q Results
Unit Sales
Unit (thousands)
FY07 2,816 884 1,187
FY08 2,333 937 1,258
Change
Motorcycles Automobiles Power Products
- 17.2% + 6.0% + 6.0%
Business environment Yen depreciation in 2Q YOY basis in spite of underlying yen appreciation mainly against the U.S. dollar High prices for raw materials and gasoline continued Motorcycle business:
Growth in Brazil continued Tougher competitive conditions in Asian major motorcycle market such as in India and Indonesia Struggling motorcycle and ATV market in North America
Automobile business:
Growth of Emerging markets such as BRICs and others Strong demand for fuel-efficient cars in the U.S. Japan automobile market situation remained stagnant
2Q Results
Financial results
Yen (billions)
FY07 2,630.8 193.0 163.6 27.4 127.9 70.05

approx. 1,825,993,000 shares
FY08 2,971.3 * 286.3 * 269.9 * 26.2 208.4 * 114.94 *
Change
Net sales & other operating revenue Operating income Income before income taxes Equity in income of affiliates Net income EPS (Yen)
Note : Shares which are based on calculation of EPS
+ 12.9% + 48.3% + 65.0% - 4.4% + 63.0% + 44.89
Major change factors Increased unit sales in overseas regions mainly in automobile business Improved operating margin in all regions Unit Sales
Motorcycles: Automobiles: Power Products: Decreased unit sales of component parts sets for Asia Strong sales in South America, etc. Increased sales of CR-V in overseas regions Increased unit sales in Japan, Europe, Asia and Other Regions Decreased unit sales in North America
Net sales & other operating revenue

Increased unit sales in automobile segments / Currency effects from the depreciation of the yen
Operating income
<Increase Factors> - Increased profit from higher revenue - Decrease in unrealized profit due to inventories - Continuing cost reduction effects - Currency effects from the depreciation of the yen <Decrease Factors> - Change in model mix - Increased incentives in North America - Increased depreciation expenses - Increasing raw material prices - Increased SG&A and R&D expenses
approx. * Record high 1,813,784,000 shares
(weighted average number of shares outstanding )
Average Rates (Yen)
US Dollar Euro
116 148
118 162
weaker by 2 yen weaker by 14 yen
Outline of 2nd Quarter & 1st Half Financial Results (Consolidated)

2Q Results 1H Results Change
Unit Sales
Unit (thousands)
FY07 2,816 884 1,187
FY08 2,333 937 1,258

2Q Results
FY07 5,196 1,780 2,911
FY08 4,586 1,883 2,787

1H Results
Change
Motorcycles Automobiles Power Products
- 17.2% + 6.0% + 6.0%
- 11.7% + 5.8% - 4.3%
Financial results
Yen (billions)
FY07 2,630.8 193.0 163.6 27.4 127.9 70.05

FY08 2,971.3 * 286.3 * 269.9 * 26.2 208.4 * 114.94*
Change
FY07 5,230.5 396.5 355.0 57.6 271.3 148.52

FY08 5,902.4 * 508.0 * 488.2 * 63.2* 374.6 * 206.26*
Change
Net sales & other operating revenue Operating income Income before income taxes Equity in income of affiliates Net income EPS (Yen)
+ 12.9% + 48.3% + 65.0% - 4.4% + 63.0%

+ 44.89
+ 12.8% + 28.1% + 37.5% + 9.8% + 38.1%

+ 57.74
Average Rates (Yen)
US Dollar Euro
116 148
118 162
115 146
119 162
Change in Income Before Income Taxes < FY08 2nd Quarter >
Income before Income taxes + 106.3 bn. yen ( + 65.0 % ) Operating Income + 93.3 bn. yen ( + 48.3 %) Other Income & Expenses + 13.0 bn. yen
Yen (billions)
<Negative
Factors> - Increasing raw materials prices - Increases in depreciation expenses, etc.

<Positive
Factors> - Continuing cost reduction effects, etc.
- Increased sales expenses, storage fees due to the increase in unit sales - Increased expenses for advertising, ,sales promotion, etc.
- 6.2 + 19.2
Others Fair value of derivative instruments
( Exhibit 2)
- 11.8
Cost Reduction, the effect of raw material cost fluctuations, etc.
- 15.8
Increase in SG&A
- 11.1
Increase in R&D
+ 27.0
Currency Effect
269.9
+ 105.1
163.6
Revenue, model mix, etc. <Increase Factors> - Increased profit from higher revenue in automobile business segment - Decrease in unrealized profit due to inventories, etc. <Decrease Factors> - Change in model mix - Increased sales incentives in North America, etc.
- Difference between transaction rates and average rates : + 17.2 bn. yen - Gain and loss from valuation of the balance of receivable and debt : - 23.4 bn. yen
FY07 2Q
Currency effects (change in average rates + translation effects): Difference between transaction rates and average rates: Currency effect on income before income taxes:
+ 27.0 bn. yen + 17.2 bn. yen + 44.2 bn. yen
<Impact on Operating income> <Impact on Other Income & expenses> (Exhibit 1)
FY08 2Q
Change in Income Before Income Taxes < FY08 1st Half >
Income before Income taxes + 133.2 bn. yen ( + 37.5 % ) Operating Income + 111.4 bn. yen ( + 28.1 %)
<Negative
Yen (billions)
Factors> - Increasing raw materials prices - Increases in depreciation expenses, etc.

