Honda Motor Co subsidiary Yachiyo Industry Co. Ltd, will build a new plant in Japan for making mini-vehicles, in which Honda will invest 50 billion yen ($491 million;) as part of an effort to strengthen its mini-vehicle business.
Rising oil prices and global environmental concerns has boosted demand for cheap, fuel-efficient tiny cars, the Japanese automaker stated.
The new plant in the Mie prefecture, situated in southwest of Nagoya, central Japan, will begin with engine production in 2009, and auto production a year later, the Tokyo-based company said in a statement.
Combined with an existing nearby plant, the production capacity will be 240,000 units a year, and the new plant will make mini-vehicles models of Life and Zest.
Known as "kei," or light, vehicles in Japanese, mini cars are powered by an engine size of up to 660 cubic centimeters and they have been popular for years in Japan, with demand for these cars picking up in the global market as well.
To promote the growth of the car industry, as well as to offer an alternative delivery method to small business and shop owners, kei car standards were introduced in Japan, which limits the physical size, engine displacement and power of the vehicles by law.
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