Edgar Filing: HONDA MOTOR CO LTD

Annual Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

¨	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2013

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

¨	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

Commission file number 1-7628

HONDA GIKEN KOGYO KABUSHIKI KAISHA

(Exact name of Registrant as specified in its charter)

HONDA MOTOR CO., LTD.

(Translation of Registrant’s name into English)

JAPAN

(Jurisdiction of incorporation or organization)

No. 1-1, Minami-Aoyama 2-chome, Minato-ku, Tokyo 107-8556, Japan

(Address of principal executive offices)

Narushi Yazaki, Honda North America, Inc.,

ir@hna.honda.com, (212)707-9920, 156 West 56th Street, 20th Floor, New York, NY 10019, U.S.A.

(Name, E-mail and/or Facsimile number, Telephone and Address of Company Contact Person)

Securities registered pursuant to Section 12(b) of the Act.


Title of each class		Name of each exchange on which registered
Common Stock*		New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.


Title of each class		Outstanding as of March 31, 2013
Common Stock		1,802,297,290**

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act, Yes x No ¨

If this report is an annual or transmission report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such file). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or, a non-accelerated filer. See definition of “accelerated filer and large accelerated filer “in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S.GAAP x International Financial Reporting Standards as issued by the International Accounting Standards Board ¨ Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

*	Not for trading purposes, but only in connection with the registration of American Depositary Shares, each representing one share of Common Stock.

**	Shares of Common Stock include 50,168,219 shares represented by American Depositary Shares.


PART I

Item 1. Identity of Directors, Senior Management and Advisors			1

Item 2. Offer Statistics and Expected Timetable			1

Item 3. Key Information			1
A. Selected Financial Data			1
B. Capitalization and Indebtedness			3
C. Reason for the Offer and Use of Proceeds			3
D. Risk Factors			3

Item 4. Information on the Company			8
A. History and Development of the Company			8
B. Business Overview			8
C. Organizational Structure			25
D. Property, Plants and Equipment			26

Item 4A. Unresolved Staff Comments			28

Item 5. Operating and Financial Review and Prospects			28
A. Operating Results			28
B. Liquidity and Capital Resources			55
C. Research and Development			57
D. Trend Information			59
E. Off-Balance Sheet Arrangements			59
F. Tabular Disclosure of Contractual Obligations			60
G. Safe Harbor			60

Item 6. Directors, Senior Management and Employees			60
A. Directors and Senior Management			60
B. Compensation			73
C. Board Practices			74
D. Employees			74
E. Share Ownership			75

Item 7. Major Shareholders and Related Party Transactions			75
A. Major Shareholders			75
B. Related Party Transactions			75
C. Interests of Experts and Counsel			76

Item 8. Financial Information			76
A. Consolidated Statements and Other Financial Information			76
B. Significant Changes			77

Item 9. The Offer and Listing			77
A. Offer and Listing Details			77
B. Plan of Distribution			78
C. Markets			78
D. Selling Shareholders			78
E. Dilution			78
F. Expenses of the Issue			78

Item 10. Additional Information			79
A. Share Capital			79
B. Memorandum and Articles of Association			79
C. Material Contracts			86
D. Exchange Controls			86
E. Taxation			86


F. Dividends and Paying Agents			90
G. Statement by Experts			90
H. Documents on Display			90
I. Subsidiary Information			91

Item 11. Quantitative and Qualitative Disclosure about Market Risk			91

Item 12. Description of Securities Other than Equity Securities			93
A. Debt Securities			93
B. Warrants and Rights			94
C. Other Securities			94
D. American Depositary Shares			94

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies			95

Item 14. Material Modifications to the Rights of Security Holders and Use Proceeds			95

Item 15. Controls and Procedures			95

Item 16A. Audit Committee Financial Expert			96

Item 16B. Code of Ethics			96

Item 16C. Principal Accountant Fees and Services			96

Item 16D. Exemptions from the Listing Standards for Audit Committees			97

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers			99

Item 16F. Change in Registrant’s Certifying Accountant			99

Item 16G. Corporate Governance			99

Item 16H. Mine Safety Disclosure			101

PART III

Item 17. Financial Statements			102

Item 18. Financial Statements			102

Item 19. Exhibits			102

PART I

Unless the context otherwise requires, the terms “we”, “us”, “our”, “Registrant”, “Company” and “Honda” as used in this Annual Report each refer to Honda Motor Co., Ltd. and its consolidated subsidiaries.

Item 1. Identity of Directors, Senior Management and Advisors

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

A. Selected Financial Data:

The selected consolidated financial data set out below for each of the five fiscal years ended March 31, 2013 have been derived from our consolidated financial statements that were prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP).

You should read the U.S. GAAP selected consolidated financial data set out below together with “Item 5. Operating and Financial Review and Prospects” and our consolidated financial statements contained in this Annual Report.


	Fiscal years ended March 31,
	Yen (millions)
	2009		2010		2011		2012		2013
Income statement data:
Net sales and other operating revenue	¥	10,011,241	¥	8,579,174	¥	8,936,867	¥	7,948,095	¥	9,877,947
Research and development		563,197		463,354		487,591		519,818		560,270
Operating income		189,643		363,775		569,775		231,364		544,810
Income before income taxes and equity in income of affiliates		161,734		336,198		630,548		257,403		488,891
Equity in income of affiliates		99,034		93,282		139,756		100,406		82,723
Net income		150,933		282,611		563,477		222,074		392,638
Net income attributable to Honda Motor Co., Ltd.		137,005		268,400		534,088		211,482		367,149
Balance sheet data:
Total assets	¥	11,818,917	¥	11,629,115	¥	11,577,714	¥	11,787,599	¥	13,635,357
Long-term debt, excluding current portion		1,932,637		2,313,035		2,043,240		2,235,001		2,710,845
Honda Motor Co., Ltd. shareholders’ equity		4,007,288		4,328,640		4,439,587		4,392,226		5,037,477
Total equity		4,130,344		4,456,430		4,572,524		4,517,902		5,197,742
Common stock		86,067		86,067		86,067		86,067		86,067
Cash flow data:
Depreciation excluding property on operating leases	¥	441,868	¥	401,743	¥	377,272	¥	345,105	¥	335,536
Depreciation of property on operating leases		195,776		227,931		212,143		209,762		254,933
Total depreciation		637,644		629,674		589,415		554,867		590,469
Capital expenditures		635,190		392,062		318,543		397,218		626,879
Purchase of operating lease assets		668,128		544,027		798,420		683,767		793,118
Total capital expenditures		1,303,318		936,089		1,116,963		1,080,985		1,419,997

Weighted average number of shares outstanding


	(Thousands of shares)
	2009		2010		2011		2012		2013
Weighted average number of common shares outstanding		1,814,560		1,814,605		1,806,360		1,802,300		1,802,298

Net income attributable to Honda Motor Co., Ltd. per common share

	(Yen)
	2009		2010		2011		2012		2013
Basic	¥	75.50	¥	147.91	¥	295.67	¥	117.34	¥	203.71
Diluted		75.50		147.91		295.67		117.34		203.71

Net income attributable to Honda Motor Co., Ltd. per common share has been computed by dividing net income attributable to Honda Motor Co., Ltd. available to common shareholders by the weighted average number of common shares outstanding during each year.

Dividends declared during the period per common share


	(Yen)
	2009			2010			2011			2012			2013
Dividends declared during the period per common share		¥77.00			¥34.00			¥51.00			¥60.00			¥72.00
		(US$ 0.78	)		(US$ 0.37	)		(US$ 0.61	)		(US$ 0.73	)		(US$ 0.77	)

Additionally, a year-end dividend of ¥19 ($0.20) per common share aggregating ¥34.2 billion ($364 million) relating to fiscal 2013 was determined by our Board of Directors in April 2013 and approved by our shareholders in June 2013. This dividend will be paid in June 2013.

U.S. dollar amounts for dividends per share are translated from yen at the year-end exchange rate of each period.

Adjustments of prior years’ financial data

As described in notes (1)(w) and (1)(x) to the accompanying consolidated financial statements, certain adjustment has been made to the consolidated financial statement periods presented above.

The following table sets out information regarding the noon buying rates for yen in New York City as certified for customs purposes by the Federal Reserve Bank of New York expressed in yen per $1.00 during the periods shown. On May 31, 2013, the noon buying rate was ¥100.83=$1.00. The average exchange rate for the period shown is the average of the month-end rates during the period.


	(Yen)
Years ended March 31,	Average		Period end		High		Low
2009		100.85		99.15		110.48		87.80
2010		92.49		93.40		100.71		86.12
2011		85.00		82.76		94.68		78.74
2012		78.86		82.41		85.26		75.72
2013		83.26		94.16		96.16		77.41
2014 (through May 31, 2013)		99.18		100.83		103.52		92.96
Dec-2012						86.64		81.86
Jan-2013						91.28		86.92
Feb-2013						93.64		91.38
Mar-2013						96.16		93.32
Apr-2013						99.61		92.96
May-2013						103.52		97.28

B. Capitalization and Indebtedness

Not applicable.

C. Reason for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

You should carefully consider the risks described below before making an investment decision. If any of the risks described below actually occurs, Honda’s business, financial condition or results of operations could be adversely affected. In that event, the trading prices of Honda’s common stock and American Depositary Shares could decline, and you may lose all or part of your investment. Additional risks not currently known to Honda or that Honda now deems immaterial may also harm Honda and affect your investment.

Risks Relating to Honda’s Industry

Honda may be adversely affected by market conditions

Honda conducts its operations in Japan and throughout the world, including North America, Europe and Asia. A sustained loss of consumer confidence in these markets, which may be caused by continued economic slowdown, recession, changes in consumer preferences, rising fuel prices, financial crisis or other factors could trigger a decline in demand for automobiles, motorcycles and power products that may adversely affect Honda’s results of operations.

Prices for products can be volatile

Prices for automobiles, motorcycles and power products in certain markets may experience sharp changes over short periods of time. This volatility is caused by various factors, including fierce competition, which is increasing, short-term fluctuations in demand caused by instability in underlying economic conditions, changes in tariffs, import regulations and other taxes, shortages of certain materials and parts, steep rise in material prices and sales incentives. There can be no assurance that such price volatility will not continue for an extended period of time or that price volatility will not occur in markets that to date have not experienced such volatility.

Overcapacity within the industry has increased and will likely continue to increase if the economic downturn continues in Honda’s major markets, leading, potentially, to further increased price volatility. Price volatility in any of Honda’s markets could adversely affect Honda’s results of operations.

Risks Relating to Honda’s Business Generally

Currency and Interest Rate Risks

Honda’s operations are subject to currency fluctuations

Honda has manufacturing operations throughout the world, including Japan, and exports products and components to various countries.

Honda purchases materials and components and sells its products and components in foreign currencies. Therefore, currency fluctuations may affect Honda’s pricing of products sold and materials purchased. Accordingly, currency fluctuations have an effect on Honda’s results of operations and financial condition, as well as Honda’s competitiveness, which will over time affect its results.

Since Honda exports many products and components, particularly from Japan, and generates a substantial portion of its revenues in currencies other than the Japanese yen, Honda’s results of operations would be adversely affected by an appreciation of the Japanese yen against other currencies, in particular the U.S. dollar.

Honda’s hedging of currency and interest rate risk exposes Honda to other risks

Although it is impossible to hedge against all currency or interest rate risks, Honda uses derivative financial instruments in order to reduce the substantial effects of currency fluctuations and interest rate exposure on our cash flows and financial condition. These instruments include foreign currency forward contracts, currency swap agreements and currency option contracts, as well as interest rate swap agreements. Honda has entered into, and expects to continue to enter into, such hedging arrangements. As with all hedging instruments, there are risks associated with the use of such instruments. While limiting to some degree our risk fluctuations in currency exchange and interest rates by utilizing such hedging instruments, Honda potentially forgoes benefits that might result from other fluctuations in currency exchange and interest rates. Honda is also exposed to the risk that its counterparties to hedging contracts will default on their obligations. Honda manages exposure to counterparty credit risk by limiting the counterparties to major international banks and financial institutions meeting established credit guidelines. However, any default by such counterparties might have an adverse effect on Honda.

Legal and Regulatory Risks

The automobile, motorcycle and power product industries are subject to extensive environmental and other governmental regulations, including with respect to global climate changes

Regulations regarding vehicle emission levels, fuel economy, noise and safety and noxious substances, as well as levels of pollutants from production plants, are extensive within the automobile, motorcycle and power product industries. These regulations are subject to change, and are often made more restrictive, particularly in recent years, due to an increasing concern with respect to possible global climate changes. The costs to comply with these regulations can be significant to Honda’s operations.

Honda is reliant on the protection and preservation of its intellectual property

Honda owns or otherwise has rights in a number of patents and trademarks relating to the products it manufactures, which have been obtained over a period of years. These patents and trademarks have been of value in the growth of Honda’s business and may continue to be of value in the future. Honda does not regard any of its businesses as being dependent upon any single patent or related group of patents. However, an inability to protect this intellectual property generally, or the illegal infringement of some or a large group of Honda’s intellectual property rights, would have an adverse effect on Honda’s operations.

Honda is subject to legal proceedings

Honda is and could be subject to suits, investigations and proceedings under relevant laws and regulations of various jurisdictions. A negative outcome in any of the legal proceedings pending against Honda could adversely affect Honda’s business, financial condition or results of operations.

Risks Relating to Honda’s Operations

Honda’s Financial services business conducts business under highly competitive conditions in an industry with inherent risks

Honda’s Financial services business offers various financing plans to its customers designed to increase the opportunity for sales of its products and to generate financing income. However, customers can also obtain financing for the lease or purchase of Honda’s products through a variety of other sources that compete with our financing services, including commercial banks and finance and leasing companies. The financial services offered by us also involve credit risk as well as risks relating to lease residual values, cost of capital and access to funding. Competition for customers and/or these risks may affect Honda’s results of operations in the future.

Honda relies on external suppliers for the provision of certain raw materials and parts

Honda purchases raw materials and parts from numerous external suppliers, and relies on certain suppliers for some of the raw materials and parts which it uses in the manufacture of its products. Honda’s ability to continue to obtain these supplies in an efficient and cost-effective manner is subject to a number of factors, some of which are not within Honda’s control. These factors include the ability of its suppliers to provide a continued source of raw materials and parts and Honda’s ability to compete with other users in obtaining the supplies. Loss of a key supplier in particular may affect our production and increase our costs.

Honda conducts its operations in various regions of the world

Honda conducts its businesses worldwide, and in several countries, Honda conducts businesses through joint ventures with local entities, in part due to the legal and other requirements of those countries. These businesses are subject to various regulations, including the legal and other requirements of each country. If these regulations or the business conditions or policies of these local entities change, it may have an adverse affect on Honda’s business, financial condition or results of operations.

Honda may be adversely affected by wars, use of force by foreign countries, terrorism, multinational conflicts and frictions, political uncertainty, natural disasters, epidemics and labor strikes

Honda conducts its businesses worldwide and such businesses may be affected by events, such as wars, use of force by foreign countries, terrorism, multinational conflicts and frictions, political uncertainty, natural disasters such as earthquakes, tsunami and floods, epidemics and labor strikes, and other events beyond our control, which may delay, disrupt or suspend the purchase of raw materials and parts, the manufacture, sales and distribution of products, the provision of services, etc., in the region where such events occurred. Such events occurring in one region may in turn affect other regions. If such delay, disruption or suspension occurs and continues for a long period of time, Honda’s business, financial condition or results of operations may be adversely affected.

Honda may be adversely affected by inadvertent disclosure of confidential information

Although Honda maintains internal controls through established procedures to keep confidential information including personal information of its customers and relating parties, such information may be inadvertently disclosed. If this occurs, Honda may be subject to, and may be adversely affected by, claims for damages from the customers or parties affected. Also, inadvertent disclosure of confidential business or technical information to third parties may also result in a loss of Honda’s competitiveness.