<Positive
<Negative
Factors> - Increased sales expenses, storage fees due to the increase in unit sales, etc.
<Positive
Other Income & Expenses + 21.7 bn. yen
Factors> - Continuing cost reduction effects, etc.
Factors> - Decreased expenses for advertising, sales promotion, etc.
- 8.8 - 30.1 + 133.6

+ 30.6 - 33.3
Increase in SG&A
Others
+ 77.5 - 36.3
Increase in R&D Currency Effect
Fair value of derivative instruments

( Exhibit 2)
488.2
355.0
Revenue, model mix, etc. <Increase Factors> - Increased profit from higher revenue in all regions - Change in sales prices in North America - Decrease in unrealized profit due to inventories, etc. <Decrease Factors> - Increased sales incentives in North America - Change in model mix, etc.
- Difference between transaction rates and average rates : + 3.8 bn. yen - Gain and loss from valuation of the balance of receivable and debt : - 12.7 bn. yen
FY07 1H
Currency effects (change in average rates + translation effects): Difference between transaction rates and average rates: Currency effect on income before income taxes:
+ 77.5 bn. yen + 3.8 bn. yen + 81.4 bn. yen
<Impact on Operating income> <Impact on Other Income & expenses> (Exhibit 1)
FY08 1H
Motorcycle Unit Sales (Motorcycles All-Terrain Vehicles, etc.)

FY08 2Q Japan North America Europe Asia
Change from FY 07 2Q
Major increase/decrease factors

Introduction of all new Today model Decreased unit sales of utility ATVs such as FourTrax Rancher model Decreased unit sales of cruisers such as Shadow Spirit 750 Decreased unit sales of 125cc models such as XL125 model in France Decreased unit sales of component parts sets for India Introduction of POP100 model in Brazil Increased unit sales of CG125 FAN model in Brazil
- 610
- 11.7%
Approx.1,060
Today Japan
Approx.2,120
Unit (thousands)
107 121 68 1,645 392 2,333
+9 - 22 -3 - 518 + 51 - 483
6,000 6,000
5,196
629
CG125 FAN Brazil
5,000 5,000
Other Regions Total
4,586
763
Other Regions
4,000 4,000
Approx.1,150 Approx.560 Approx.640
- 483
- 17.2%
Approx.1,100 Approx.1,020
3,000 3,000
Approx.500
2,816
341
2,765
314
Unit sales of Honda-brand motorcycle products that are manufactured and sold by overseas affiliates accounted for under the equity method, but do not use any parts supplied by Honda and its subsidiaries 3,972
2,380
288
2,408
362
2,253
371
2,333
392
3,268
Asia
2,000 2,000
2,163 1,809 2,217 1,706
1,000 1,000
1,623
1,645
0 0
105 89 89
71 143 98
56 107 71
97 164 79
95 80 84
68 121 107
176 232 187
163 201 191
Europe North America Japan
1Q

FY07
2Q
3Q
4Q

FY08
1Q
2Q
1H 66 FY07
1H 66 FY08
Unit sales is the total of sales of completed products of Honda and its consolidated subsidiaries and sales of parts for Hondas affiliates accounted for under the equity method.
Motorcycle Business
FY07 1Q
Net Sales
Net Sales/Operating Income/Operating Margin

FY08 FY07 1Q 2Q 1H FY08 1H
2Q
3Q
4Q
310.1
335.5
303.2
421.7
+ 13.8%
368.3
381.6
645.6
749.9
Yen (billions)
Yen (billions)
Operating Income Operating Margin
10.5%
<Increase Factors> - Currency effects of weakened yen, etc. <Decrease Factors> - Increased sales incentives in North America - Increased SG&A expenses - Increased R&D expenses, etc.
+ 16.2%
68.1
( + 50.7%)
60
9.6% 8.5%
9.7% 9.1%
10%
44.2
45.2 7.0% 37.0

( + 15.4%)
40
32.0 4.2%
31.1
5%
20
13.1
3.7%
11.1
0
1Q 2Q FY07 3Q 4Q 1Q FY08 2Q 1H FY07 1H FY08
0%
Automobile Unit Sales

FY08 2Q Japan
Unit (thousands) Change from FY 07 2Q

Decreased unit sales of Zest and Stream models Introduction of Crossroad model Increased unit sales of CR-V and Fit models Increased unit sales of Civic and CR-V models in Russia and UK Increased unit sales of component parts sets for China (CR-V and Fit models ) Increased unit sales CR-V model in ASEAN countries such as Indonesia and Thailand Introduction of Civic FFV model CR-V Civic
143 445 100 177 72 937
- 28 + 34 + 21 + 14 + 12 + 53
+ 103 + 5.8%
2,000
North America Europe
1,883 1,780
120
Civic 4Door
138
Other Regions
Asia Other Regions Total
364 316
Asia
1,500
150
192
Europe
+ 53 + 6.0%
Civic 5Door
1,000
957 896
60 153 71
884
60 163 79
915
61 155 72
946
66 187 92
937
72
North America
67 149 102
177 100
867
910
500
456 411 471 450 465 445
327 156 171 156 189 136 143
279
Japan
0
Automobile Business
FY07 1Q
Net Sales
Yen (billions)

