Honda 2007 Annual Report Download - page 28

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26
Honda Soltec: Scheduled to start operation
in fall 2007
Financial Services Business
Power Product and Other Businesses／Financial Services Business
in generator sales. In Europe, despite flagging sales of core push lawn-
mowers, due to inclement weather, and a decline in generator sales attribut-
able to rising sales of lower-priced Chinese models, overall sales were
approximately the same level as the previous year, thanks to an increase in
OEM engine sales.
Since 2003, Honda’s sales of home-use cogeneration* units to gas
companies in Japan have exceeded 45,000 units. In March 2007, Climate
Energy LLC of the United States began sales of Freewatt, a compact home-
use system that combines the Honda cogeneration unit with Climate
Energy’s heating unit.
* Cogeneration refers to the application of energy derived from a single source to two or more applica-
tions, such as using the heat supplied during the combustion process that drives an engine for other
heating or cooling purposes. In addition to being highly efficient during operation, such systems
reduce CO2 emissions by reducing the need for other forms of energy.
Solar Business
Honda has developed a next-generation thin film solar cell that requires only
half as much energy to manufacture as conventional solar cells made of
crystalline silicon. In December 2006, Honda established Honda Soltec Co.,
Ltd., in Ozu-machi, Kumamoto Prefecture, to sell these solar cells. Although
we plan to begin sales in autumn 2007, we began sales of solar cells made
by Honda Engineering in June 2007 in only the Kanto area (including Tokyo).
Financial Services Business, Supporting Honda’s
Core Businesses
Honda offers a variety of financial services to support sales of Honda
motorcycles, automobiles and other products. These services are provided
through financial subsidiaries in Japan, North America, Europe and other
areas. The services of these subsidiaries include loans, leases and other
financial services, such as wholesale financial services to dealerships.
Financial services are particularly prevalent in the United States, where
Honda’s financing services are used for approximately half of all its
automobile purchases.
Honda maintains some of the best credit and receivables management
in the industry, which is reflected in its low rates of credit loss and
delinquent payments.
In fiscal 2007, operating income rose 27.6%, to ¥115.5 billion. Particularly
in the United States, financial services subsidiaries experienced changes in
the costs of raising fund due to interest rate shifts, as well as movement in
credit loss percentages and used vehicle prices, which affected reserve levels.