Risks Relating to Pension Costs and Other Postretirement Benefits

Honda has pension plans and provides other post-retirement benefits. The amounts of pension benefits, lump-sum payments and other post-retirement benefits are primarily based on the combination of years of service and compensation. The funding policy is to make periodic contributions as required by applicable regulations. Benefit obligations and pension costs are based on assumptions of many factors, including the discount rate, the rate of salary increase and the expected long-term rate of return on plan assets. Differences in actual expenses and costs or changes in assumptions could affect Honda’s pension costs and benefit obligations, including Honda’s cash requirements to fund such obligations, which could materially affect our financial condition and results of operations.

A holder of ADSs will have fewer rights than a shareholder has and such holder will have to act through the depositary to exercise those rights

The rights of shareholders under Japanese law to take various actions, including exercising voting rights inherent in their shares, receiving dividends and distributions, bringing derivative actions, examining a company’s accounting books and records, and exercising appraisal rights, are available only to holders of record. Because the depositary, through its custodian agents, is the record holder of the Shares underlying the ADSs, only the depositary can exercise those rights in connection with the deposited Shares. The depositary will make efforts to exercise votes regarding the Shares underlying the ADSs as instructed by the holders and will pay to the holders the dividends and distributions collected from the Company. However, in the capacity as an ADS holder, such holder will not be able to bring a derivative action, examine our accounting books or records or exercise appraisal rights through the depositary.

Rights of shareholders under Japanese law may be more limited than under the laws of other jurisdictions

The Company’s Articles of Incorporation, Regulations of the Board of Directors, Regulations of the Board of Corporate Auditors and the Company Law of Japan (the “Company Law”) govern corporate affairs of the Company. Legal principles relating to such matters as the validity of corporate procedures, directors’ and officers’ fiduciary duties, and shareholders’ rights may be different from those that would apply if the Company were a U.S. company. Shareholders’ rights under Japanese law may not be as extensive as shareholders’ rights under the laws of the United States. An ADS holder may have more difficulty in asserting his/her rights as a shareholder than such an ADS holder would as a shareholder of a U.S. corporation. In addition, Japanese courts may not be willing to enforce liabilities against the Company in actions brought in Japan that are based upon the securities laws of the United States or any U.S. state.

Because of daily price range limitations under Japanese stock exchange rules, a holder of ADSs may not be able to sell his/her shares of the Company’s Common Stock at a particular price on any particular trading day, or at all

Stock prices on Japanese stock exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges are order-driven markets without specialists or market makers to guide price formation. To prevent excessive volatility, these exchanges set daily upward and downward price fluctuation limits for each stock, based on the previous day’s closing price. Although transactions may continue at the upward or downward limit price if the limit price is reached on a particular trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit may not be able to sell his or her shares at such price on a particular trading day, or at all.

U.S. investors may have difficulty in serving process or enforcing a judgment against the Company or its directors, executive officers or corporate auditors

The Company is a limited liability, joint stock corporation incorporated under the laws of Japan. Most of its directors, executive officers and corporate auditors reside in Japan. All or substantially all of the Company’s

assets and the assets of these persons are located in Japan and elsewhere outside the United States. It may not be possible, therefore, for U.S. investors to effect service of process within the United States upon the Company or these persons or to enforce against the Company or these persons judgments obtained in U.S. Courts predicated upon the civil liability provisions of the Federal securities laws of the United States. There is doubt as to the enforceability in Japan, in original actions or in actions for enforcement of judgment of U.S. courts, of liabilities predicated solely upon the federal securities laws of the United States.

The Company’s shareholders of record on a record date may not receive the dividend they anticipate

The customary dividend payout practice and relevant regulatory regime of publicly listed companies in Japan may differ from that followed in foreign markets. The Company’s dividend payout practice is no exception. While the Company may announce forecasts of year-end and quarterly dividends prior to the record date, these forecasts are not legally binding. The actual payment of year-end dividends requires a resolution of the Company’s shareholders. If the shareholders adopt such a resolution, the year-end dividend payment is made to shareholders as of the applicable record date, which is currently specified as March 31 by the Company’s Articles of Incorporation. However, such a resolution of the shareholders is usually made at an ordinary general meeting of shareholders held in June. The payment of quarterly dividends requires a resolution of the Company’s Board of Directors. If the board adopts such a resolution, the dividend payment is made to shareholders as of the applicable record dates, which are currently specified as June 30, September 30 and December 31 by the Articles of Incorporation. However, the board usually does not adopt a resolution with respect to a quarterly dividend until after the respective record dates.

Shareholders of record as of an applicable record date may sell shares after the record date in anticipation of receiving a certain dividend payment based on the previously announced forecasts. However, since these forecasts are not legally binding and resolutions to pay dividends are usually not adopted until after the record date, our shareholders of record on record dates for year-end and quarterly dividends may not receive the dividend they anticipate.

Cautionary statement with respect to forward looking statements in this Annual Report

This Annual Report includes “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward looking statements included in this Annual Report are based on the current assumptions and beliefs of Honda in light of the information currently available to it, and involve known and unknown risks, uncertainties, and other factors. Such risks, uncertainties and other factors may cause Honda’s actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors are generally set forth in Item 3.D “Risk Factors” and include, without limitation:

•

the political, economic and social conditions in Japan and throughout the world including North America, Europe and Asia, including economic slowdowns, recessions, changes in consumer preferences, rising fuel prices, financial crises and other factors, as well as the relevant governments’ specific policies with respect to economic growth, inflation, taxation, currency conversion, imports and sources of supplies and the availability of credit, particularly to the extent such current or future conditions and policies affect the automobile, motorcycle and power product industries and markets in Japan and other markets throughout the world in which Honda conducts its business, and the demand, sales volume and sales prices for Honda’s automobiles, motorcycles and power products;

•

the effects of competition in the automobile, motorcycle and power product markets on the demand, sales volume and sales prices for Honda’s automobiles, motorcycles and power products;

•

Honda’s ability to finance its working capital and capital expenditure requirements, including obtaining any required external debt or other financing;

•

the effects of economic stagnation or recession in Honda’s principal markets and of exchange rate and interest rate fluctuations on Honda’s results of operations; and

•

the effects of environmental and other governmental regulations and legal proceedings.

Honda undertakes no obligation and has no intention to publicly update any forward looking statement after the date of this Annual Report. Investors are advised to consult any further disclosures by Honda in its subsequent filings pursuant to the Securities and Exchange Act of 1934.

Item 4. Information on the Company

A. History and Development of the Company

Honda Motor Co., Ltd. is a limited liability, joint stock corporation incorporated on September 24, 1948 under the Commercial Code of Japan as Honda Giken Kogyo Kabushiki Kaisha. It was formed to succeed to the business of an unincorporated enterprise established in 1946 by the late Soichiro Honda to manufacture motors for motorized bicycles.

Honda develops, produces, and manufactures a variety of motor products, ranging from small general-purpose engines and scooters to specialty sports cars that incorporate Honda’s highly efficient internal combustion engine technology.

Honda’s principal executive office is located at 1-1, Minami-Aoyama 2-chome, Minato-ku, Tokyo, 107-8556, Japan. Its telephone number is 81-3-3423-1111.

Principal Capital Investments

In the fiscal years ended March 31, 2011, 2012 and 2013, Honda’s capital expenditures were ¥1,125.0 billion, ¥1,108.1 billion and ¥1,423.5 billion, respectively, on an accrual basis. Also, capital expenditures excluding those with respect to property on operating leases were ¥326.6 billion, ¥424.4 billion and ¥630.4 billion, respectively, on an accrual basis. For further details of Honda’s capital expenditures during fiscal 2013, see “Property, Plants and Equipment” included as “Item 4.D” of this Annual Report.

B. Business Overview

General

Honda’s business segments are the Motorcycle business, Automobile business, Financial services business, and Power product and other businesses.

The following tables show the breakdown of Honda’s revenues from external customers by category of activity and by geographical markets based on the location of the customer during the fiscal years ended March 31, 2011, 2012 and 2013:


	Fiscal years ended March 31,
	2011		2012		2013
	Yen (billions)
Motorcycle Business	¥	1,288.1	¥	1,348.8	¥	1,339.5
Automobile Business		6,794.0		5,805.9		7,709.2
Financial Services Business		561.8		516.1		548.5
Power Product and Other Businesses		292.6		277.1		280.6

Total	¥	8,936.8	¥	7,948.0	¥	9,877.9


	Fiscal years ended March 31,
	2011		2012		2013
	Yen (billions)
Japan	¥	1,503.8	¥	1,517.9	¥	1,652.9
North America		3,921.3		3,480.7		4,586.4
Europe		610.1		515.7		534.5
Asia		1,852.4		1,458.7		2,093.0
Other Regions		1,049.0		974.8		1,010.9

Total	¥	8,936.8	¥	7,948.0	¥	9,877.9

Motorcycle Business

In 1949, Honda began mass production of motorcycles with the Dream D-Type, followed by other models such as the Benly and the Cub F-Type. By 1957, Honda became the top Japanese manufacturer in terms of motorcycle production volume. Honda expanded its business overseas by establishing American Honda Motor Co., Inc. in the United States in 1959. Honda’s first overseas production started in Belgium in 1963.

Honda produces a wide range of motorcycles, ranging from the 50cc class to the 1800cc class in cylinder displacement. Honda’s motorcycles use internal combustion engines developed by Honda that are air- or water-cooled, four-cycle, and single, two, four or six-cylinder. Honda’s motorcycle line consists of sports (including trial and moto-cross racing), business and commuter models. Honda has also produced all-terrain vehicles (ATVs) since 1984 and multi utility vehicles (MUVs) since 2008.

The following table sets out unit sales for Honda’s Motorcycle business, including motorcycles, and all-terrain vehicles (ATVs) and revenue from Motorcycle business, and the breakdown by geographical markets based on the location of the customer during the fiscal years ended March 31, 2011, 2012 and 2013:


	Fiscal years ended March 31,
	2011							2012							2013
	Honda Group Unit Sales*		Consolidated Unit Sales*		Revenue			Honda Group Unit Sales*		Consolidated Unit Sales*		Revenue			Honda Group Unit Sales*		Consolidated Unit Sales*		Revenue
	Units (thousands)		Units (thousands)		Yen (billions)			Units (thousands)		Units (thousands)		Yen (billions)			Units (thousands)		Units (thousands)		Yen (billions)
Japan		190		190	¥	70.2			220		220	¥	72.9			217		217	¥	72.9
North America		185		185		96.6			200		200		97.3			250		250		112.1
Europe		202		202		103.8			198		198		96.1			179		179		86.4
Asia		16,064		5,148		577.6			12,412		6,001		579.5			13,035		7,051		667.4
Other Regions		1,690		1,690		439.7			2,031		2,031		502.8			1,813		1,813		400.5

Total		18,331		7,415	¥	1,288.1			15,061		8,650	¥	1,348.8			15,494		9,510	¥	1,339.5

Motorcycle revenue as a percentage of total sales revenue						15	%						17	%						14	%

Motorcycles are produced by Honda in Japan at the Kumamoto factory. Honda’s motorcycles are also produced by subsidiaries in countries around the world including Thailand, Vietnam, India, Brazil and Argentina.

For further information on recent operations and a financial review of the Motorcycle business, see “Operating Results” in “Item 5. Operating and Financial Review and Prospects”.

Automobile Business

Honda started the Automobile business in 1963 with the T360 mini truck and the S500 small sports car, and subsequently launched a series of mass-produced models including the Civic in 1972, the Accord in 1976, which established a base for its Automobile business. In 1969, production of the mini vehicles N600 and TN600 began in Taiwan using component parts sets. In 1982, Honda became the first Japanese automaker to begin local automobile production in the United States (with the Accord).

Honda’s automobiles use gasoline engines of three, four or six-cylinder, diesel engines, gasoline-electric hybrid systems and gasoline-electric plug-in hybrid systems. Honda also offers alternative fuel-powered vehicles such as natural gas, ethanol, electric and fuel cell vehicles.

Honda’s principal automobile products include the following vehicle models:

Passenger cars:

Accord, Accord Plug-in Hybrid, Accord Tourer, Brio, Brio Amaze, City, Civic, CR-Z, Fit/Jazz, Fit/Jazz Hybrid, Fit Shuttle, Fit Shuttle Hybrid, FREED, FREED Hybrid, FREED SPIKE, FREED SPIKE Hybrid, Insight, Inspire, Legend, Stream, Acura ILX, Acura RLX, Acura TL, Acura TSX

Light trucks:

Crosstour, CR-V, Elysion, Odyssey, Pilot, Ridgeline, Step WGN, Acura MDX, Acura RDX, Acura ZDX

Mini vehicles:

Acty, Life, N Box, N Box +, N-ONE, Vamos, Zest

The following table sets out Honda’s unit sales of automobiles and revenue from Automobile business and the breakdown by geographical markets based on the location of the customer during the fiscal years ended March 31, 2011, 2012 and 2013:


	Fiscal years ended March 31,
	2011							2012							2013
	Honda Group Unit Sales*		Consolidated Unit Sales*		Revenue			Honda Group Unit Sales*		Consolidated Unit Sales*		Revenue			Honda Group Unit Sales*		Consolidated Unit Sales*		Revenue
	Units (thousands)		Units (thousands)		Yen (billions)			Units (thousands)		Units (thousands)		Yen (billions)			Units (thousands)		Units (thousands)		Yen (billions)
Japan		585		582	¥	1,310.7			588		580	¥	1,329.6			692		685	¥	1,462.6
North America		1,458		1,458		3,252.8			1,323		1,323		2,855.6			1,731		1,731		3,905.2
Europe		198		198		441.6			158		158		355.9			171		171		388.4
Asia		1,022		375		1,221.7			837		219		836.3			1,122		523		1,385.4
Other Regions		266		266		567.1			202		202		428.3			298		298		567.3

Total		3,529		2,879	¥	6,794.0			3,108		2,482	¥	5,805.9			4,014		3,408	¥	7,709.2

Automobile revenue as a percentage of total sales revenue						76	%						73	%						78	%

Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates accounted for under the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated net sales to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. Certain sales of automobiles that are financed with residual value type auto loans by our Japanese finance subsidiaries are accounted for as operating leases in conformity with U.S. generally accepted accounting principles and are not included in consolidated net sales to the external customers in our automobile business. As a result, they are not included in Consolidated Unit Sales, but are included in Honda Group Unit Sales of our automobile business.

Automobiles are produced by Honda at two sites in Japan: the Saitama factory and the Suzuka factory. Our major production sites overseas include those located in Ohio (U.S.A.), Alabama (U.S.A.), Indiana (U.S.A.), Ontario (Canada), Swindon (U.K.), Ayutthaya (Thailand), Greater Noida (India) and Sao Paulo (Brazil). Yachiyo Industry Co., Ltd., one of our consolidated subsidiaries, assembles mini vehicles for the Japanese market.

For further information on recent operations and a financial review of the Automobile business, see “Operating Results” in “Item 5. Operating and Financial Review and Prospects”.

Financial Services Business

We offer a variety of financial services to our customers and dealers through finance subsidiaries in countries including Japan, the United States, Canada, the United Kingdom, Germany, Brazil and Thailand, with the aim of providing sales support for our products. The services of these subsidiaries include retail lending, leasing to customers and other financial services, such as wholesale financing to dealers.