FY07 1Q 2Q 1H FY08 1H
FY08 2Q 3Q 4Q
2,095.6
2,098.8
2,263.8
2,430.7
+ 12.3%
2,327.2
2,356.4
4,194.4
4,683.7
Yen (billions)
+ 11.7%
400
350
300 7.2% 250 6.2%
<Increase Factors> - Increased profit from higher revenue - Decrease in unrealized profit due to inventories - Continuing cost reduction effects - Currency effects of weakened yen, etc. <Decrease Factors> - Increased sales incentives in North America - Increasing raw material prices - Increases in depreciation expenses - Increased SG&A expenses - Increased R&D expenses, etc.
10% 9.0% 361.3

( + 28.6%)
8% 280.9 7.7% 6%
7.1% 6.5% 6.4%
6.7% 213.0
( + 62.8%)
200
150
150.0 130.8
160.7
157.7
148.3
4%
100 2% 50
0
0%
10
Unit Sales Ratio of Hondas 4 Global Models
Jan.- Sept. 2006

Accord 19.2% Others 39.9% Civic 20.3% CR-V Fit 11.9% 8.7%
Jan.- Sept. 2007
Others 33.7%
Accord 18.7%
Fit 11.2%
Civic 23.0% CR-V 13.4%

Source: Honda
Fit
Civic
CR-V
Accord 11
Growing 4 Global models
Power Products Unit Sales

FY08 2Q Japan North America
Unit (thousands) Change from FY 07 2Q
141 479 280 242 116 1,258
+ 14 - 15 + 26 + 35 + 11 + 71
+ 71 + 6.0%
Decreased unit sales of push lawn mowers in the U.S. Increased unit sales of push lawn mowers in Europe Increased unit sales of general-purpose engines and others in China
- 124 - 4.3%
Europe Asia Other Regions Total
3,000
HRX537push loan mower
2,911
177 369 462
Asia
2,787
213
Other Regions
2,500
2,128
2,000
112 230
GX160 general-purpose engine 636

Europe
1,724
72 162
670
1,500
382
1,529 1,382 1,187

105 207 254 117 161 390 365 1,023 687 479 264 276
Japan
624
97 220
1,258
116 242 280 1,465 1,166
North America
1,000
971
500
494
615
137
127
124
139
135
141
1Q
2Q FY07
3Q
4Q
1Q FY08
2Q
1H FY07
1H FY08
Unit sales is the total of sales of completed products of Honda and its consolidated subsidiaries and sales of parts for Hondas affiliates accounted for under the equity method. 12
Power product & Other Businesses

FY08 1Q
Net Sales
FY07 2Q 3Q 4Q
FY07 1Q 2Q 1H
FY08 1H
108.4
Yen (billions)
100.0
105.0
125.3
+ 4.9%
115.2
105.0
208.5
220.2
Yen (billions)
20
+ 5.6%
10.2%
9.9%
<Decrease Factors> - Increased R&D expenses, etc. <Increase Factors> - Decreased SG&A expenses - Currency effects of weakened yen, etc.
12% 18.4
15
8.9% 7.5% 6.9% 6.6% 6.8% 14.9
( - 19.1%)
10%
8%
10
11.0
10.4
5.8% 6% 7.9 7.2 6.9

( - 6.5%)
7.4
4%
5
2%
0
0%
13
Financial Services Business

FY07 1Q
Net Sales
Yen (billions)

FY07 FY08 1H
*
FY08 2Q 3Q 4Q
*
1Q
*
2Q
*
1H
90.8
98.9
105.0
118.4
129.8
137.8
189.8
267.6
Yen (billions)
+ 39.3%
<Increase Factors>
+ 41.0%
* Including increased net sales due to start of operating lease transaction
70
32.2%
34.6%
- Increased profit from higher revenue - Decreased SG&A expenses - Currency effects of weakened yen, etc.
60
63.5
( + 22.5%)
30%
26.4%
27.3% 51.8 23.7%
50
22.8% 21.7% 40.9 34.2 21.3%
40
20%
30
29.2 29.3
( + 29.7%)
20
22.6
22.7
10%
10
0
0%
14
Japan
FY07 1Q
Net Sales
Yen (billions)
Net Sales / Operating Income / Operating Margin

FY08 FY07 1Q 2Q 1H FY08 1H 4Q
2Q
3Q
1,109.2
1,175.8
1,223.8
1,265.1
+ 3.4%
1,176.2
1,215.5
2,285.1
2,391.8
Yen (billions)
+ 4.7%
140
120
5.9%
<Increase Factors> - Increased profit from higher revenue - Continuing cost reduction effects - Decreased SG&A expenses - Currency effects of weakened yen, etc. <Decrease Factors> - Increasing raw material prices - Increases in depreciation expenses - Increased R&D expenses, etc.
8% 133.9
( + 13.6%)
117.9 6.0% 5.6% 6%
100
4.4% 3.4% 68.9
5.4%
5.2%
5.2%
80
73.3 68.2 60.6

( + 6.3%)
4%
60
48.9
40
41.9
2%
20
0
0%
15
North America
FY07 1Q
Net Sales
Yen (billions)

FY08 FY07 1Q 2Q 1H FY08 1H 4Q
2Q
3Q
1,467.9
1,421.0
1,612.1
1,671.4
+ 9.6%
1,583.3
1,557.1
2,888.9
3,140.5
Yen (billions)
+ 8.7%
220 200 180
7.8% 160 6.7% 140 120 114.4 100 95.7 80 60 40 20 0

