Thursday, January 15, 2009

Honda scraps projects for survival

In the face of auto-sales slump, Japanese Automaker, Honda Motor Co., Ltd. (TYO: 7267) decided to scrap its various projects. These include development of its convertible CR-Z, which is going to be the successor of Honda S2000, the company's popular sports car model, a rear-drive line-up of Acura, development of a new V-8 engine and launch of a new single global model for Honda Accord. In order to keep the company running, the automaker had to shutdown these projects. The production of S2000 will also stop at the end of 2009. CNet reports:

Tough times already had killed the planned 2010 Acura NSX, which would have had a front-mounted V-10. Now Honda also has decided to shelve a rear-drive V-8 Acura that was meant to take on BMW in 2015, according to Autocar. The V-8 -- long a thorny issue, given Honda's green image -- was seen as the wrong powerplant because of the uncertain future of fuel prices.

American automakers observed sales slump when price of fuel went up. All the major American automakers specialize in building trucks, pickups and SUVs. Due to the price rise of fuel, people stopped buying these cars. At such a time, Honda motor enjoyed a little success because unlike its competitors, Honda specializes in producing fuel-efficient small cars. However, the worldwide economic recession affected the auto industry. Now, like every other automaker, Honda is trying hard to survive these tough economic times.

Here, I like to mention that even companies like Google are finding things to be tough.

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