The following table sets out Honda’s revenue from Financial services business and the breakdown by geographical markets based on the location of the customer during the fiscal years ended March 31, 2011, 2012 and 2013:


	Fiscal years ended March 31,
	2011			2012			2013
	Yen (billions)
Japan	¥	26.3		¥	28.9		¥	34.2
North America		503.9			455.5			484.2
Europe		9.2			8.1			7.2
Asia		3.7			2.8			3.1
Other Regions		18.5			20.6			19.5

Total	¥	561.8		¥	516.1		¥	548.5

Financial Service revenue as a percentage of total sales revenue		6	%		7	%		5	%

For further information on recent operations and a financial review of the Financial services business, see “Operating Results” in “Item 5. Operating and Financial Review and Prospects”.

Power Product and Other Businesses

Honda’s Power product business began in 1953 with the introduction of the model the H, its first general purpose engine. Since then, Honda has manufactured a variety of power products including tillers, portable generators, general-purpose engines, grass cutters, outboard marine engines, water pumps, snow throwers, power carriers, power sprayers, lawn mowers and lawn tractors (riding lawn mowers). In 2003, Honda introduced a compact home-use cogeneration^* unit. In addition, Honda began sales of thin film solar cells made of crystalline silicon for home use in 2007 and for public and industrial use in 2008.

^*	Cogeneration: Cogeneration refers to the multiple applications of energy derived from a single source, such as using the heat supplied during the combustion process that drives an engine for other heating or cooling purposes.

The following table sets out Honda’s revenue from Power product and other businesses and the breakdown by geographical markets based on the location of the customer during the fiscal years ended March 31, 2011, 2012 and 2013:


	Fiscal years ended March 31,
	2011					2012					2013
	Honda Group Unit Sales / Consolidated Unit Sales*		Revenue			Honda Group Unit Sales / Consolidated Unit Sales*		Revenue			Honda Group Unit Sales / Consolidated Unit Sales*		Revenue
	Units (thousands)		Yen (billions)			Units (thousands)		Yen (billions)			Units (thousands)		Yen (billions)
Japan		388	¥	96.5			392	¥	86.4			314	¥	83.1
North America		2,085		67.9			2,314		72.1			2,604		84.6
Europe		1,174		55.2			1,121		55.4			1,004		52.3
Asia		1,325		49.3			1,472		40.0			1,572		36.9
Other Regions		537		23.6			520		23.0			577		23.5

Total		5,509	¥	292.6			5,819	¥	277.1			6,071	¥	280.6

Power Product and Other revenue as a percentage of total sales revenue				3	%				3	%				3	%

^*	Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates accounted for under the equity method. Consolidated Unit Sales is the total unit sales of

completed products corresponding to consolidated net sales to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. In power product business, there is no discrepancy between Honda Group Unit Sales and Consolidated Unit Sales since no affiliate accounted for under the equity method was involved in the sale of Honda power products.

For further information on recent operations and a financial review of the Power product and other businesses, see “Operating Results” in “Item 5. Operating and Financial Review and Prospects”.

Marketing and Distribution

Most of Honda’s products are distributed under the Honda trademarks in Japan and/or in overseas markets.

Sales in Japan

Sales of Honda motorcycles, automobiles, and power products in Japan are made through different distribution networks. Honda’s products are sold to consumers primarily by independent retail dealers throughout Japan.

Motorcycles are distributed through approximately 6,900 outlets, including approximately 600 “PRO’S” shops and approximately 110 Honda Dream authorized dealerships.

As for the automobile distribution network, at present, approximately 750 retail dealers operate approximately 2,170 shops and sell models including the Accord, Accord Tourer, Acty, CR-V, CR-Z, Elysion, Fit, Fit Hybrid, Fit Shuttle, Fit Shuttle Hybrid, FREED, FREED Hybrid, FREED SPIKE, FREED SPIKE Hybrid, Insight, Inspire, Legend, Life, N Box, N Box +, N-ONE, Odyssey, Step WGN, Stream, Vamos and Zest.

Power products are distributed in Japan to approximately 1,130 retail dealers throughout Japan, including affiliates of Honda. A number of small engines are also sold to other manufacturers for use in their products.

Service and Parts Related Operations in Japan

Sales of spare parts and after sales services are mainly provided through retail dealers. Training programs on automobile service technicians are provided for dealers regularly by Honda’s Automobile Sales Operations (Japan).

Overseas Sales

In fiscal 2013, approximately 97% of Honda’s overseas sales were made through its principal foreign sales subsidiaries, which distribute Honda’s products to local wholesalers and retail dealers.

In the United States, Honda markets its products through a sales network of approximately 1,050 independent local dealers for motorcycles, approximately 1,310 for automobiles and approximately 8,200 for power products. Many of the motorcycle dealers and some of the automobile dealers also sell Honda’s power products. In 1986, Honda opened the first Acura automobile dealerships in the United States. The Acura network in the United States totaled 275 dealerships at the end of fiscal 2013. The Acura network offers ILX, MDX, RDX, RLX, TL, TSX and ZDX models.

With regard to exports from North America, Honda is currently exporting such North American-built models as the Accord, Civic, CR-V, Crosstour, Odyssey, Pilot, Ridgeline, Acura ILX, Acura ILX Hybrid, Acura MDX, Acura RDX, Acura TL and Acura ZDX to other markets. In fiscal 2013, Honda exported approximately 77,400 units from North America to 55 countries throughout the world.

In Europe, Honda’s products are distributed through approximately 1,550 independent local dealers for motorcycles, approximately 1,300 for automobiles and approximately 2,900^* for power products.

^*	Total number represents dealers in 11 countries which fall under the management of Honda foreign sales subsidiaries in the region.

In Asia, Honda’s products are distributed through approximately 13,700 independent local dealers for motorcycles, approximately 1,490 for automobiles and approximately 2,800^* for power products.

^*	Total number represents dealers in six countries where Honda has foreign sales subsidiaries.

The Company exports motorcycle components to 13 countries, including Indonesia, Vietnam, Thailand and Brazil, where motorcycles are manufactured by its subsidiaries, joint venture firms and licensees. Some of the components used in the production of these vehicles are supplied locally.

The Company exports automobile components to 15 countries, including the United States, Canada, China, Thailand and Brazil, where automobiles are manufactured by its subsidiaries, joint venture firms and licensees. Some of the components used in the production of these vehicles are supplied locally.

The Company also exports power product components to seven countries, including Thailand and China, where power products are manufactured by its subsidiaries, joint venture firms and licensees. Some of the components used in the production of these products are supplied locally.

Service and Parts Related Operations Overseas

Honda provides its overseas operations, joint venture firms, independent distributors and licensees with spare parts and necessary technical information, which they in turn supply to wholesale or retail dealers, either directly or through one or more spare parts distributors.

Components and Parts, Raw Materials and Sources of Supply

Honda manufactures the major components and parts used in its products, including engines, frames and transmissions. Other components and parts, such as shock absorbers, electrical equipment and tires, are purchased from numerous suppliers. The principal raw materials used by Honda are steel plate, aluminum, special steels, steel tubes, paints, plastics and zinc, which are purchased from several suppliers. The most important raw material purchased is steel plate, accounting for approximately 45% of Honda’s total purchases of raw materials.

No single supplier accounted for more than 5% of the Company’s purchases of major components and parts and principal raw materials during the fiscal year ended March 31, 2013.

Ordinarily, Honda does not have and does not anticipate having any difficulty in obtaining its required materials from suppliers and considers its contracts and business relations with the suppliers to be satisfactory. The Company does not believe any of its Japanese domestic suppliers are substantially more dependent on foreign suppliers than Japanese suppliers generally. However, it should be noted that Japanese industry in general is heavily dependent on foreign suppliers for substantially all of its raw materials.

Seasonality

Honda’s Motorcycle and Power product businesses have historically experienced some seasonality. However, this seasonality has not generally been material to our financial results.

Environmental and Safety Regulation

Honda is subject to various government regulations, including environmental and safety regulations for automobiles, motorcycles and power products. Such regulations relate to items such as emissions, fuel economy, recycling and safety and have had, and are expected to continue to have, material effects on Honda’s business. Among others, Honda has incurred significant compliance costs in connection with such regulations and will incur future compliance costs for new and upcoming regulations. Relevant environmental and safety regulations are described below.

Outline of Environmental and Safety Regulation for Automobiles

1. Emissions

Japan

In March 2008, to strengthen the enforcement of laws, the 2009 Exhaust Emission Standards were created after the passage of long-term regulation. Long-term targets for gasoline vehicles remained unchanged except those for direct injection gasoline vehicles, which were also required to meet the particulate matter (PM) standard. New long-term emissions targets for diesel vehicles were lowered by more than 60% from the 2005 level of NOx and PM standards.

In 2010, the Central Environmental Council in the Ministry of Environment reviewed on the current JC08 mode for emission test mode and began to take the introduction of WLTP (Worldwide harmonized Light vehicle Test Procedure) into consideration.

The United States

Increasingly stringent emission regulations under the Clean Air Act have been enacted since the 1990s by the U.S. federal government.

Under the Clean Air Act, the State of California is permitted to establish its own emission control standards to the extent they are more stringent than federal standards. Pursuant to this authority, the California Air Resources Board (CARB) adopted the California Low Emission Vehicle Program in 1990, aiming to establish the strictest emission regulation in the world.

In April 2004, the CARB finalized its Zero-Emission Vehicles (ZEV) requirements. Under these requirements, beginning with 2005 model cars, 6% of vehicles sold in California by a car manufacturer must be Partial Zero Emission Vehicles (PZEV), which includes Super Ultra Low Emission Vehicles (SULEV) with warranties coverage up to the earlier of 15 years or 150,000 driven miles, 2% must be advanced technology PZEV and 2% must be ZEV. Required percentages have been gradually increased under the ZEV standards from the 2008 model cars.

In March 2009, the CARB amended the ZEV regulation to require 7,500 Fuel Cell Vehicles (FCV) in the entire industry instead of the previous requirement of 2,500 FCV. In addition, manufacturers should sell a significant number of Enhanced Advanced Technology Partial Zero Emission Vehicles (Enhanced AT-PZEV) in the market after the 2012 model year.

In August 2012, the CARB issued the Advanced Clean Car package of regulations, which included amendments to the California Low Emission Vehicle Program III (LEV III) and ZEV regulations. As to the LEV III regulation, which applies to 2015 and subsequent model years, limits on emissions and evaporative emissions were tightened. The ZEV regulation was revised so that requirements can be satisfied by TZEV (formerly, Enhanced AT-PZEV) and ZEV alone for 2018 and subsequent model years. Also, for 2018 and subsequent model years, the credit value eligible for each ZEV category was decreased drastically, which consequently increases the required sales volume dramatically. The BEVx category, which includes battery electric vehicles with auxiliary power units, was also added as a ZEV category.

In addition, the Environmental Protection Agency (EPA) is planning to propose a LEV III equivalent emission regulation (Tier 3) in 2013.

Currently, many other states have also adopted or planned to adopt the California LEV III and ZEV regulations.

Europe

In 2005, the European Union created new emission standards (Euro5 and Euro6) and comprehensive requirements for gasoline vehicles and diesel vehicles. Euro5 was implemented in September 2009. Emission limits for gasoline vehicles and diesel vehicles were further lowered compared to the Euro4 level of HC, NOx and PM. PM mass emission standards shall apply only to vehicles with direct injection engines.

Additionally, Euro5 required limits on particle number emissions from diesel vehicles, and implemented new test measurements for PM mass emissions from gasoline vehicles with direct injection engines and diesel vehicles on and after September 2011.

Euro6 will be implemented in 2014. Emission limits for diesel vehicles will be lowered even more than the Euro5 level HC and NOx. Additionally, Euro6 will require limits on particle numbers from gasoline vehicles with direct injection engines.

Russia

The Euro4 regulation has been in effect from January 2010. Additionally, the Euro5 regulation will be implemented in January 2014.

China

China adopted Step3 and Step4 emission regulations for light-duty vehicles in 2005. These regulations are similar to European regulations (such as Euro3 and Euro4). Step3 was implemented in 2007 and Step4 was implemented in July 2010. In addition, China has proposed to implement Step5 emission regulations in or around 2016, based on Euro5.

In the city of Beijing, Step4 was implemented in March 2008 and Step5 was implemented in February 2013. In addition, the city of Beijing is considering the introduction of Step6 emission regulations in 2016.

Other Regions

In Korea, the Atmospheric Environment Preservation Act, which applies to the whole country, was amended. Diesel Euro6 (including the Particulate Number (PN) regulations) and the enhancement of gasoline evaporative emission regulations will be enforced from 2014. In addition, the Special Act on Capital Region Air Quality Improvements, which applies in the capital region, is currently under review.

Several other Asian countries have adopted regulations which are similar to the European regulations (such as Euro2 and Euro3). Some of these countries are considering the introduction of Euro4 and Euro5.

Australia implemented Euro4-equivalent regulations in July 2008. In addition, Australia will introduce Euro5-equivalent regulations from November 2013.

2. Fuel Economy / CO₂

Japan

In 2005, discussions about the “POST-2010” standard took place among the applicable ministries and industries. In February 2007, the final “POST-2010” target, or the “2015 standard”, was announced. Fuel consumption will be reduced by 29.2% compared to the 2010 target for passenger cars.

In June 2010, the Ministry of Land, Infrastructure and Transport (MLIT) and the Ministry of Economy, Trend and Industry (METI) set out a committee, respectively, and jointly commenced a study to formulate new fuel economy standards for passenger motor vehicles, for 2020. Such new standards were announced in March 2013. The next term fuel economy standards improve the 2015 standards by 19.6% and adopt the Corporate Average Fuel Economy (CAFE) calculation method.

Fuel specifications for E10 fuel, which is gasoline blended with 10% ethanol, were revised and included in the April 2012 announcement setting forth the details of safety standards under the Road Transport Vehicle Law. Ethanol blended fuel is a “biomass fuel”. Biomass fuel is regarded as an effective countermeasure for CO₂ reduction. CO₂ emissions after burning ethanol fuel produced with biomass resources (such as plants or wood) are not counted as CO₂ emissions under the Kyoto Protocol.

The United States

The Federal Motor Vehicle Information and Cost Savings Act requires automobile manufacturers to comply with the CAFE standards. Under the CAFE standards, manufacturers are subject to substantial penalties if automobiles produced by them in any model year do not meet the average standards for each category.

In March 2009, the National Highway Traffic Safety Administration (NHTSA) issued the CAFE regulation standard for passenger cars and light trucks for the 2011 model year. The CAFE standard calculation of passenger cars and light trucks for the 2011 model year use a footprint prescribed in the CAFE regulation issued in 2006. The industry-wide combined average for the 2011 model year was estimated to be 27.3 mpg.

The EPA and the NHTSA jointly finalized the U.S. federal Green House Gas (GHG) regulation from 2012 model year in accordance with President Obama’s announcement. The standard for the 2016 model year is 250 g-CO₂/mile or 35.5 mpg over the industry average. In addition, a manufacturer is also deemed to comply with CARB GHG regulation if the manufacturer complies with EPA-GHG, based on an agreement among the White House, the CARB and the industry.

In March 2008, the EPA denied California’s GHG regulation waiver request against the CARB. On January 26, 2009, U.S. President Obama announced that he had directed the EPA to review California’s waiver request. The EPA approved the waiver on July 8th, 2009 because the CARB promised that a manufacturer was also deemed to comply with CARB GHG regulation if the manufacturer complied with EPA-GHG from the 2012 through 2016 model years.