1Q 2Q FY07
<Increase Factors> - Increased profit from higher revenue in automobile and financial services business segments - Continuing cost reduction effects - Currency effects of weakened yen, etc. <Decrease Factors> - Change in model mix - Increased sales incentives in motorcycle and automobile business segments - Increasing raw material prices, etc.
210.2
213.0
( + 1.4%)
10%
7.3%
7.7% 6.1% 128.4
7.5%
8% 7.3% 6.8%
6% 116.0
( + 21.2%)
118.2 97.0
4%
2%
0%
3Q 4Q 1Q FY08 2Q 1H FY07 1H FY08
16
Europe
FY07 1Q
Net Sales

FY08 FY07 1Q 2Q 1H FY08 1H 4Q
2Q
3Q
325.1
310.7
271.6
440.1
+ 25.8%
400.2
390.8
635.9
791.0
Yen (billions)
+ 24.4%
Yen (billions)
30
<Increase Factors> - Increased profit from higher revenue - Continuing cost reduction effects - Currency effects of weakened yen, etc. <Decrease Factors> - Increased SG&A expenses, etc.
5% 4.3%
27.0
( + 74.4%)
25
4%
3.4%
20
2.9% 2.9% 16.7 2.6% 2.0% 12.6
( + 84.7%)
3% 2.4% 15.5 2% 10.3
15
10
9.0 1.4%
6.4 3.7
1%
0
0%
17
Asia
FY07 1Q
Net Sales
Yen (billions)

FY08 FY07 1Q 2Q 1H FY08 1H 4Q
2Q
3Q
287.5
313.5
303.4
366.9
+ 32.6%
393.3
415.6
601.0
808.9
Yen (billions)
+ 34.6%
10% 9.4% 70.3 8.7% 8%

( + 86.7%)
8.0%
60
6.8% 5.8% 6.7% 5.2%
<Increase Factors> - Increased profit from higher revenue - Currency effects of weakened yen, etc. <Decrease Factors> - Increased SG&A expenses, etc.
6.3% 6%
40
37.6 36.9 33.4
( + 82.9%)
4%
20
19.4 18.2
20.2
19.2
2%
0
0%
18
Other Regions
FY07 1Q
Net Sales
Yen (billions)

FY08 FY07 1Q 2Q 1H FY08 1H 4Q
2Q
3Q
176.9
196.3
193.0
231.3
+ 36.4%
226.3
267.9
373.2
494.2
Yen (billions)
60
+ 32.4%
50
<Increase Factors> - Increased profit from higher revenue - Continuing cost reduction effects - Currency effects of weakened yen, etc. <Decrease Factors> - Increased SG&A expenses, etc.
11.3%
51.9
( + 41.5%)
10.9% 9.6% 9.8%
10.5%
10%
40
8.6%
8.3%
8.4% 36.6
30
30.1
(+ 40.7%)
20
15.2
21.4 16.0
21.7 19.5
5%
10
0
0%
19
Forecast: Unit Sales by Business Segment

Unit sales of Honda-brand motorcycle products that are manufactured and sold by overseas affiliates accounted for under the equity method, but do not use any parts supplied by Honda and its subsidiaries
Motorcycles
- 789
Approx. 4,840 Approx. 4,000 4,680
Automobiles
+ 283
Power Products
- 86
3,960 3,652
248 310
3,935
315
6,000
Unit
(thousands) 12,000
Approx. 2,860
6,421
406 760
6,220
410 1,020
6,335
420 955
Other Regions Asia
750
750
5,000
10,369
1,305
9,000
3,000
620 390 390
9,930
1,535
9,580
1,555 324
1,625
4,000
1,650
1,715
Europe
2,000 6,000
7,895
7,220
6,855
1,788
1,850
1,855
3,000
3,103
2,000 1,000 3,000 1,000
2,560
2,670
North America
329 503 337

FY07
295 550 330

FY08
Forecasts of Jul. 25th
295 545 330

FY08 Revised
672
FY07
660
FY08
625 527
FY08 Revised FY07
Japan
580
FY08
575
FY08 Revised
20
FY08 Financial Forecasts (Consolidated)

Yen (billions)
FY07
Results
FY08
Revised Forecasts
Change amount %
Change from previous forecasts
Net sales & other operating revenue Operating income Income before income taxes Equity in income of affiliates Net income
EPS (Yen)
11,087.1 851.8 792.8 103.4 592.3

324.62
12,300.0 880.0 870.0 98.0 640.0

352.85
+ 1,212.8 + 28.1 + 77.1 - 5.4 + 47.6 + 28.23
+ 10.9% + 3.3% + 9.7% - 5.2% + 8.0%
- 50.0 -15.0 + 1.0 + 15.0
(Sep. 30, 2007)
Average Rates (Yen) US Dollar
117
1H: 115 2H: 119
116
1H: 119 2H: 113
stronger by 1 yen
1H: weaker by 4 yen 2H: stronger by 6 yen
stronger by 1 yen
(1H:stronger by 2 yen 2H: 0 yen)
Euro
151
1H: 146 2H: 155
155
1H: 162 2H: 148
weaker by 4 yen
1H: weaker by 16 yen 2H: stronger by 7 yen
0 yen
(1H: stronger by 1 yen 2H: 0 yen)
21
Forecast: Change in Income Before Income Taxes

