Keihin to Double Motorcycle Parts Output

Keihin Corp., an auto parts supplier controlled by Honda Motor Co., will double production of fuel injectors in Thailand that improve motorcycle fuel- efficiency as Asian governments impose more stringent emissions regulations.

Keihin, 41 percent owned by Honda, will have capacity to produce about 1.6 million fuel injectors annually in Thailand by the end of this fiscal year, said Chief Executive Officer Kunimichi Odagaki in an interview. He spoke with Bloomberg Television in an interview broadcast today.
Tokyo-based Keihin is increasing output to help meet Honda's goal of using fuel injectors instead of carburetors on almost all of its motorcycles by 2010, when China and India plan to adopt stricter so-called Euro IV emissions standards. Honda is the world's largest maker of motorcycles.

``Keihin must go along with Honda's environmental agenda,'' said UBS AG analyst Kunihiro Matsumoto. ``However, they cost more to make than carburetors, so it may not boost earnings in the short-term.''

Fuel injectors use computers to mix air and gasoline into a controlled spray that burns fuel more efficiently than air and gasoline mixed by carburetor. Carmakers started phasing out carburetors for cars in the 1970s, while less stringent emissions standards for two-wheel vehicles delayed the transition for motorcycles, according to Atsushi Ishii, a powertrain analyst at CSM Worldwide in Tokyo.

Fuel Efficiency
Fuel injectors improve fuel economy by at least 10 percent, compared with carburetors, according to UBS's Matsumoto.

``We are responsible for fuel delivery systems'' of vehicles, Odagaki said. ``Given emissions and fuel efficiency issues, there is a need for more precise control'' of fuel delivery.

Odagaki, who spent four years overseeing the development of Honda's Odyssey minivan, said Keihin is still negotiating prices with Honda to offset higher manufacturing costs.
The cost of the production capacity increase in Thailand is included in Keihin's full-year capital expenditure budget of 63,.5 billion Baht ($1.87 billion), Odagaki said. The company has no further plans for major capacity expansion, he said.

Keihin expects operating profit will fall 18 percent to 19.6 billion yen in the year ending March 31 on lower sales in the U.S. and Europe.

The company has plans to produce fuel injectors in Brazil this year, and may make them in China at existing carburetor plants, depending on demand, according to Keihin spokesman Masami Akiyoshi.

Motorcycle parts made up about a quarter of Keihin's total sales in the year ended March 31.
Keihin rose 0.1 percent to close at 1,572 yen in Tokyo. The shares have declined 21 percent this year, compared with a 19 percent drop in the benchmark Topix index
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