On May 21, 2010, President Obama ordered the NHTSA and the EPA to extend the National Program for cars and light-duty trucks to the 2017 model year and beyond with the support of the CARB. On October 1, 2010, the NHTSA, the EPA, and the CARB gave the notice of their intent to conduct joint rulemaking to establish 2017 and later model year fuel economy and greenhouse gas standards. The NHTSA and EPA issued a regulation on August 2012 regarding GHG / CAFE regulations from the 2017 through 2025 model years. The standard for the 2025 model year is 163 g-CO₂/mile or 54.4 mpg over the industry average. The CARB also issued a regulation that is almost equivalent to the EPA’s GHG regulations on August 2012. On December 2012, the CARB amended its GHG regulation so that a manufacturer is also deemed to comply with CARB GHG regulations if it complies with EPA-GHG from the 2017 through 2025 model years.

Europe

In 2008, the European parliament adopted CO₂ regulations in response to concerns related to possible global climate changes. The adopted CO₂ regulations were published by Official Journal in June 2009.

Pursuant to the CO₂ regulations, the European Commission set a more stringent target of 130 grams of carbon dioxide per kilometer for new passenger cars offered for sale in the EU from 2012. In addition, the CO₂regulations provided manufacturers with the necessary incentive to reduce the CO₂ emissions of their vehicles by

imposing an excess emissions premium if their average emission levels are above the limit value curve. This premium is based on the number of grams per kilometer (g/km) that an average vehicle sold by the manufacturer exceeding the limit imposed by the curve, multiplied by the number of vehicles sold by the manufacturer.

Currently, the European Commission proposed a more stringent regulation that targets 95 g/km of CO₂ for 2020.

China

China adopted a fuel consumption regulation for passenger vehicles in 2004. Step 1 of this regulation was implemented in 2005 and Step 2 was implemented in 2008. Step 3 was implemented in 2012. It will be a Corporate Average Fuel Consumption regulation from Step 3. In addition, China is considering the introduction of Step 4 in 2016.

Other Regions

Korea introduced CAFE in 2005 and plans to phase-in CAFE and CO₂ regulations from 30% for the 2012 model year to 100% for the 2015 model year.

India and Australia have also proposed to introduce fuel economy / CO₂regulations in 2015 and 2020 in a phased manner.

Taiwan is considering introducing fuel economy / CO₂ regulations.

Mexico has proposed to introduce fuel economy / CO₂ regulations for the 2014 through 2016 model years.

3. Recycling / End-of-Life Vehicles (ELV) / REACH

Japan

Japan enacted the Automobile Recycling Law in July 2002, which required manufacturers to take back air bags, fluorocarbon and shredder residue derived from end-of-life vehicles (ELV), which became effective on January 1, 2005. ELV processing costs are collected from owners of cars currently in use and purchasers of new cars.

Europe

On December 30, 2006, the European Union adopted the Regulation concerning the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), which became effective on June 1, 2007. From June 1, 2008, any manufacturer or importer of chemical substances is required to submit a registration to the Agency, based on annual production or import quantity levels. Submitting a pre-registration between June 1 and December 1, 2008 will allow the manufacturer or importer to extend the deadline for submitting the registration for existing chemical substances. The list of Substance of Very High Concern (SVHC) is amended periodically to include new substances. Currently, 73 substances are in the SVHC list. Upon a request by a consumer, a supplier of a product containing SVHC must provide the consumer with sufficient information, including at least the name of the substance, within 45 days.

On February 18, 2011, the first set of substances which require authorization for use after specified dates were announced. Manufacturers using these substances in Europe must either be authorized for use after submitting an application or use substitute substances. Substances which require authorization will be added periodically. Currently, 14 substances require authorization.

Other Regions

Taiwan and Korea implemented automobile recycling laws in January 1, 2008, following the regulations established by the European Union and Japan. Turkey also implemented automobile recycling laws in December 12, 2010, following the regulations established by the European Union. In addition, China, Vietnam, India and Russia each have a plan to implement automobile recycling laws in the near future.

4. Safety

Japan

In November 2007, MLIT issued safety standards, which are applicable from July 1, 2012, for vehicles which use high voltage electric power such as electric vehicles or hybrid electric vehicles, to avoid electric shocks during normal operations and post-crash. And further, in 2011, they have adopted Economic Commission for Europe (ECE) R100 which was amended to incorporate the Japanese electrical safety standard.

Japan Automobile Standards Internationalization Center (JASIC), which is organized by the MLIT and Japan Automobile Manufacturers Association (JAMA), among others, has started to review a proposal for the unification of Safety/Environment Standards, vehicle categories and certification in order to promote further internationalization of standards and certifications. JASIC made the proposal to other contracting parties of the 58 / 98 Agreement in 2009 and aims at reaching an agreement among the contracting parties by 2015.

In January 2010, MLIT started preparing a guideline for measurements of the silent characteristic of hybrid vehicles and also started studying how to regulate this.

In March 2010, an accident in the Unites States caused by sudden unintended acceleration prompted the MLIT to consider introducing a “brake-override system”.

In May 2011, the MLIT introduced a pedestrian leg protection standard, adopting, for the first time in the world, a flexible leg impactor that is improved in biomechanism characteristic.

The United States

In June 2008, the NHTSA issued a final rule to revise some performance requirements and phase-in compliance schedules in upgraded side impact occupant protection standards. For both the moving deformable barrier test and the oblique side pole impact test, manufacturers must comply with the revised requirements for 20% of all vehicles produced by 2010, 40% by 2011, 60% by 2012, 80% by 2013 and 100% by 2014.

In May 2009, the NHTSA issued a final rule to upgrade the vehicle roof crush standard. The rule newly introduces the “Two-sided Roof Test,” which imposes the strength tests for both sides of the vehicle roof and increases the maximum applied load. For vehicles with a gross vehicle weight rating (GVWR) of 2,722 kg or less, manufacturers must comply with the upgraded requirements for 25% of all vehicles produced by 2012, 50% by 2013, 75% by 2014, and 100% by 2015. For heavier vehicles, manufacturers must comply with the standards on and after September 2016.

In January 2011, the NHTSA issued a final rule to prevent the ejection of occupants in rollover accidents. The rule requires “ejection mitigation countermeasure” (e.g. advanced glazing or head protection side airbag) equipment which meet with performance requirements. Manufacturers must comply with the new requirements for 25% of all vehicles produced by 2013, 50% by 2014, 75% by 2015, 100% (with carryover credit) by 2016, and all vehicles by 2017.

In February 2012, the NHTSA issued a proposed Driver Distraction Guideline. The purpose of the guideline is to reduce the number of crashes and resulting deaths and injuries that occur due to distracted driving while performing non-driving activities with integrated in-vehicle electronic devices. Compliance with this guideline is voluntary, but the NHTSA believes that manufacturers will take the initiative to implement these guidelines in an effort to improve safety.

In April 2012, the NHTSA issued a proposed regulation that mandates installation of a brake-throttle override system. This rule was proposed to take proper measures against the following problem: a vehicle cannot be effectively decelerated /stopped in the event that the accelerator pedal cannot return to its stationary position even after the foot is taken off the accelerator pedal, because of the floor mat being caught in the accelerator pedal or any failure in the accelerator pedal. Manufacturers must comply with the new requirements within two years from September 1 of the date of publication of the final rule.

In December 2012, the NHTSA issued a proposed regulation that mandates installation of an event data recorder (EDR) in vehicles. The purpose of this regulation is to allow for effective collision research as well as to share important data for the performance analysis of safety devices (e.g. advanced restraint devices) through the mandatory installation of EDRs. On or after September 2014, the NHTSA plans to require manufacturers to install EDRs which comply with specified performance requirements.

In January 2013, the NHTSA issued a proposed regulation that mandates installation of an approaching vehicle audible system. This regulation was established to reduce the number of collision accidents by letting pedestrians and bicycle riders be aware of approaching hybrid vehicles on electric drive or electric vehicles by sound. Manufacturers must comply with the new requirements for 30% of all vehicles produced by 2015, 60% by 2016, 90% by 2017, and all vehicles by 2018.

Europe

The European Commission issued a new regulation for type approval requirements for the General Safety of vehicles (GSR). It includes an installation requirement for the advanced safety system (Electronic Stability Control System (ESC) and Tire Pressure Monitoring Systems (TPMS)) and a tire performance requirement in order to improve the safety and environmental performance of vehicles.

In February 2011, the United Nations issued a revised ECE regulation relating to the installation of lighting devices, requiring automatic switching of dipped-beam headlamps. For M1 and N1 vehicles, the dipped-beam headlamps shall be switched on and off automatically relative to the ambient light conditions, if a vehicle is equipped with daytime running lamps on and after January 30, 2015.

Legislation regarding a new system called “eCall” is under consideration in the EU and the Customs Union, which is organized by Russia, Kazakhstan and Belarus. eCall is a system that can automatically transmit vehicle status (e.g., Supplemental Restraint System (SRS) deployment, location, direction and other information) to conventional infrastructures simultaneously with voice messages when accidents occur. Some relevant draft standards have been published in the EU. The effective date of the EU eCall for new vehicles is scheduled for the end of the first quarter in 2015. On the other hand, final standards were published in the Customs Union. The effective date of eCall for the Customs Union (ERA-GLONASS) is on and after January 1^st 2015 for new vehicle types.

5. New Car Assessment Program (NCAP)

Programs that provide customers with assessments of car safety functions and promote the development of car safety by automobile manufacturers are conducted in countries such as the United States, Japan, Australia, the EU, Korea, China and Malaysia. The principal items assessed in these programs are passenger protection and braking power, which are typically assessed with stricter standards or criteria than those required by statute.

Outline of Environmental and Safety Regulation for Motorcycles

1. Emissions

Japan

Japan has emissions regulations for motorcycles applicable to all classes of engine displacement. Some aspects of these requirements, such as standards for hydro-carbon levels and durability, are stricter than the current European regulations, namely the Euro3 regulations.

The United States

Emissions regulations regarding off-road motorcycles and ATVs were introduced in 2006. In addition, the EPA adopted the current California emissions standards regarding on-road motorcycles on a national basis, two years behind the schedule of California. The EPA regulations include fuel permeation requirements rather than traditional evaporative emission standards. California is considering new evaporative emission standards.

Europe

The EU has issued main regulation of recast Whole Vehicle Type Approval (WVTA) for in order to make further enforcement of exhaust emission by Euro4 and Euro5 step. The Euro4 will be enforced from January 2016 and newly introduce evaporative emission, durability and OBD.

Other Regions

Other countries, mainly in Asia, have implemented tighter emissions regulations based on European regulations.

Japan, China, Korea, and India are considering new exhaust emission standards based on the next European WVTA.

In Brazil, the Worldwide-harmonized Motorcycle Test Cycle (WMTC) was introduced. The WMTC will be in effect from the beginning of 2014.

2. Recycling / REACH

Europe

REACH compliance is required, the same as for motor vehicles.

Other Regions

Vietnam and India each have a plan to implement motorcycle recycling laws in the near future.

3. Safety

Japan

In November 2007, the Ministry of Land, Infrastructure and Transport (MLIT) issued safety standards which are applicable from July 1, 2012, for vehicles which use high voltage electric power such as electric vehicles or hybrid electric vehicles, to avoid electric shocks during normal operations and accidents. Further, in 2011, they adopted ECE R100, which was amended to incorporate the Japanese electrical safety standard.

The Japan Automobile Standards Internationalization Center (JASIC), which is organized by the MLIT and JAMA, among others, has started to review a proposal for the unification of Safety/Environment Standards, vehicle categories and certification in order to promote further internationalization of standards and certifications. JASIC made the proposal to other contracting parties of the 58 / 98 Agreement in 2009 and aims to reach an agreement among the contracting parties by 2015.

In January 2010, MLIT started preparing a guideline for some measures against the silent characteristic of hybrid vehicles and also started studying how to regulate this.

In March 2010, in the session of the World Forum for Harmonization of Vehicle Regulations (WP29) of the United Nations Economic Commission for Europe, Japan proposed the establishment of “a mutual certification system of international vehicle type certifications”, which was agreed upon. Also in March 2010, prompted by a runaway accident in the United States, the MLIT began research on introducing “brake-override-systems”.

In May 2011, the MLIT introduced a pedestrian leg protection standard, adopting for the first time in the world a flexible legform impactor that is improved from the view point of biomechanism characteristics. The impactor has been made to match more similarly to the human body structure and its characteristics.

In February 2013, the MLIT established a homologation system for ultra-compact mobility vehicles. These are vehicles which are easy to maneuver in a small space compared to automobiles, have superior environmental performance and can be utilized as a means of simple mobility for 1 or 2 passengers in a regional area. The system permits ultra-compact mobility vehicles to be run on public roads by adding features pertaining to such vehicles and relaxing certain standards without degrading the safety or environmental performances of the vehicles.

Europe

The EU has issued core regulation of recast WVTA in order to make further enforcement of safety. This new safety requirement contains advanced brake system, functional safety and electrical safety requirements.

Other regions

The Brazilian government issued a new regulation regarding anti-theft device, which requires installations of an immobilizer and a vehicle tracking system on vehicles and motorcycles sold or registered from August 1, 2009. However, this regulation has not been implemented yet, because the Prosecutors Office claimed it was unconstitutional and asked the court to overturn it. The contents and the effective date of this regulation have been under consultation between the government and the industry. The regulation was scheduled to be implemented from September 30, 2013 but is now expected to be postponed because infrastructure will not be ready in time.

Many Asian countries, such as India, Thailand, Indonesia, Malaysia, Korea and Vietnam, are introducing several regulations, regarding lighting, braking, and anti-theft, based on UN R (ECE) regulations.

Outline of Environmental and Safety Regulation for Power Products

1. Emissions

The United States

The EPA introduced more stringent exhaust standards and new evaporative emission standards for fuel tanks and fuel lines used in small non-road engines. The regulation applied starting in the 2011 model year for Class II engines (above 225 cc), in the 2012 model year for Class I engines (less than 225 cc, used in non-handheld applications) and generally in 2010 for handheld products. EPA also adopted a more stringent level of emission standards for outboard and personal watercraft engines started with the 2010 model year. This new regulation includes standards to control evaporative emissions for all vessels using marine spark-ignition engines.

Canada

The Canadian federal government has introduced emissions regulations generally equivalent to the U.S. EPA regulations for outboard and personal watercraft engines from the 2012 model year. This new regulation includes controls for evaporative emissions from the 2015 model year.

China

An exhaust emission standard was introduced in China on March 1, 2011. Its requirements are based on the European exhaust emission regulation and are applicable to small spark-ignition engines for non-road mobile machinery with 19 kW or less.

2. Recycling /RoHS / WEEE / REACH

Europe

REACH compliance is required, the same as for motor vehicles. In June 2011, the European Union Directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment (RoHS) was wholly revised and most power products will be within its scope after 2019.

Other regions

Turkey and several Asian countries have adopted regulations which are similar to the European regulations (such as RoHS and WEEE).

3. Safety

Japan

The Institute of Agricultural Machinery amended the safety standard of backward speed requirement for walk-behind equipment from 3.6 km/h to 1.8 km/h, and the interpretation of splash protection guard requirements for brush cutters. New models have had to comply with the standard from April 2010 and all models will need to comply with it from April 2015.

The United States

Based on the “Consumer Product Safety Improvement Act of 2008”, walk-behind lawn mowers have had to comply with the certificate requirements from November 11, 2008. The CPSC has enhanced the recall system by this Act.

Europe

The Machinery Directive was changed and a new directive has been effective from December 29, 2009. The main changes were to clarify the scope of the directive (e.g. partly completed machinery such as an engine unit), add the concrete description of market survey and create an obligation to establish a penalty description for member states.

China

The Chinese State Council published the “Agricultural Machinery Safety Supervision and Management Regulations”. This regulation requires that defective agricultural machinery producers should conduct recalls in a timely manner. The producers should establish the quality assurance system for their products. In addition, agricultural machinery is required to comply with the applicable new technical standards. The new regulation was implemented on November 1, 2009.