Yen (billions)
Income before income taxes + 77.1 bn. yen ( + 9.7 %)

Operating Income + 28.1 bn. yen ( + 3.3 %)
- 8.0
Other Income & Expenses
+ 49.0 bn. yen

- 106.0
Increase in SG&A
+ 174.3
+ 14.0 - 38.2
Change in R&D
+ 6.0
Currency Effect
+ 35.0
Fair value of derivative instruments
Others
870.0
792.8
Revenue, model mix, etc.
FY07
FY08
Revised Forecasts
22
FY08 Financial Forecasts (Consolidated)
Yen (billions)
FY07
Results
FY08
forecasts
Change + 127.9 + 48.2 + 38.2
Change from previous forecasts
Capital expenditures * Depreciation and amortization * R&D expenses
627.0 361.7 551.8
755.0 410.0 590.0
* Capital expenditures in results and the forecast aforementioned exclude investment in operating leases. Depreciation and amortization in results and the forecast aforementioned exclude depreciation of investment in operating leases.
23
Dividend to Shareholders
Yen
Dividend per share 1st quarter End 2nd quarter End
FY07 Results
FY08 ( Projects )
Increase from FY07 results
30 17 20 67
20 + 12 22 ( 22 ) ( 22 ) ( 86 ) (+ 5) (+ 2) ( + 19 )
3rd quarter End 4th quarter End Fiscal Year
24
Return to Shareholders
Purchase of the Companys own shares *1 Dividend amounts *2 Shareholders return ratio *3 Payout ratio
(billion yen)
250 30% 200
150
20%
100 10% 50
0
FY02 FY03 FY04 FY05 FY06 FY07 FY08(P)
*1: Purchase of the Companys own shares amounts correspond to shareholders meetings date *2: Dividend amounts correspond to each fiscal years record date *3:Shareholders return ratio = Cash dividend + Purchase of Companys own shares Net income
0%
25
Table of Contents
FY07* Financial Results Outline Profit Analysis Segment Information FY08* Financial Forecasts Outline (Sales units / Profit analysis / Capital Expenditures / R&D etc.) Returning Profit to Shareholders Highlights of Major Strategies for Business Growth Automobile Business : North America BRICs Japan Motorcycle Business : Asia Brazil - Steady Growth of Hondas subsidiaries - Strong position in the market - Stable increase in slowing market - Steady Growth - Improving margin of Fit, highest-selling model
Production capacity - Continuous growth
*FY07: Fiscal year ended March 31, 2007
FY08: Fiscal year ending March 31 , 2008
26
Update on Inventory and Incentives

Days Days Inventory Inventory
(days)
Incentives Incentives
(U.S.$ / unit)
3,000
Source: Autodata
Passenger Cars
U.S. Big 3
Passenger Cars
100
Industry average
2,000
50
Japanese Automakers
1,000
Honda
Honda
0
Jan.05 J ul Jan.06 J ul Jan.07 Jul
Oct.
Jan.05
Jul
Jan.06
Jul
Jan.07
July
Oct.
Light Trucks
5,000
Light Trucks
120
U.S. Big 3
4,000
Industry average
3,000
70
Japanese Automakers
2,000
1,000
Honda
20
Jan.05 Jul Jan.06 Jul Jan.07 Jul
0
Honda
Jan.05 Jul Jan.06 Jul Jan.07 July
Oct.
Oct.
Honda maintains sound inventory level and lowest incentive level in both segments
27
Hondas Principal Models Inventory / Incentives / Residual Value

Days Days Inventory Inventory
Passenger Cars
(U.S.$ / unit)
2,500
Incentives Incentives
Passenger Cars Source: Autodata
(days)
100
Residual Residual Value Value (( 36 36 months) months)

Source: Auto Lease Guide
Accord
75
2,000
Accord
1,500
Accord Accord LX LX (4D) (4D) 54% 54%
50
1,000
25
Civic
500
Civic Civic LX LX (4D) (4D) 59% 59%

Civic
0
Jan.05 Jul Jan.06 Jul Jan.07 Jul
Oct.
Jan.05
Jul
Jan.06
Jul
Jan.07
July
Oct.
Light Trucks
100
2,500
Light Trucks
Odyssey Odyssey LX LX 52% 52%
2,000
75
Odyssey
1,500
50
1,000
25
500
CR-V CR-V EX(4WD) EX(4WD) 60% 60%

CR-V
Odyssey CR-V
0
0
Jan.05 Jul Jan.06 Jul Jan.07 July
Oct.
Jan.05
Jul
Jan.06
Jul
Jan.07
Jul
Oct.
28
Update on Hondas U.S. Automobile Business

Industry Demand and Honda
Unit (thousands) Unit (thousands)
Hondas Retail Unit Sales

(aggregate numbers of Honda brand and Acura brand)
20,000
12% Passenger Cars Light Trucks 16,965 Honda share 17,134 16,831 16,884 16,652 16,556 16,000 10%
Passenger Cars Light Trucks 1,500

1,349 1,394 1,462 1,509
1,560
15,000
1,207
1,247
8%
1,000
10,000
6%
4%
500
5,000 2%
0 CY01 02 03 04 05 06 07(E)
0%
0 CY01 02 03 04 05 06 07(P) Source: Honda
Hondas steady growth despite weak SAAR
29
Automobile Demand in BRICs Markets

