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Honda Opens Piston Plant in Vietnam

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Honda Motor Co., Ltd. (HMC) has announced the inauguration of the first piston workshop in Vietnam. This will support Honda’s plans to raise localization rates to offer products at competitive prices. The company’s shares, which are down roughly 11% over a year, gained around 0.9% during trading session last Friday.

Honda will be developing pistons in the Vietnam factory located in Phuc Thang - Phuc Yen - Vinh Phuc province. The piston plant spans across 3,000 meter square.

Honda invested VND 230 billion (roughly $10.8 million) in the workshop which will start operations on Apr 1, 2014, and will have a maximum capacity of 2.4 million units per year.

Presently, Honda has an engine casting workshop with a capacity of 2 million units per year, a sintering workshop (2.3 million units a year) and a spare parts center in Vietnam. The addition of the piston workshop will provide the company a strong foundation for local operations and exports.

Separately, Honda completed the production of 15 million bikes in Vietnam on Mar 21, 2014. The 15 millionth bikes were of Air Blade make. Air Blade was first introduced in Vietnam in Apr 2007 and eventually became one of the leading models in the market.

Honda Vietnam operation strives to come up with superior quality products to meet demand. The automaker also focuses on enhancing export from Vietnam and has exported 40,000 units in 2013 and expects to sell abroad another 100,000 units in 2014.

Honda also achieved two production milestones in the U.S. recently. The company completed the production of 20 million vehicles on Mar 20. The 20 millionth vehicles was also the 10 millionth Honda Accord built in the U.S.

Currently, Honda retains a Zacks Rank #2 (Buy).

Some other automobile stocks worth considering are Tata Motors Limited (TTM), Daimler AG (DDAIF) and Tesla Motors, Inc. (TSLA). Tata Motors and Daimler sport a Zacks Rank #1 (Strong Buy) while Tesla carries the same Zacks Rank as Honda.

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