Preparing for the Future

Honda aims to achieve global growth by further encouraging and strengthening innovation and creativity and creating quality products that please the customers and exceed their expectations.

Honda will focus all its energies on the tasks set out below as it pursues the vision toward 2020 of “providing good products to customers with speed, affordability, and low CO₂ emissions.”

1. Research and Development

In connection with its efforts to develop the most effective safety and environmental technologies, Honda will continue to be innovative in advanced technology and products. Honda aims to create and introduce new value-added products to quickly respond to specific needs in various markets around the world. Honda will also continue its efforts to conduct research on experimental technologies for the future.

2. Production Efficiency

Honda will establish and enhance efficient and flexible production systems at its global production bases and supply high quality products, with the aim of meeting the needs of its customers in each region. Learning from the experience of disasters such as the Great East Japan Earthquake and the Thai floods, Honda will work at improving its global supply chain, implementing disaster prevention measures at each place of business and devising more effective business continuity plans (BCPs).

3. Sales Efficiency

Honda will remain proactive in its efforts to expand product lines through the innovative use of IT and will show its continued commitment to different customers throughout the world by upgrading its sales and service structure.

4. Product Quality

In response to increasing customer demand, Honda will upgrade its quality control by enhancing the functions of and coordination among the development, purchasing, production, sales and service departments.

5. Safety Technologies

Honda is working to develop safety technologies that enhance accident prediction and prevention, technologies to help reduce the risk of injuries to passengers and pedestrians from car accidents, and technologies that enhance compatibility between large and small vehicles, as well as expand its lineup of products incorporating such technologies. Honda will reinforce and continue to advance its contribution to traffic safety in motorized societies in Japan and abroad. Honda also intends to remain active in a variety of traffic safety programs, including advanced driving and motorcycling training programs provided by local dealerships.

6. The Environment

Honda will step up its efforts to create better, cleaner and more fuel-efficient engine technologies and to further improve recyclables throughout its product lines. Honda has now set a target to reduce CO₂ emissions from its global products by 30 percent by the end of 2020 compared to year 2000 levels. In addition to reducing CO₂ emissions during production and supply chain, Honda will strengthen its efforts to realize reductions in CO₂ emissions through its entire corporate activities. Furthermore, Honda will strengthen its efforts in advancing technologies in the area of total energy management, to reduce CO₂ emissions through mobility and people’s everyday lives.

7. Continuing to Enhance Honda’s Social Reputation and Communication with the Community

In addition to continuing to provide products incorporating Honda’s advanced safety and environmental technologies, Honda will continue striving to enhance its social reputation by, among other things, strengthening its corporate governance, compliance, and risk management as well as participating in community activities and making philanthropic contributions.

Through these company-wide activities, Honda will strive to be a company that its shareholders, investors, customers and society want to exist.

C. Organizational Structure

As of March 31, 2013, the Company had 93 Japanese subsidiaries and 276 overseas subsidiaries. The following table sets out for each of the Company’s principal subsidiaries, the country of incorporation, function and percentage ownership and voting interest held by Honda.


Company	Country of Incorporation	Function	Percentage Ownership and Voting Interest
Honda R&D Co., Ltd.	Japan	Research & Development		100.0
Honda Engineering Co., Ltd.	Japan	Manufacturing and Sales of machine tools, equipment and production techniques		100.0
Yachiyo Industry Co., Ltd.	Japan	Manufacturing		50.5
Honda Finance Co., Ltd.	Japan	Finance		100.0
American Honda Motor Co., Inc.	U.S.A.	Sales		100.0
Honda North America, Inc.	U.S.A.	Coordination of Subsidiaries Operation		100.0
Honda of America Mfg., Inc.	U.S.A.	Manufacturing		100.0
American Honda Finance Corporation	U.S.A.	Finance		100.0
Honda Manufacturing of Alabama, LLC	U.S.A.	Manufacturing		100.0
Honda Manufacturing of Indiana, LLC	U.S.A.	Manufacturing		100.0
Honda Transmission Mfg. of America, Inc.	U.S.A.	Manufacturing		100.0
Honda R&D Americas, Inc.	U.S.A.	Research & Development		100.0
Honda Canada Inc.	Canada	Manufacturing and Sales		100.0
Honda Canada Finance Inc.	Canada	Finance		100.0
Honda de Mexico, S.A. de C.V.	Mexico	Manufacturing and Sales		100.0
Honda Motor Europe Limited*¹	U.K.	Coordination of Subsidiaries Operation and Sales		100.0
Honda of the U.K. Manufacturing Ltd.	U.K.	Manufacturing		100.0
Honda Finance Europe plc	U.K.	Finance		100.0
Honda Bank GmbH	Germany	Finance		100.0
Honda Motor (China) Investment Co., Ltd.	China	Coordination of Subsidiaries Operation and Sales		100.0
Honda Auto Parts Manufacturing Co., Ltd.	China	Manufacturing		100.0
Honda Automobile (China) Co., Ltd.	China	Manufacturing		65.0
Honda Motorcycle & Scooter India (Private) Ltd.	India	Manufacturing and Sales		100.0
Honda Cars India Limited*²	India	Manufacturing and Sales		100.0
P.T. Honda Prospect Motor	Indonesia	Manufacturing and Sales		51.0
Honda Taiwan Co., Ltd.	Taiwan	Sales		100.0
Asian Honda Motor Co., Ltd.	Thailand	Coordination of Subsidiaries Operation and Sales		100.0
Honda Leasing (Thailand) Co., Ltd.	Thailand	Finance		100.0
Honda Automobile (Thailand) Co., Ltd.	Thailand	Manufacturing and Sales		89.0
Thai Honda Manufacturing Co., Ltd.	Thailand	Manufacturing		60.0
Honda Vietnam Co., Ltd.	Vietnam	Manufacturing and Sales		70.0
Honda Motor de Argentina S.A.	Argentina	Manufacturing and Sales		100.0
Honda South America Ltda.	Brazil	Coordination of Subsidiaries Operation		100.0
Banco Honda S.A.	Brazil	Finance		100.0
Honda Automoveis do Brasil Ltda.	Brazil	Manufacturing and Sales		100.0
Moto Honda da Amazonia Ltda.	Brazil	Manufacturing and Sales		100.0
Honda Turkiye A.S.	Turkey	Manufacturing and Sales		100.0
Honda Australia Pty. Ltd.	Australia	Sales		100.0

*¹	Honda Motor Europe Limited merged with Honda France S.A.S., Honda Deutschland GmbH and 12 other companies in the current fiscal year.

*²	Honda Cars India Limited changed its name from Honda Siel Cars India Limited in the current fiscal year.

D. Property, Plants and Equipment

The following table sets out information, as of March 31, 2013, with respect to Honda’s principal manufacturing facilities, all of which are owned by Honda:


Location	Number of Employees		Principal Products Manufactured
Sayama, Saitama, Japan		4,955	Automobiles
Hamamatsu, Shizuoka, Japan		2,365	Power products and transmissions
Suzuka, Mie, Japan		6,679	Automobiles
Ohzu-machi, Kikuchi-gun Kumamoto, Japan		2,759	Motorcycles, all-terrain vehicles, power products and engines
Marysville, Ohio, U.S.A.		5,785	Automobiles
Anna, Ohio, U.S.A.		2,314	Engines
East Liberty, Ohio, U.S.A.		2,091	Automobiles
Lincoln, Alabama, U.S.A.		4,436	Automobiles and engines
Greensburg, Indiana, U.S.A.		2,120	Automobiles
Alliston, Ontario, Canada		4,048	Automobiles and engines
El Salto, Mexico		2,604	Motorcycles and automobiles
Swindon, Wiltshire, U.K.		3,866	Automobiles and engines
Guangzhou, China		815	Automobiles
Gurgaon, India		4,654	Motorcycles
Greater Noida, India		2,705	Automobiles
Karawang, Indonesia		1,771	Automobiles and engines
Ayutthaya, Thailand		3,790	Automobiles
Bangkok, Thailand		3,329	Motorcycles and power products
Vinhphuc, Vietnam		3,844	Motorcycles and automobiles
Buenos Aires, Argentina		1,196	Motorcycles and automobiles
Sumare, Brazil		3,368	Automobiles
Manaus, Brazil		8,435	Motorcycles and power products
Gebze, Turkey		775	Automobiles

In addition to its manufacturing facilities, the Company’s properties in Japan include sales offices and other sales facilities in major cities, repair service facilities, and research and development facilities.

As of March 31, 2013, the Company’s property, with a net book value of approximately ¥26.1 billion, was subject to specific mortgages securing indebtedness.

Capital Expenditures

Capital expenditures in fiscal 2013 were applied to the introduction of new models, as well as the improvement, streamlining and modernization of production facilities, and improvement of sales and R&D facilities.

Total capital expenditures for the year amounted to ¥1,386.7 billion, increased ¥296.3 billion from the previous year. Also, total capital expenditures, excluding property on operating leases, for the year amounted to ¥593.6 billion, increased ¥187.0 billion from the previous year. Spending by business segment is shown below.


	Fiscal years ended March 31,
	2012		2013		Increase (Decrease)
	Yen (millions)
Motorcycle Business	¥	62,075	¥	73,513	¥	11,438
Automobile Business		334,196		505,045		170,849
Financial Services Business		684,083		793,669		109,586
Financial Services Business (Excluding Property on Operating Leases)		316		551		235
Power Product and Other Businesses		10,005		14,519		4,514
Total	¥	1,090,359	¥	1,386,746	¥	296,387
Total (Excluding Property on Operating Leases)	¥	406,592	¥	593,628	¥	187,036

Intangible assets are not included in the table above.

In Motorcycle business, we made capital expenditures of ¥73,513 million in the fiscal year ended March 31, 2013. Funds were allocated to the introduction of new models, as well as the improvement, streamlining and modernization of production facilities, and improvement of sales and R&D facilities.

In Automobile business, we made capital expenditures of ¥505,045 million in the fiscal year ended March 31, 2013. Funds were allocated to the introduction of new models, as well as the improvement, streamlining and modernization of production facilities, and improvement of sales and R&D facilities.

In Financial services business, capital expenditures excluding property on operating leases amounted to ¥551 million in the fiscal year ended March 31, 2013, while capital expenditures for property on operating leases were ¥793,118 million. Capital expenditures in Power products and other businesses in the fiscal year ended March 31, 2013, totaling ¥14,519 million, were deployed to upgrade, streamline, and modernize manufacturing facilities for power products, and to improve R&D facilities for power products.

Plans after fiscal 2013

During the fiscal year ended March 31, 2013, we modified our capital expenditure plans which were originally set out in the prior fiscal year. The modified plans are as follows:

The second auto plant in Rajasthan, India, constructed by Honda Cars India Limited, which is one of the Company’s consolidated subsidiaries, is planned to start operations from 2014.

Managements mainly consider economic trends of each region, demand trends, situation of competitors and our business strategy such as introduction plans of new models in determining the future of projects.

The estimated amounts of capital expenditures for fiscal year ending March 31, 2014 are shown below.


	Fiscal year ending March 31, 2014
	Yen (millions)
Motorcycle Business	¥	64,000
Automobile Business		623,000
Financial Services Business		700
Power Product and Other Businesses		12,300

Total	¥	700,000

The estimated amount of capital expenditures for Financial services business in the above table does not include property on operating leases.

Intangible assets are not included in the table above.

Item 4A. Unresolved Staff Comments

We do not have any unresolved written comments provided by the staff of the Securities and Exchange Commission regarding our periodic reports under the Securities and Exchange Act of 1934.

Item 5. Operating and Financial Review and Prospects

A. Operating Result

Overview

Business Environment

We saw economic conditions in the U.S. continue to improve during the fiscal year ended March 31, 2013. This recovery in the U.S. was underscored by the job market improving, and by strengthening performances in personal consumption, housing investment, and capital investment. Economic conditions in Europe, on the other hand, continued to stagnate owing to the debt crisis, negative GDP growth, and unemployment rates remaining high. Meanwhile, the Asian economy continued to expand. This expansion was driven by reconstruction demand from the floods in Thailand and strong growth in Indonesia, even as the pace of economic growth in China and India eased. Japan continued on a gradual recovery path against a backdrop of a change to a weakening yen, a recovery in the stock market, an improvement in the employment situation as well as reconstruction demand from the Great East Japan Earthquake.

The trends, uncertainties, demands, commitments and events identified below may continue or recur, impacting the company’s future financial results.

Overview of Fiscal Year 2013 Operating Performance

Honda’s consolidated net sales and operating revenues for the fiscal year ended March 31, 2013, increased from the fiscal year ended March 31, 2012, due mainly to increased net sales in Automobile business operations attributable to a recovery from the Great East Japan Earthquake, and the floods in Thailand, and favorable foreign currency translation effects. Operating income increased from the previous fiscal year, due mainly to an increase in income attributable to increased net sales and model mix as well as cost reductions, which was partially offset by increased selling, general and administrative expenses, in addition to increased research and development expenses.

Motorcycle Business

Honda’s consolidated unit sales of motorcycles in fiscal year 2013 totaled 9,510 thousand units, an increase of 9.9% from the previous fiscal year, mainly due to higher sales in India, Thailand and certain other countries, despite lower sales in Brazil and Vietnam.

Automobile Business

Honda’s consolidated unit sales of automobiles in fiscal year 2013 totaled 3,408 thousand units, an increase of 37.3% from the previous fiscal year, due mainly to an increase in unit sales in all regions. Growth in unit sales was supported mainly by recoveries from the Great East Japan Earthquake and the floods in Thailand, as well as a boost from the rollout of new models.

Power Product and Other Businesses

Honda’s consolidated unit sales of power products in fiscal year 2013 totaled 6,071 thousand units, an increase of 4.3% from the previous fiscal year, mainly due to steady sales of engines, generators and certain other products in North America, as well as pumps and certain other products in Asia.

Fiscal Year 2013 Compared with Fiscal Year 2012

Net Sales and Other Operating Revenue

Honda’s consolidated net sales and other operating revenue (hereafter, “net sales”) for the fiscal year ended March 31, 2013, increased ¥1,929.8 billion, or 24.3%, to ¥9,877.9 billion from the fiscal year ended March 31, 2012, due mainly to increased net sales in Automobile business by recovery from the impact of the Great East Japan Earthquake and the floods in Thailand and positive foreign currency translation effects. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, net sales for the year would have increased by approximately ¥1,773.9 billion, or 22.3%, compared to the increase as reported of ¥1,929.8 billion, which includes positive foreign currency translation effects.

Operating Costs and Expenses

Operating costs and expenses increased ¥1,616.4 billion, or 20.9%, to ¥9,333.1 billion from the previous fiscal year. Cost of sales increased ¥1,425.5 billion, or 24.1%, to ¥7,345.1 billion from the previous fiscal year, due mainly to an increase in costs attributable to increased consolidated unit sales in Automobile business and negative foreign currency effects. Selling, general and administrative expenses increased by ¥150.4 billion, or 11.8%, to ¥1,427.7 billion from the previous fiscal year, due mainly to an increase in selling expenses attributable to increased consolidated unit sales in Automobile business and increased product warranty expenses. R&D expenses increased by ¥40.4 billion, or 7.8%, to ¥560.2 billion from the previous fiscal year, due mainly to improving safety and environmental technologies and enhancing of the attractiveness of the products.

Operating Income

Operating income increased ¥313.4 billion, or 135.5%, to ¥544.8 billion from the previous fiscal year, due mainly to an increase in income attributable to increased net sales and continuing cost reduction, which was partially offset by increased selling, general and administrative expenses and increased R&D expenses. Excluding positive foreign currency effects of ¥35.8 billion, Honda estimates operating income increased ¥277.6 billion.