Industry: Unit (thousands)
Industry Demand (excluding commercial vehicles)

China India Brazil Russia
10,000
8,000
6,000
4,000
2,000
0 CY01 02 03 04 05 06 07(E)
Source: Global Insight
30
Hondas Growth in China

Unit (thousands)
6,000
(excluding commercial vehicles)
Unit (thousands)
10%
Hondas Unit Sales

Over 400
450 400
5,000 8%
350
323
4,000 6%
WDHAC models
300 250
257 214 Honda share
4%
Civic CR-V Fit
3,000
200
City GHAC models
2,000
150
123
2%
Odyssey
100 50
53 66
Accord
1,000
0 CY01 02 03 04 05 06 07(E)
0%
0 CY01
GHAC model line up
02
03
04
05
06
07(P)
Source: Honda
Source: Honda
Hondas Progress in China

1 Enhancing model lineup and dealer network
- New CR-V introduced in Apr. 2007 - Number of Dealer outlets: GHAC 300, WDHAC 140, Acura 5(Oct.2007) - Introduced Acura (TL/RL/MDX)
Fit
City
Accord
Odyssey
2 Progress in Manufacturing Operation

GHAC*1 : Annual production capacity 360 thousand units WDHAC*2 : Annual production capacity 120 thousand units CHAC*3 : Added 2nd shift from Apr. 2007 CHAM*4 : A new powertrain plant started operation in Mar. 2007
*1 GHAC: Guangzhou Honda Automobile Co., Ltd. *2 WDHAC: Dongfeng Honda Automobile Co., Ltd. *3 CHAC: Honda Automobile (China) Co., Ltd. *4 CHAM: Honda Auto Parts Manufacturing Co., Ltd.
WDHAC model line up
Civic
CR-V
31
Hondas Growth in India

Unit (thousands) 1,200

(excluding commercial vehicles, SUV and MUV)
10%
Unit (thousands)
Hondas Unit Sales

70
80 70
Category
1,000
Premium "A"
Honda share
8%
60 50
6%
800
800cc
55 CR-V Civic 40 35
600 4% 400
40 30 20
2%
City
15
200
10 0
10
12
Accord
0 CY01 02 03 04 05 06 07(E)
0%
CY01
02
03
04
05
06
07(P)
Source: Honda
Honda model line up in India
Hondas Progress in India

1. Enhancing dealer network - Number of Dealer outlets: 34 (Mar. 2003) 63 (Sep. 2007) 2. Further Accelerating production capacity expansion
Existing Plant 50,000 100,000 units (by the end of 2007) Second Plant 60,000 units (initial) (To start operation by the end of 2009)
City
Civic
Accord
CR-V
32
Update on Hondas Automobile Business in South America Industry Demand and Honda
Unit (thousands)
Hondas Unit Sales

Unit (thousands)
(including commercial vehicles)

Brazil Columbia Argentina Ecuador Venezuela Peru 8% Chile 10%
Good sales of FFV models contributed to growth in 2007.

118
3,500 3,000 2,500
120 100 80
Flexible Fuel Vehicles (currently marketed in Brazil) Petrol Engine Vehicles

Brazil
84 68
84
2,000 1,500
Honda share
6%
60
4%
57 57 50
67
40
1,000
2%
36 26 24 21 32
500 0 CY01 02 03 04 05 06 07(E)

0%
20 0
22
CY01
02
03
04
05
06 07(P) Source: Honda
Hondas Progress in Brazil

1. Features of Honda FFV models in Brazil - Adapt to ethanol-to-gasoline ratios of between 20% and 100% 2. Enhancing dealer network - Number of Dealer outlets: 94 (2004 end) 130 (Sep. 2007) 3. Further Accelerating production capacity expansion
50,000 100,000 units per year in 2007
Flexible Fuel Vehicles introduced in Brazil Civic FFV Fit FFV
Introduced in Nov. 2006
Introduced in Dec. 2006
33
Hondas Growth in Russia

Unit (thousands)

(excluding commercial vehicles)
Foreign brands Domestic brands
Unit (thousands)
Hondas Unit Sales

38.0
2,000
35 30
1,500
25 20 15
500
1,000
15.7 Others
10
8.9
CR-V Civic Accord
5
0.8
0
3.5 1.3
6.0
0
CY01 CY02 CY03 CY04 CY05 CY06 CY07
CY01
02
03
04
05
06
07(P)
Source: AEB (The Association of European Businesses) & DRI
Source: Honda
Honda model line up in Russia
Hondas Progress in Russia

1 Starting business - Established subsidiary in Feb. 2004
Jazz
Civic 5D
Civic 4D
2 Enhancing dealer network - Number of Dealer outlets: 15 (2004 end) 34 (Sep. 2007) to expand mainly in large cities 70 outlets in a few years
CR-V
Accord
Legend
34
Update on Hondas Automobile Business in Japan

Unit (thousands)

Registered vehicle Mini
Unit (thousands)
Hondas Unit Sales

892 873
900
20%
6,000
800
732
700
15%
717
710
691
Others
660
600 500
Minivan
Honda share
4,000 10%
400
Small
300
2,000 5%
200 100
Mini
0%
0 FY02 03 04 05 06 07 08(P)
Source: Honda
Models introduced in FY2007 and 2008
CY01
02
03
04
05
06
Source: Honda
07(E)
Hondas progress in Japan -Introduced all-new Fit in Oct. 2007 -Introducing all-new Accord by the end of 2007 -Aiming to enhance mini-vehicle models
Stream
Jul. 2006
Elysion Prestige
Dec. 2006
CR-V
Oct. 2006
Crossroad
Feb. 2007
Fit
Oct. 2007
35
Expansion of Production Capacity (Automobiles)

