Honda Motor President and CEO Takahiro Hachigo

TOKYO -- Honda Motor is considering expanding its partnership with General Motors to encompass hybrid and self-driving cars, looking to gain an edge as automakers increasingly compete on cutting-edge technology.

"We're thinking about what we can do together with GM on a technological level," Honda President Takahiro Hachigo told The Nikkei on Thursday.

The two automakers joined hands in 2013 to work on a core system for fuel cell vehicles. They intend to release vehicles equipped with the jointly developed system under their own brands by 2020, after Honda's planned March 2016 rollout of an independently developed fuel cell car.

"The fuel cell partnership has gone extremely well," Hachigo said. "We want to consider expanding it to include self-driving technology, information technology and electrification." The automaker has already begun discussing the prospect with GM, he said. A broader alliance, likely covering such areas as sensors and control technology, would shorten development time and improve cost competitiveness.

Though Honda is working on safety and other technologies on its own, it has no target date for bringing a self-driving car to market. And while GM plans to launch cars that can operate autonomously on highways in 2017, it lags behind Honda on hybrids. The automakers hope to bring together their technologies to create more-competitive eco-cars and safety features.

Supply-demand gap

Honda is also racing to deal with excess production capacity, Hachigo said. The automaker set a global sales target of 6 million cars for fiscal 2016, but was forced to back down from this goal after selling just 4.47 million vehicles in fiscal 2014.

Honda's capacity is expected to reach 5.6 million vehicles a year at the end of fiscal 2015. Hachigo said the gap between sales volume and capacity is about 800,000 vehicles and that it will take four to five years to close that at the current pace of sales growth. The company hopes to accomplish that faster by maintaining production while improving its offerings.

The environment in Japan "is tough right now because of the consumption tax hike and the tax increase on minicars," Hachigo said. "I don't expect significant growth going forward."

The automaker downgraded its domestic sales projection by 6% in September. Honda will keep domestic output in the mid-800,000 vehicle range by ramping up exports to North America.

Hachigo showed greater optimism about China, where sport utility vehicles are selling well. "We've established a structure allowing us to sell 1 million vehicles in fiscal 2016," he said. The company aims to grow sales by launching a new version of the mainstay Civic sedan in 2016.

Asked about the recall of Takata airbags, of which Honda is the biggest user, Hachigo responded that "Honda is also conducting an independent investigation to determine the cause. We're not considering business support to individual parts makers."

On the Volkswagen emissions scandal, he said "there needs to be a system to check technology to ensure it meets legal standards."

(Nikkei)