With respect to the discussion above of the changes, management identified the factors and used what it believes to be a reasonable method to analyze the respective changes in such factors. Management analyzed changes in these factors at the levels of the Company and its material consolidated subsidiaries. “Foreign currency effects” consist of “translation adjustments”, which come from the translation of the currency of foreign subsidiaries’ financial statements into Japanese yen, and “foreign currency adjustments”, which result from foreign-currency-denominated sales. With respect to “foreign currency adjustments”, management analyzed foreign currency adjustments primarily related to the following currencies: U.S. dollar, Euro, Japanese yen and others at the level of the Company and its material consolidated subsidiaries.

Income before Income Taxes and Equity in Income of Affiliates

Income before income taxes and equity in income of affiliates increased ¥231.4 billion, or 89.9%, to ¥488.8 billion. Main factors of this increase except factors relating operating income are as follows;

Unrealized gains and losses related to derivative instruments had a negative impact of ¥36.8 billion. Other income (expenses) excluding unrealized gains and losses related to derivative instruments had a negative impact of ¥45.0 billion, due mainly to an increase in foreign currency transaction losses.

Income Tax Expense

Income tax expense increased ¥43.2 billion, or 31.9%, to ¥178.9 billion from the previous fiscal year. The effective tax rate decreased 16.1 percentage points to 36.6% from the previous fiscal year. The decrease in the effective tax rate was due mainly to a decrease in adjustments for the change in income tax laws in Japan and a decrease in impact on recognition of valuation allowance.

Equity in Income of Affiliates

Equity in income of affiliates decreased ¥17.6 billion, or 17.6%, to ¥82.7 billion, due mainly to a recognition of impairment loss on certain investments in affiliates and a decrease in income attributable to decreased net sales at affiliates in Asia.

Net Income

Net income increased ¥170.5 billion, or 76.8%, to ¥392.6 billion from the previous fiscal year.

Net Income attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests increased ¥14.8 billion, or 140.6%, to ¥25.4 billion from the previous fiscal year.

Net Income attributable to Honda Motor Co., Ltd.

Net income attributable to Honda Motor Co., Ltd. increased ¥155.6 billion, or 73.6%, to ¥367.1 billion from the previous fiscal year.

Business Segments

Motorcycle Business

Honda’s consolidated unit sales of motorcycles, all-terrain vehicles (ATVs) totaled 9,510 thousand units, increased by 9.9% from the previous fiscal year, due mainly to an increase in consolidated unit sales in Asia.

Revenue from external customers decreased ¥9.2 billion, or 0.7%, to ¥1,339.5 billion from the previous fiscal year, due mainly to negative foreign currency translation effects, which was partially offset by increased consolidated unit sales. The impact of price changes was immaterial. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, net sales for the year would have increased by approximately ¥45.2 billion, or 3.4%, compared to the decrease as reported of ¥9.2 billion, which includes negative foreign currency translation effects.

Operating costs and expenses increased ¥23.0 billion, or 1.9%, to ¥1,229.3 billion from the previous fiscal year. Cost of sales increased by ¥24.0 billion, or 2.6%, to ¥963.0 billion, due mainly to an increase in costs attributable to increased consolidated unit sales, which was partially offset by positive foreign currency effects. Selling, general and administrative expenses decreased by ¥4.0 billion, or 2.0%, to ¥199.8 billion, due mainly to decreased product warranty expenses and positive foreign currency effects, which was partially offset by an increase in selling expenses attributable to increased consolidated unit sales. R&D expenses increased by ¥3.1 billion, or 4.9%, to ¥66.4 billion.

Operating income decreased ¥32.3 billion, or 22.7%, to ¥110.2 billion from the previous fiscal year, due mainly to a negative foreign currency effects, which was partially offset by continuing cost reduction.

Japan

Total industry demand for motorcycles in Japan^* in fiscal year 2013 was approximately 440 thousand units, mostly unchanged from the previous fiscal year. Although the number of licensed riders declined in line with the continued decline in the population of young people in Japan, unit sales growth was driven by higher demand for scooters and small motorcycles.

Honda’s consolidated unit sales in Japan in fiscal year 2013 were 217 thousand units, down 1.4% from the previous fiscal year. This result reflects lower unit sales of the TODAY model scooter and other models. The

lower unit sales were partly offset by the positive impact of the launch of the large NC700S and Integra models, as well as the new PCX150 model scooter featuring enhanced fuel economy. Another positive factor was increased unit sales of the SUPER CUB series.

^*	Source: JAMA (Japan Automobile Manufacturers Association)

North America

Total demand for motorcycles and all-terrain vehicles (ATVs) in the United States^* during calendar year 2012 increased approximately 2% from the previous year to approximately 678 thousand units, although demand has yet to fully recover. Unit sales growth reflected stronger consumer sentiment in line with improvement in the unemployment rate and income levels.

Under these circumstances, Honda’s consolidated unit sales in North America for fiscal year 2013 increased 25.0% from the previous fiscal year to 250 thousand units. Of this, consolidated unit sales of motorcycles increased 43.0% from the previous fiscal year to 153 thousand units, mainly due to steady sales of models such as the newly introduced large NC700X model featuring outstanding fuel economy and the PCX model scooter, primarily in the U.S. Consolidated unit sales of ATVs rose 4.3% to 97 thousand units, mainly due to brisk sales of utility ATVs such as TRX 420.

^*	Source: MIC (Motorcycle Industry Council)

Europe

Total demand^* for motorcycles in Europeduring calendar year 2012 declined approximately 10% from the previous year to approximately 779 thousand units. Weak consumer sentiment due to growing economic instability adversely affected demand.

Under these circumstances, Honda’s consolidated unit sales in Europe for fiscal year 2013 decreased 9.6% from the previous fiscal year to 179 thousand units, mainly reflecting the lackluster market as a whole. This was despite increased sales of newly introduced large models NC700X, NC700S and Integra featuring outstanding fuel economy.

^*	Based on Honda research: this only includes the following 10 countries – the United Kingdom, Germany, France, Italy, Spain, Switzerland, Portugal, the Netherlands, Belgium and Austria.

Asia

Total demand^* for motorcycles in Asia during calendar year 2012 declined approximately 3% from the previous year to approximately 41,500 thousand units.

Looking at market conditions by country, demand in India increased approximately 5% from the previous year, to approximately 13,850 thousand units while demand in China decreased approximately 10% from the previous year, to approximately 12,630 thousand units. Indonesia saw demand decline approximately 12% from the previous year, to approximately 7,060 thousand units and Vietnam saw demand decline approximately 7% from the previous year, to approximately 3,100 thousand units. Demand in Thailand rose approximately 8% from the previous year, to approximately 2,160 thousand units.

Under these circumstances, Honda’s consolidated unit sales in Asia for fiscal year 2013 increased 17.5% from the previous fiscal year to 7,051 thousand units. Sales rose on growth in sales of the Activa scooter and the small Dream Yuga motorcycle in India. In Thailand, which was impacted by floods in the previous year, sales growth was supported by brisk sales of the Wave Cub-type motorcycle, the Click 125i scooter and certain other models.

Honda’s consolidated unit sales do not include unit sales of P.T. Astra Honda Motor in Indonesia, which is an affiliate accounted for under the equity method. Astra Honda Motor’s unit sales for fiscal year 2013 decreased 4.3% from the previous fiscal year to 4,092 thousand units mainly due to the impact of Indonesian government’s regulations concerning down payments on two-wheeled vehicles.

^*	Based on Honda research: this only includes the following eight countries – Thailand, Indonesia, Malaysia, the Philippines, Vietnam, India, Pakistan and China.

Other Regions

In Brazil, the principal market within Other Regions, total demand for motorcycles in calendar year 2012 declined approximately 15% from the previous year to approximately 1,640 thousand^* units, mainly due to stricter lending standards for retail loans.

In Other Regions (including South America, the Middle East, Africa, Oceania and other areas), Honda’s consolidated unit sales in fiscal year 2013 decreased 10.7% from the previous fiscal year to 1,813 thousand units, mainly due to lower sales of the small motorcycle CG125 Fan, CG150 Fan and other models. These sales declines primarily reflected stricter lending standards for retail loans in Brazil.

^*	Source: ABRACICLO (the Brazilian association of motorcycle, moped, and bicycle manufacturers)

Automobile Business

Honda’s consolidated unit sales of automobiles totaled 3,408 thousand units, increased by 37.3% from the previous fiscal year, due mainly to an increase in consolidated unit sales in all regions by recovery from the impact of the Great East Japan Earthquake and the floods in Thailand.

Revenue from external customers increased ¥1,903.2 billion, or 32.8%, to ¥7,709.2 billion from the previous fiscal year, due mainly to increased consolidated unit sales and positive foreign currency translation effects. The impact of price changes was immaterial. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, net sales for the year would have increased by approximately ¥1,721.4 billion, or 29.6%, compared to the increase as reported of ¥1,903.2 billion, which includes positive foreign currency translation effects. Revenue including intersegment sales increased ¥1,900.8 billion, or 32.6%, to ¥7,723.5 billion from the previous fiscal year.

Operating costs and expenses increased ¥1,537.6 billion, or 26.1%, to ¥7,437.5 billion from the previous fiscal year. Cost of sales increased by ¥1,349.6 billion, or 29.9%, to ¥5,868.2 billion, due mainly to an increase in costs attributable to increased consolidated unit sales and negative foreign currency effects. Selling, general and administrative expenses increased by ¥151.8 billion, or 15.9%, to ¥1,105.3 billion, due mainly to an increase in selling expenses attributable to increased consolidated unit sales and increased product warranty expenses. R&D expenses increased by ¥36.1 billion, or 8.5%, to ¥464.0 billion, due mainly to improving safety and environmental technologies and enhancing of the attractiveness of the products.

Operating income was ¥285.9 billion, an increase of ¥363.1 billion of operating income from the previous fiscal year, due mainly to an increase in income attributable to increased net sales and continuing cost reduction, which was partially offset by increased selling, general and administrative expenses and increased R&D expenses.

Proportion of retail unit sales by vehicle category:


	Fiscal year ended March 31,
	2012			2013
Passenger cars:		62	%		60	%
*Accord, Accord Plug-in Hybrid, Accord Tourer, Brio, Brio Amaze,* *City, Civic, CR-Z, Fit/Jazz, Fit/Jazz Hybrid, Fit Shuttle, Fit Shuttle Hybrid,* *FREED, FREED Hybrid, FREED SPIKE, FREED SPIKE Hybrid, Insight, Inspire, Legend,* *Stream, Acura ILX, Acura RLX, Acura TL, Acura TSX*

Light trucks:		33	%		31	%
*Crosstour, CR-V, Elysion, Odyssey,* *Pilot, Ridgeline, Step WGN,* *Acura MDX, Acura RDX, Acura ZDX*

Mini vehicles:		5	%		9	%
*Acty, Life, N Box, N Box +, N-ONE, Vamos, Zest*

Although there are various factors that affect the profitability of each vehicle category, sales price is an important factor in determining profitability. In general, the weighted average sales price in the light trucks category is higher relative to the total average sales price, while the weighted average sales price in the mini vehicles category, which is unique to the Japanese market, is relatively lower, although sales price vary from model to model.

In general, the contribution margin of the light trucks category tends to be higher relative to the total weighted average contribution margin because the sales price is higher, while the contribution margin of the mini vehicles category tends to be relatively lower because the sales price is lower, although the level of contribution margin varies from model to model.

For example, in Japan and the United States, which are the main sales markets for our automobiles, the contribution margin of our light trucks category was approximately 30% higher, our passenger cars category was approximately 10% lower and our mini vehicles category was approximately 30% lower than total weighted average contribution margin for the fiscal year ended March 31, 2013.

It should be noted that we define contribution margin as an amount per unit of net sales minus material cost, which is thought to increase in almost direct proportion to net sales volume.

Japan

Total industry automobile sales in Japan^*¹ for fiscal year 2013 rose approximately 10% from the previous fiscal year, to approximately 5,210 thousand units. Automobile sales held firm thanks to the pump-priming effect of government stimulus policies that provided tax breaks and subsidies for purchasing eco-cars in the first half of the fiscal year. Another contributing factor was the recovery from the Great East Japan Earthquake.

Honda’s consolidated unit sales in Japan rose 18.1% from the previous fiscal year to 685 thousand units^*2. This result was mainly due to strong sales of the N Box mini vehicle and Step WGN, along with the positive impact of the launch of the new mini vehicle N Box + and N-ONE.

In production activities, Honda’s unit production of automobiles in Japan for fiscal year 2013 increased 0.6% from the previous fiscal year to 876 thousand units, mainly due to higher sales in Japan, despite the shift of some production overseas.

^*1:	Source: JAMA (Japan Automobile Manufacturers Association): (as measured by the number of regular vehicle registrations (661 cc or higher) and mini vehicles (660 cc or lower))

^*2:

Certain sales of automobiles that are financed with residual value-type auto loans by our Japanese finance subsidiaries are accounted for as operating leases in conformity with U.S. generally accepted accounting principles and are not included in consolidated net sales to the external customers in our automobile business. As a result, they are not included in consolidated unit sales.

North America

In calendar year 2012, total industry sales of automobiles in the United States^* rose approximately 13% from the previous year to approximately 14,490 thousand units. The main contributing factors were an upswing in consumer sentiment, an improvement in the unemployment rate, and firm sales of passenger cars, in particular.

Under these circumstances, Honda’s consolidated unit sales in North America increased 30.8% from the previous fiscal year to 1,731 thousand units. This was mainly due to the positive impact of the launch of the all-new Accord, as well as strong sales of the Civic, CR-V and other models.

In production activities, Honda manufactured 1,687 thousand units, up 37.3% from the previous fiscal year.

Honda Manufacturing of Alabama, LLC, a consolidated subsidiary, ramped up its production capacity by 40 thousand units in fiscal year 2013, bringing its annual production capacity to 340 thousand units.

Honda Manufacturing of Indiana, LLC, a consolidated subsidiary, ramped up its production capacity by 50 thousand units in fiscal year 2013, bringing its annual production capacity to 250 thousand units.

Honda de Mexico, S.A. de C.V., a consolidated subsidiary in Mexico, has decided to build a new factory with an annual production capacity of approximately 200 thousand units in order to meet expected market expansion in the subcompact car segment. This move is expected to raise Honda’s annual automobile production capacity in North America to 1,920 thousand units by the first half of 2014.

^*	Source: Ward’s Auto

Europe

During calendar year 2012, total demand in Europe^*¹ decreased approximately 8% from the previous year, to approximately 12,530 thousand units. The market contracted as a whole, mainly due to weak consumer sentiment accompanying growing concerns about the economy, despite signs of a market recovery in the U.K. On the other hand, in Russia, total demand^*² increased approximately 11% from the previous year to approximately 2,940 thousand units.

Honda’s consolidated unit sales in Europe increased 8.2% from the previous fiscal year to 171 thousand units. The main contributing factors were the launch of the all-new CR-V model, and the rollout of a Civic model fitted with a new diesel engine.

On the production front, unit output at Honda’s U.K. plant in fiscal year 2013 increased 62.8% from the previous fiscal year to 170 thousand units.

^*1:	Source: ACEA (Association des Constructeurs Europeens d’Automobiles (the European Automobile Manufacturers’ Association) (New passenger car registrations cover 27 EU countries and three EFTA countries.)), excluding Russia

^*2:	Source: AEB (The Association of European Businesses)

Asia

In Asia, in calendar year 2012, total demand increased approximately 13% from the previous year to approximately 8,930 thousand units^*¹, mainly due to market expansion in Indonesia and India. Another factor was growth in Thailand’s sub-compact segment of the market, which is eligible for government subsidies. Total demand in China rose around 4% from the previous year to approximately 19,310 thousand units^*².