FY2007: 3,700 <Sales Volume> <Production Capacity (Plan as at Oct. 2006)>
CY2006 Japan
U.S. Canada Mexico
2010: 4,500 thousand

2008
Indiana
CY2007
2009
Yorii
2010 +200
1,300
980 390 30
+200
+20
North America
U.K. Turkey
1,400
250 30
+20 +120
Europe
Thailand Indonesia Philippines Malaysia Vietnam India Pakistan China Taiwan
280
120 50 15 20 10 50 50 530 30
+50
+60
Asia
Brazil Argentina
875
50 0
+30
+20 +30 4,025 4,425

New plant
Others Total
50 3,905 4,455 4,655 36

Capacity expansion
Expansion of Production Capacity (Automobiles)
Unit (thousands)
2010 2008
Thailand +120 Turkey +20
2009
Yorii Japan +200
4,655
2007
India Indiana Argentina +60 +30 +200
3,905
Mexico Brazil +20 +50
India +50
3,500
2006
37
Growth Potential of Principal Asian Motorcycle Markets

Penetration Rate for Motorcycles
Population (millions)
GDP per capita (U.S.$)
People / Unit
Units in operation (millions)
15,482 5,718 3,136 723 1,640 796

JETRO 2006
Taiwan Malaysia Thailand Vietnam Indonesia India
1.7 people/unit 3.5 4.2 4.9 9.3 36.6

100 200 1,000 Honda wholesales: Unit ( thousands ) 14,000
12,000
Industry: Unit ( thousands ) 40,000

China Indonesia Vietnam 30,000 Honda's units sales India Thailand Philippines
Business expansion in Vietnam market due to deregulation
10,000
8,000 20,000 6,000
4,000 10,000 2,000
0 CY01 02 03 04 05 06
0 07(E) Source: Honda
38
India
Penetration Rate for Motorcycles : 36.6 people / unit Solidify business foundation with 2 companies in rapidly growing market
10,000
To expand annual production capacity (4,900 5,400 thousand units by the end of 2007)
Other brands Hero Honda Honda Motorcycle & Scooter India Honda share
50%
8,000
6,000
40%
4,000 30% 2,000
CY 01
02
03
04
05
06
07(E)
Principal models of Hero Honda Motors Limited
Principal models of Honda Motorcycle & Scooter India
20% Source : Honda
Splendor+
CY06 : 1,142 thousand units
CD Deluxe CBZ X-treme

Introduced in Nov. 06 Introduced in Nov. 06
Activa Shine
CY06 : 397 thousand units Introduced in Apr. 06
39
Vietnam
Honda to enhance product pipeline for growing market
Other brands Honda Honda share
To expand of production capacity by the end of 2008 (1,000 1,500 thousand units per year)
Honda Share
60%
2,500 2,000 1,500 1,000 500 0 CY01 02 03 04 05 06 07(E)

Source: Honda
40%
20%
0%
Principal models
Super Dream
Wave RS
Future Neo FI
Click 40
Indonesia
Penetration Rate for Motorcycles : 9.3 people / unit
Continuous competitive market situation

Honda Share
6,000 5,000
60% 50%
4,000 40% 3,000 2,000 1,000 0 CY01 02 03 04 05 06 07(E)

Added annual production capacity in Sep. 2005 (2,000 3,000 thousand units)
30% 20% 10% 0%

Source: Honda
Principal models
Revo
* AT model: Motorcycles equipped with automatic transmission
Vario (AT* model) 41
Brazil
Solid operation as a market leader in ongoing expansion of Brazilian market
1,600 1,400 1,200 1,000 800 600 400 200 0 CY01
Honda Share
100%
80%
60%
40%
Accelerating expansion of production capacity by the end of 2007 (1,350 1,500 thousand units per year)
20%
0% 02 03 04 05 06 07(E)
Source: Honda
Principal models
CG 150 Titan
CG 125 FAN
Biz 125
CBX125 Twister 42
Hondas Continued Growth (Production) Motorcycles

<Production Capacity (Plan as at Aug. 2007)>
CY2006 Japan North America (U.S.)
Spain Italy
Unit (thousands)
CY2007
2008 600
2009
2010
700 430
30 200
Europe
Thailand Indonesia Vietnam Philippines Malaysia India Pakistan China
230
1,500 3,000 860 500 250 4,900 500 2,600
+140
+500
HHML +500
HMSI +200
Asia
Brazil Peru Argentina
14,110
1,000 15
+350
+150 +25
Others Total
New plant
1,030 16,500 17,165

Capacity expansion
18,165
18,165
18,365
43
(Reference) Transition of commodity markets (Base metal prices)
3000
(US$/tonne)
Aluminum
9000
(US$/tonne)
Copper
8000 2500 7000
2000
Average 2,483
Average 2,550
6000
5000 1500 4000
Average 7,666
Average 7,699
1000
3000
2000 500 1000
0
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
0
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
FY06
FY07
FY08
FY06
FY07
FY08
*Source: LME
44
(Reference) Transition of commodity markets (Precious metal prices)

(US$ per troy oz)
Platinum
(US$ per troy oz)

6000
Rhodium
Average 6,120 Average 4,694
1200
5000
1000
800
Average 1,218
Average 1,294
4000
3000
600
2000
400
200
1000
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
FY06
(US$ per troy oz) 400
FY07
FY08
FY06
FY07
FY08
Palladium
300
Average 326
200
Average 349
100
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
FY06
FY07
FY08
*Source: Platinum Today
45
Caution Cautionwith withRespect Respectto toForward-Looking Forward-LookingStatements: Statements:

This Thisslide slidecontains containsforward-looking forward-lookingstatements statementsabout aboutthe theperformance performanceof ofHonda, Honda,which which are based on managements assumptions and beliefs taking into account information are based on managements assumptions and beliefs taking into account information currently currentlyavailable availableto toit. it.Therefore, Therefore,please pleasebe beadvised advisedthat thatHondas Hondasactual actualresults resultscould could differ materially from those described in these forward-looking statements as a result differ materially from those described in these forward-looking statements as a result of ofnumerous numerousfactors, factors,including includinggeneral generaleconomic economicconditions conditionsin inHondas Hondasprincipal principal markets marketsand andforeign foreignexchange exchangerates ratesbetween betweenthe theJapanese Japaneseyen yenand andthe theU.S. U.S.dollar, dollar,the the Euro and other major currencies, as well as other factors detailed from time to time. Euro and other major currencies, as well as other factors detailed from time to time.
Accounting Accountingstandards: standards:

Our Ourconsolidated consolidatedfinancial financialstandards standardsare areprepared preparedin inconformity conformitywith withU.S. U.S.generally generally accepted accounting principles. accepted accounting principles.
Notice Noticeon onthe theFactors Factorsfor forIncreases Increasesand andDecreases Decreasesin inIncome: Income:
The Thevarious variousfactors factorsfor forincreases increasesand and decreases decreasesin inincome incomeset setforth forthin inthis thisslide slidehave have been classified in accordance with a method that Honda considers reasonable. been classified in accordance with a method that Honda considers reasonable.
46

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Honda Update November 2007

Production capacity - Continuous growth

*FY07: Fiscal year ended March 31, 2007,

FY08: Fiscal year ending March 31, 2008

Outline of 2nd Quarter Financial Results (Consolidated)

FY07 2,816 884 1,187

FY08 2,333 937 1,258

Motorcycles Automobiles Power Products

- 17.2% + 6.0% + 6.0%

FY07 2,630.8 193.0 163.6 27.4 127.9 70.05

FY08 2,971.3 * 286.3 * 269.9 * 26.2 208.4 * 114.94 *

+ 12.9% + 48.3% + 65.0% - 4.4% + 63.0% + 44.89

Net sales & other operating revenue

approx. * Record high 1,813,784,000 shares

(weighted average number of shares outstanding )

Average Rates (Yen)

weaker by 2 yen weaker by 14 yen

Outline of 2nd Quarter & 1st Half Financial Results (Consolidated)

FY07 2,816 884 1,187

FY08 2,333 937 1,258

FY07 5,196 1,780 2,911

FY08 4,586 1,883 2,787

Motorcycles Automobiles Power Products

- 17.2% + 6.0% + 6.0%

- 11.7% + 5.8% - 4.3%

FY07 2,630.8 193.0 163.6 27.4 127.9 70.05

FY08 2,971.3 * 286.3 * 269.9 * 26.2 208.4 * 114.94*

FY07 5,230.5 396.5 355.0 57.6 271.3 148.52

FY08 5,902.4 * 508.0 * 488.2 * 63.2* 374.6 * 206.26*

+ 12.9% + 48.3% + 65.0% - 4.4% + 63.0%

+ 12.8% + 28.1% + 37.5% + 9.8% + 38.1%

approx. * Record high 1,813,784,000 shares

approx. * Record high 1,816,129,000 shares

(weighted average number of shares outstanding )

(weighted average number of shares outstanding )

Average Rates (Yen)

weaker by 2 yen weaker by 14 yen

weaker by 4 yen weaker by 16 yen

Factors> - Increasing raw materials prices - Increases in depreciation expenses, etc.

Factors> - Continuing cost reduction effects, etc.

+ 27.0 bn. yen + 17.2 bn. yen + 44.2 bn. yen

<Impact on Operating income> <Impact on Other Income & expenses> (Exhibit 1)

Factors> - Increasing raw materials prices - Increases in depreciation expenses, etc.

Other Income & Expenses + 21.7 bn. yen

Factors> - Continuing cost reduction effects, etc.

Factors> - Decreased expenses for advertising, sales promotion, etc.

- 8.8 - 30.1 + 133.6

Fair value of derivative instruments

+ 77.5 bn. yen + 3.8 bn. yen + 81.4 bn. yen

<Impact on Operating income> <Impact on Other Income & expenses> (Exhibit 1)

Motorcycle Unit Sales (Motorcycles All-Terrain Vehicles, etc.)

Major increase/decrease factors

107 121 68 1,645 392 2,333

Other Regions Total

176 232 187

163 201 191

Europe North America Japan

Net Sales/Operating Income/Operating Margin

Operating Income Operating Margin

45.2 7.0% 37.0