Honda’s consolidated unit sales in Asia outside Japan increased 138.8% from the previous fiscal year to 523 thousand units. Sales grew atop a recovery from the damage caused by the floods in Thailand, as well as the positive impact of the launch of Brio Amaze and higher sales of City and other models.

Honda’s consolidated unit sales do not include unit sales of Dongfeng Honda Automobile Co., Ltd. and Guangqi Honda Automobile Co., Ltd., both of which are affiliates accounted for under the equity method in China. However, unit sales for fiscal year 2013 decreased 3.0% from the previous fiscal year to 599 thousand units, reflecting the challenging sales conditions faced by Japanese automakers in the country during the fiscal year.

On the production front, Honda’s unit production increased 40.0% to 1,167 thousand units^*3. In Asia, excluding China, production was 550 thousand units, while output in China was 617 thousand units.

Honda Malaysia SDN BHD, a consolidated subsidiary in Malaysia, has decided to build a second production line with an annual production capacity of 50 thousand units. Honda Malaysia plans to produce small car models such as the Jazz, as well as hybrid vehicles on the new production line. This new line will raise the company’s annual production capacity to 100 thousand units in 2013.

P.T. Honda Prospect Motor, a consolidated subsidiary in Indonesia, has decided to construct a new automobile factory with an annual production capacity of 120 thousand units. Honda Prospect Motor plans to produce the Brio and other small cars at the new factory. This new facility is expected to raise the company’s annual production capacity to 200 thousand units in 2014.

Honda Automobile (Thailand) Co., Ltd., a consolidated subsidiary in Thailand, will ramp up capacity at the Ayutthaya Plant, bringing the company’s annual production capacity to 300 thousand units in 2014. In addition, the company has decided to construct a new automobile factory with an annual production capacity of 120 thousand units. The new factory will raise the company’s production capacity to 420 thousand units in 2015.

Furthermore, Dongfeng Honda Automobile Co., Ltd., an affiliate accounted for under the equity method, will expand the production capacity of its second plant by 20 thousand units to respond to a continuing increase in demand in China’s automobile market. By the end of 2013, Dongfeng Honda Automobile Co., Ltd.’s total annual production capacity is scheduled to increase to 360 thousand units.

Moreover, Guangqi Honda Automobile Co., Ltd., another affiliate accounted for under the equity method, has decided to build a third production line with an annual production capacity of 120 thousand units. The new line will raise the company’s annual production capacity to 600 thousand units in 2015.

As a result, Honda and its affiliates’ annual production capacity of automobiles in China, including the annual production capacity of Honda Automobile (China) Co., Ltd., a factory dedicated to production for export, is scheduled to increase from 870 thousand units at present to 1,010 thousand units in 2015.

^*1:	The total is based on Honda research and includes the following 10 countries: Thailand, Indonesia, Malaysia, the Philippines, Vietnam, Singapore, Taiwan, South Korea, India and Pakistan.

^*2:	Source: China Association of Automobile Manufacturers

^*3:	The total includes the following nine countries: China, Thailand, Indonesia, Malaysia, the Philippines, Vietnam, Taiwan, India and Pakistan.

Other Regions

Total industry demand for automobiles in Brazil^*, one of the principal markets among the Other Regions, increased approximately 6% from the previous year to approximately 3,630 thousand units in calendar year 2012. This growth mainly reflected government policies such as tax breaks for automobile purchases.

In Other Regions (including South America, the Middle East, Africa, Oceania and other areas), consolidated unit sales in fiscal year 2013 increased 47.5% from the previous fiscal year to 298 thousand units. This result was mainly due to the positive impact of the launch of the all-new Civic in Brazil.

On the production front, Honda’s unit production in Brazil increased 67.8% from the previous fiscal year to 135 thousand units in fiscal year 2013.

^*	Source: ANFAVEA (Associação Nacional dos Fabricantes de Veiculos Automotores (the Brazilian Automobile Association, includes passenger cars and light commercial vehicles))

Power Product and Other Businesses

Honda’s consolidated unit sales of power products totaled 6,071 thousand units, increased by 4.3% from the previous fiscal year, due mainly to an increase in consolidated unit sales in North America and Asia.

Revenue from external customers increased ¥3.5 billion, or 1.3%, to ¥280.6 billion from the previous fiscal year, due mainly to increased consolidated unit sales of power products and positive foreign currency translation effects, which was partially offset by decreased sales of other business. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, net sales for the year would have decreased by approximately ¥1.2 billion, or 0.4%, compared to the increase as reported of ¥3.5 billion, which includes positive foreign currency translation effects. Revenue including intersegment sales increased ¥1.9 billion, or 0.7%, to ¥291.6 billion from the previous fiscal year.

Operating costs and expenses increased ¥7.4 billion, or 2.5%, to ¥301.2 billion from the previous fiscal year. Cost of sales increased by ¥6.2 billion, or 3.0%, to ¥214.8 billion, due mainly to an increase in costs attributable to increased net sales of power products business and negative foreign currency effects. Selling, general and administrative expenses increased by ¥0.08 billion, or 0.1%, to ¥56.6 billion. R&D expenses increased by ¥1.1 billion, or 4.1%, to ¥29.7 billion.

Operating loss was ¥9.5 billion, an increase of ¥5.5 billion from the previous fiscal year, due mainly to increased costs including R&D expenses.

Japan

Honda’s consolidated unit sales in fiscal year 2013 decreased 19.9% from the previous fiscal year to 314 thousand units, mainly due to lower exports of general-purpose engines for OEM^* use and decreased sales of generators and certain other products. These declines were partly offset by higher sales of lawn mowers, snow blowers and certain other products.

^*	OEM (Original Equipment Manufacturer): refers to manufacturers of products and components sold under a third-party brand.

North America

Honda’s consolidated unit sales in fiscal year 2013 increased 12.5% from the previous fiscal year to 2,604 thousand units. Although sales of snow blowers and certain other products declined, increased sales of general-purpose engines for OEM use in lawn mowers, construction machinery and other products contributed to the increase.

Europe

Honda’s consolidated unit sales in fiscal year 2013 decreased 10.4% from the previous fiscal year to 1,004 thousand units, despite strong sales of brush cutters and certain other products. The main reason for the decrease was lower sales of general-purpose engines for OEM use in construction machinery and agricultural equipment, as well as decreased sales of small tillers.

Asia

Honda’s consolidated unit sales in fiscal year 2013 increased 6.8% from the previous fiscal year to 1,572 thousand units, mainly due to higher sales of pumps and certain other products in Thailand, despite lower sales of general-purpose engines for OEM use in India.

Other Regions

In Other Regions (including South America, the Middle East, Africa, Oceania and other areas) Honda’s consolidated unit sales in fiscal year 2013 rose 11.0% from the previous fiscal year to 577 thousand units. Sales growth was fueled by higher sales of general-purpose engines for OEM use, pumps and certain other products in the Middle East and Africa. This growth was tempered by lower sales of lawn mowers and certain other products in Australia.

Financial Services Business

To support the sale of its products, Honda provides retail lending and leasing to customers and wholesale financing to dealers through our finance subsidiaries in Japan, the United States, Canada, the United Kingdom, Germany, Brazil, Thailand and other countries.

Total amount of finance subsidiaries-receivables and property on operating leases of finance subsidiaries increased by ¥955.3 billion, or 19.4%, to ¥5,874.2 billion from the previous fiscal year. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, total amount of finance subsidiaries-receivables and property on operating leases of finance subsidiaries as of the end of the year would have increased by approximately ¥281.0 billion, or 5.7%, compared to the increase as reported of ¥955.3 billion, which includes positive foreign currency translation effects.

Revenue from external customers in Financial services business increased ¥32.3 billion, or 6.3%, to ¥548.5 billion from the previous fiscal year, due mainly to an increase in operating lease revenues and positive foreign currency translation effects. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, revenue for the year would have increased by approximately ¥8.4 billion, or 1.6%, compared to the increase as reported of ¥32.3 billion, which includes positive foreign currency translation effects. Revenue including intersegment sales increased ¥33.6 billion, or 6.4%, to ¥560.2 billion from the previous fiscal year.

Operating costs and expenses increased ¥45.5 billion, or 12.8%, to ¥402.0 billion from the previous fiscal year. Cost of sales increased ¥42.9 billion, or 14.7%, to ¥336.2 billion from the previous fiscal year, due mainly to an increase in costs related to lease residual values and negative foreign currency effect. Selling, general and administrative expenses increased ¥2.5 billion, or 4.0%, to ¥65.8 billion from the previous fiscal year.

Operating income decreased ¥11.8 billion, or 7.0%, to ¥158.1 billion from the previous fiscal year, due mainly to an increase in costs related to lease residual values.

Geographical Information

Japan

In Japan, revenue from domestic and export sales increased ¥530.5 billion, or 15.8%, to ¥3,893.5 billion from the previous fiscal year, due mainly to an increase in revenue in Automobile business. Operating income

was ¥178.4 billion, an increase of ¥288.2 billion of operating income from the previous fiscal year, due mainly to an increase in income attributable to increased net sales and model mix and positive foreign currency effects, which was partially offset by increased R&D expenses and increased selling, general and administrative expenses.

North America

In North America, which mainly consists of the United States, revenue increased ¥1,142.3 billion, or 30.8%, to ¥4,857.1 billion from the previous fiscal year, due mainly to an increase in revenue in Automobile business and positive foreign currency translation effects. Operating income decreased ¥14.3 billion, or 6.4%, to ¥208.9 billion from the previous fiscal year, due mainly to increased selling, general and administrative expenses, which was partially offset by an increase in income attributable to increased net sales, model mix and continuing cost reduction.

Europe

In Europe, revenue increased ¥61.3 billion, or 10.6%, to ¥642.1 billion from the previous fiscal year, due mainly to an increase in revenue in the Automobile business. Operating income was ¥0.4 billion, an increase of ¥12.5 billion of operating income from the previous fiscal year, due mainly to an increase in income attributable to increased net sales and model mix, which was partially offset by increased selling, general and administrative expenses.

Asia

In Asia, revenue increased ¥815.1 billion, or 54.7%, to ¥2,305.6 billion from the previous fiscal year, due mainly to an increase in revenue in Automobile businesses and Motorcycle businesses. Operating income increased ¥69.8 billion, or 90.9%, to ¥146.7 billion from the previous fiscal year, due mainly to an increase in income attributable to increased net sales and model mix and continuing cost reduction, which was partially offset by increased selling, general and administrative expenses.

Other Regions

In Other Regions, revenue increased ¥3.3 billion, or 0.4%, to ¥896.4 billion from the previous fiscal year, due mainly to an increase in revenue in Automobile businesses, which was partially offset by a decrease in revenue in Motorcycle business and negative foreign currency translation effects. Operating income decreased ¥21.2 billion, or 37.3%, to ¥35.6 billion from the previous fiscal year, due mainly to increased selling, general and administrative expenses and negative foreign currency effects.

Fiscal Year 2012 Compared with Fiscal Year 2011

Net Sales and Other Operating Revenue

Honda’s consolidated net sales and other operating revenue (hereafter, “net sales”) for the fiscal year ended March 31, 2012, decreased ¥988.7 billion, or 11.1%, to ¥7,948.0 billion from the fiscal year ended March 31, 2011, due mainly to decreased net sales in Automobile business by the Great East Japan Earthquake, the floods in Thailand and negative foreign currency translation effects, which was partially offset by increased net sales in Motorcycle business. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, net sales for the year would have decreased by approximately ¥555.6 billion, or 6.2%, compared to the decrease as reported of ¥988.7 billion, which includes negative foreign currency translation effects.

Operating Costs and Expenses

Operating costs and expenses decreased ¥650.3 billion, or 7.8%, to ¥7,716.7 billion from the previous fiscal year. Cost of sales decreased ¥577.2 billion, or 8.9%, to ¥5,919.6 billion from the previous fiscal year, due

mainly to a decrease in costs attributable to decreased consolidated unit sales in Automobile business and positive foreign currency effects. Selling, general and administrative expenses decreased by ¥105.3 billion, or 7.6%, to ¥1,277.2 billion from the previous fiscal year, due mainly to a decrease in selling expenses attributable to decreased product warranty expenses, decreased consolidated unit sales in Automobile business, and positive foreign currency effects. R&D expenses increased by ¥32.2 billion, or 6.6%, to ¥519.8 billion from the previous fiscal year, due mainly to improving safety and environmental technologies and enhancing of the attractiveness of the products.

Operating Income

Operating income decreased ¥338.4 billion, or 59.4%, to ¥231.3 billion from the previous fiscal year, due mainly to a decrease in income attributable to decreased net sales, increased R&D expenses and negative foreign currency effects, which was partially offset by decreased selling, general and administrative expenses. Excluding negative foreign currency effects of ¥114.0 billion, Honda estimates operating income decreased ¥224.3 billion.

Income before Income Taxes and Equity in Income of Affiliates

Income before income taxes and equity in income of affiliates decreased ¥373.1 billion, or 59.2%, to ¥257.4 billion. Main factors of this decrease except factors relating operating income are as follows;

Unrealized gains and losses related to derivative instruments had a negative impact of ¥5.9 billion. Other income (expenses) excluding unrealized gains and losses related to derivative instruments had a negative impact of ¥28.7 billion, due mainly to gain on sales of investments in affiliates related to the dissolution of the joint venture, which was included in the previous fiscal year and a decrease in foreign currency transaction gains.

Income Tax Expense

Income tax expense decreased ¥71.0 billion, or 34.4%, to ¥135.7 billion from the previous fiscal year. The effective tax rate increased 19.9 percentage points to 52.7% from the previous fiscal year. The increase in the effective tax rate was due mainly to a decrease in a portion of unrecognized tax benefits related to transfer pricing matters of overseas transactions between the Company and foreign affiliates, which was included in the previous fiscal year and adjustments for the change in income tax laws in Japan in the current fiscal year.

Equity in Income of Affiliates

Equity in income of affiliates decreased ¥39.3 billion, or 28.2%, to ¥100.4 billion, due mainly to a decrease in income attributable to decreased net sales by the Great East Japan Earthquake at affiliates in Asia and Japan, and decreased Equity in income of the affiliate which was dissolved pursuant to a joint venture agreement in the previous fiscal year.

Net Income

Net income decreased ¥341.4 billion, or 60.6%, to ¥222.0 billion from the previous fiscal year.

Net Income attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests decreased ¥18.7 billion, or 64.0%, to ¥10.5 billion from the previous fiscal year.

Net Income attributable to Honda Motor Co., Ltd.

Net income attributable to Honda Motor Co., Ltd. decreased ¥322.6 billion, or 60.4%, to ¥211.4 billion from the previous fiscal year.

Business Segments

Motorcycle Business

Honda’s consolidated unit sales of motorcycles, all-terrain vehicles (ATVs) totaled 8,650 thousand units, increased by 16.7% from the previous fiscal year, due mainly to an increase in consolidated unit sales in Asia and Other Regions, including South America.

Revenue from external customers increased ¥60.6 billion, or 4.7%, to ¥1,348.8 billion from the previous fiscal year, due mainly to increased consolidated unit sales, which was partially offset by negative foreign currency translation effects. The impact of price changes was immaterial. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, net sales for the year would have increased by approximately ¥158.6 billion, or 12.3%, compared to the increase as reported of ¥60.6 billion, which includes negative foreign currency translation effects.

Operating costs and expenses increased ¥56.6 billion, or 4.9%, to ¥1,206.2 billion from the previous fiscal year. Cost of sales increased by ¥51.0 billion, or 5.8%, to ¥939.0 billion, due mainly to an increase in costs attributable to increased consolidated unit sales, which was partially offset by positive foreign currency effects. Selling, general and administrative expenses increased by ¥10.0 billion, or 5.2%, to ¥203.8 billion, due mainly to an increase in selling expenses attributable to increased consolidated unit sales. R&D expenses decreased by ¥4.4 billion, or 6.6%, to ¥63.3 billion.

Operating income increased ¥4.0 billion, or 2.9%, to ¥142.6 billion from the previous fiscal year, due mainly to an increase in income attributable to increased net sales, which was partially offset by income related to licensing agreements which was included in the previous fiscal year, increased selling, general and administrative expenses and negative foreign currency effects.

Japan

Total industry demand for motorcycles in Japan^* in fiscal year 2012 was approximately 450 thousand units, approximately 6% higher than in the previous fiscal year. Although the number of licensed riders declined in line with the continued decline in the population of young people in Japan as well as changes in consumer preferences, unit sales growth was driven by the launch of new models, etc.

Honda’s consolidated unit sales in Japan in fiscal year 2012 were 220 thousand units, up 15.8% from the previous fiscal year. This result reflects the positive impact of the launch of the new Dio110 model scooter, increased sales of the Giorno scooter, and the newly launched global strategic road sports CBR250R model, whose global manufacturing base is in Asia.

^*	Source: JAMA (Japan Automobile Manufacturers Association)

North America

Total demand for motorcycles and all-terrain vehicles (ATVs) in the United States^* during calendar year 2011 declined approximately 5% from the previous year, to approximately 663 thousand units. Demand fell short of making a full-scale recovery as consumer sentiment remained muted despite signs of improvement in the employment rate and income levels.

Under these circumstances, Honda’s consolidated unit sales in North America for fiscal year 2012 increased 8.1% from the previous fiscal year, to 200 thousand units. Honda’s consolidated unit sales of motorcycles increased 18.9% from the previous fiscal year, to 107 thousand units, due to strong sales of the newly introduced global strategic road sports CBR250R model, the Ruckus scooter and certain other models. Honda’s consolidated unit sales of ATVs decreased 2.1%, to 93 thousand units despite brisk demand for utility ATVs, such as Foreman TRX500, which underwent a full model change.

^*	Source: MIC (Motorcycle Industry Council)

Europe

Total demand^* for motorcycles in Europe during calendar year 2011 declined approximately 8%, to approximately 865 thousand units. Weak consumer sentiment due to growing economic instability in Southern European countries in particular adversely affected demand.

Under these circumstances, Honda’s consolidated unit sales in Europe for fiscal year 2012 decreased 2.0% from the previous fiscal year, to 198 thousand units, slightly better than the lackluster market as a whole. This result is attributable to strong sales of the newly-launched global strategic road sports CBR250R model and newly-launched scooter model Vision110.

^*	Based on Honda research: this only includes the following 10 countries – the United Kingdom, Germany, France, Italy, Spain, Switzerland, Portugal, the Netherlands, Belgium and Austria.

Asia

Total demand^* for motorcycles in Asia during calendar year 2011 increased approximately 3%, to approximately 42.9 million units. Demand for motorcycles continued to expand despite the impact of the floods in Thailand, the introduction of interest rate hikes to control inflation and tightening of credit policies in certain countries in the region. Unit sales in India rose approximately 16%, to approximately 13.14 million units, while sales in Indonesia increased approximately 9%, to approximately 8.01 million units. Sales in Thailand rose approximately 4%, to approximately 1.92 million units, despite the effects of the flooding.

Under these circumstances, Honda’s consolidated unit sales in Asia for fiscal year 2012 rose 16.6%, to 6,001 thousand units. Sales rose on growth in sales of the Activa scooters and Shine motorcycles in India, and the AirBlade scooters and Wave Cub-type motorcycle models in Vietnam.

With respect to production activities, P.T. Astra Honda Motor, which is an affiliate accounted for under the equity method, in Indonesia, announced plans to build a fourth factory solely for scooters, with an annual production capacity of around 1,100 thousand units, in order to meet burgeoning demand in the Indonesian market. By the autumn of 2013, the company’s annual production capacity will be approximately 5,300 thousand units.

^*	Based on Honda research: this only includes the following eight countries – Thailand, Indonesia, Malaysia, the Philippines, Vietnam, India, Pakistan and China.

Other Regions

In Brazil, the principal market within Other Regions, total demand in calendar year 2011 increased approximately 7%, to 1,930 thousand^* units, on the momentum created by economic growth in the first half of the year. This result was achieved despite a fiscal tightening policy, and an economic slowdown brought on by the reverberations of the European sovereign debt crises in the second half.

In Other Regions (including South America, the Middle East, Africa, Oceania and other areas), Honda’s consolidated unit sales rose 20.2% over the previous fiscal year, to 2,031 thousand units. Strong sales of mainstay models in Brazil, including the CG150 Fan motorcycles and NXR150 Bros dual-sport motorcycles contributed to sales growth.

^*	Source: ABRACICLO (the Brazilian association of motorcycle, moped, and bicycle manufacturers)

Automobile Business

Honda’s consolidated unit sales of automobiles totaled 2,482 thousand units, decreased by 13.8% from the previous fiscal year, due mainly to a decrease in consolidated unit sales in all regions by the Great East Japan Earthquake and the floods in Thailand.

Revenue from external customers decreased ¥988.1 billion, or 14.5%, to ¥5,805.9 billion from the previous fiscal year, due mainly to decreased consolidated unit sales and negative foreign currency translation effects. The impact of price changes was immaterial. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, net sales for the year would have decreased by approximately ¥702.7 billion, or 10.3%, compared to the decrease as reported of ¥988.1 billion, which includes negative foreign currency translation effects. Revenue including intersegment sales decreased ¥979.5 billion, or 14.4%, to ¥5,822.7 billion from the previous fiscal year.

Operating costs and expenses decreased ¥637.8 billion, or 9.8%, to ¥5,899.9 billion from the previous fiscal year. Cost of sales decreased by ¥587.2 billion, or 11.5%, to ¥4,518.5 billion, due mainly to a decrease in costs attributable to decreased consolidated unit sales and positive foreign currency effects. Selling, general and administrative expenses decreased by ¥88.6 billion, or 8.5%, to ¥953.5 billion, due mainly to a decrease in selling expenses attributable to decreased product warranty expenses, decreased consolidated unit sales, and positive foreign currency effects. R&D expenses increased by ¥38.0 billion, or 9.7%, to ¥427.8 billion, due mainly to improving safety and environmental technologies and enhancing of the attractiveness of the products.

Operating loss was ¥77.2 billion, a decrease of ¥341.7 billion of operating income from the previous fiscal year, due mainly to a decrease in income attributable to decreased net sales, increased R&D expenses and negative foreign currency effects, which was partially offset by decreased selling, general and administrative expenses.

Proportion of retail unit sales by vehicle category:


	Fiscal year ended March 31,
	2011			2012
Passenger cars:		65	%		62	%
*Accord, Brio, City, Civic, CR-Z, Fit/Jazz,* *Fit/Jazz Hybrid, Fit Shuttle, Fit Shuttle Hybrid, FREED,* *FREED Hybrid, Insight, Inspire, Legend, Stream,* *Acura RL, Acura TL, Acura TSX, Everus S1*

Light trucks:		31	%		33	%
*Crosstour, CR-V, Elysion, Odyssey,* *Pilot, Ridgeline, Step WGN,* *Acura MDX, Acura RDX, Acura ZDX*

Mini vehicles:		4	%		5	%
*Acty, Life, N Box, Vamos, Zest*

It should be noted that we define contribution margin as an amount per unit of net sales minus material cost, which is thought to increase in almost direct proportion to net sales volume.

Japan

Total industry automobile sales in Japan^*1 for fiscal year 2012 rose approximately 3%, to approximately 4.75 million units. Although the Great East Japan Earthquake and the floods in Thailand had an impact, automobile sales remained stable due to government stimulus policies that provided tax breaks and subsidies for eco-car purchases in the second half of the fiscal year as well as other factors.

Honda’s consolidated unit sales in Japan were almost on a par with the previous fiscal year at 580 thousand units^*2. The impact of lower production due to the Great East Japan Earthquake and the floods in Thailand negated strong sales of new models such as the Fit Shuttle, the Fit Shuttle Hybrid, and the FREED Hybrid, as well as of the new N Box mini vehicle.

In production activities, Honda’s domestic unit production of automobiles declined 4.6% from the previous fiscal year, to 870 thousand units due to the impact of the Great East Japan Earthquake and the floods in Thailand.

^*1:	Source: JAMA (as measured by the number of regular vehicle registrations (661cc or higher) and mini vehicles (660cc or lower))

^*2:

Certain sales of automobiles that are financed with residual value type auto loans by our Japanese finance subsidiaries are accounted for as operating leases in conformity with U.S. generally accepted accounting principles and are not included in consolidated net sales to the external customers in our automobile business. As a result, they are not included in consolidated unit sales.

North America

In calendar year 2011, total industry sales in the United States^* increased approximately 9% over the previous year, to approximately 12.78 million units. Sales of small passenger cars and SUVs in particular were firm, reflecting an upswing in consumer sentiment and an improvement in the employment rate.

Under these circumstances, Honda’s consolidated automobile unit sales in North America for fiscal year 2012 decreased approximately 9.3% from the previous fiscal year, to 1,323 thousand units. The launch of the fully remodeled Civic and CR-V models generated sales, but supply constraints caused by supply chain disruptions from the Great East Japan Earthquake had a negative impact on vehicle availability.

In production activities, Honda manufactured 1,229 thousand units, down 4.8% from the previous fiscal year.

Honda Manufacturing of Indiana, LLC, Honda’s consolidated subsidiary in the U.S, began a second production shift from October 2011, which increased annual production capacity at the plant to 200 thousand units.

Honda de Mexico, S.A. de C.V., Honda’s consolidated subsidiary in Mexico, announced plans to build a new factory with an annual production capacity of approximately 200 thousand units in order to meet expected market expansion in the compact car segment. This move is expected to raise Honda’s annual automobile production capacity in North America to 1.87 million units by the first half of 2014

^*	Source: Ward’s Auto

Europe

During calendar year 2011, total demand in Europe^*1 edged down approximately 1% from the previous year, to approximately 13.57 million units. In Germany, individual retail market sales significantly declined, despite signs of a market recovery. The main factor was weak consumer sentiment due to concerns about the economy. On the other hand, in Russia^*2, sales increased approximately 39%, to approximately 2.65 million units, supported by higher sales of locally produced vehicles.

Honda’s consolidated unit sales in Europe decreased 20.2% from the previous fiscal year, to 158 thousand units, despite increased sales of the fully remodeled Civic. In addition to supply constraints caused by supply chain disruptions from the Great East Japan Earthquake, the decline was due to increased sales competition, and a drop-off in individual retail market sales which forms the core of Honda sales.

On the production front, unit output at Honda’s U.K. plant declined 24.7% from the prior fiscal year, to 104 thousand units.

^*1:	Source: ACEA (Association des Constructeurs Europeens d’Automobiles (the European Automobile Manufacturers’ Association) (new passenger car registrations cover 27 EU countries and three EFTA countries)), excluding Russia

^*2:	Source: AEB (The Association of European Businesses)

Asia

In Asia in calendar year 2011, total demand increased approximately 6% from the previous year, to approximately 7.9 million units^*1, despite lower sales in Thailand caused by the flooding. Higher overall sales resulted from a rise in demand in Indonesia, India and certain other countries. Unit sales in China rose approximately 2%, to approximately 18.51 million units^*2, despite lower growth brought on by the end of a tax break available through 2010 and more stringent qualification standards for a government incentive program for fuel-efficient vehicles.

Honda’s consolidated unit sales in Asia outside Japan for fiscal year 2012 declined 41.6%, to 219 thousand units. The decline was a direct result of lower production due to the Great East Japan Earthquake and the floods in Thailand.

On the production front, Honda’s unit production decreased 23.1%, to around 834 thousand^*3 units due to the impact of the floods in Thailand. In Asia, excluding China, production totaled 198 thousand units, while output in China was approximately 636 thousand units.

Production activities at certain automobile plants in the Asia region were suspended due to the floods in Thailand. Subsequently, however, production has gradually resumed at all factories since January 2012.

P.T. Honda Prospect Motor, Honda’s consolidated subsidiary in Indonesia, announced plans to construct a new automobile factory with an annual production capacity of 120 thousand units for production of the BRIO and other compact cars. This new facility is expected to raise the company’s annual production capacity to 180 thousand units in 2014.

Furthermore, Dongfeng Honda Automobile Co., Ltd., an affiliate accounted for under the equity method, is constructing a second plant to respond to a continuing increase in demand in China’s automobile market. By the end of 2013, Dongfeng Honda’s total annual production capacity is scheduled to increase to 360 thousand units.

Moreover, Guangqi Honda Automobile Co., Ltd., an affiliate accounted for under the equity method, has announced plans to build a third production line with an annual production capacity of 120 thousand units. This new line will raise the company’s annual production capacity to 600 thousand units in 2014.

As a result, Honda and its affiliates’ annual production capacity of automobiles in China, including the annual production capacity of Honda Automobile (China) Co., Ltd., a factory focused on production for export, is scheduled to increase from 770 thousand units at present to 1,010 thousand units in 2014.

^*1:	The total is based on Honda research and includes the following 10 countries: Thailand, Indonesia, Malaysia, the Philippines, Vietnam, Singapore, Taiwan, Korea, India and Pakistan.

^*2:	Source: China Association of Automobile Manufacturers

^*3:	The total includes the following nine countries: China, Thailand, Indonesia, Malaysia, the Philippines, Vietnam, Taiwan, India and Pakistan.

Other Regions

Total industry demand for automobiles in Brazil^*, one of the principal markets among the Other Regions, increased approximately 3%, to approximately 3,430 thousand units in calendar year 2011, marking a record for the 5th consecutive year. Although the growth rate dropped due to the impact of fiscal tightening measures from the end of 2010, light commercial vehicle sales increased.

In Other Regions (including South America, the Middle East, Africa, Oceania and other areas), Honda’s consolidated unit sales in fiscal year 2012 declined 24.1% from the previous fiscal year, to 202 thousand units. This was due to supply chain disruptions caused by the Great East Japan Earthquake and supply constraints caused by the floods in Thailand.

On the production front, Honda’s unit production in Brazil, one of the principal markets among the Other Regions, decreased 36.5%, to 80 thousand units from the previous fiscal year.

^*	Source: ANFAVEA (Associaçao Nacional dos Fabricantes de Veiculos Automotores (the Brazilian automobile association, includes passenger cars and light commercial vehicles))

Power Product and Other Businesses

Honda’s consolidated unit sales of power products totaled 5,819 thousand units, increased by 5.6% from the previous fiscal year, due mainly to an increase in consolidated unit sales in North America and Asia.

Revenue from external customers decreased ¥15.5 billion, or 5.3%, to ¥277.1 billion from the previous fiscal year, due mainly to decreased sales of other business, negative foreign currency translation effects, which was partially offset by increased consolidated unit sales of power products. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, net sales for the year would have decreased by approximately ¥4.8 billion, or 1.7%, compared to the decrease as reported of ¥15.5 billion, which includes negative foreign currency translation effects. Revenue including intersegment sales decreased ¥18.0 billion, or 5.9%, to ¥289.7 billion from the previous fiscal year.

Operating costs and expenses decreased ¥19.5 billion, or 6.2%, to ¥293.7 billion from the previous fiscal year. Cost of sales decreased by ¥19.5 billion, or 8.6%, to ¥208.6 billion, due mainly to a decrease in costs attributable to decreased net sales of other business and positive foreign currency effects. Selling, general and administrative expenses increased by ¥1.3 billion, or 2.4%, to ¥56.5 billion. R&D expenses decreased by ¥1.3 billion, or 4.4%, to ¥28.6 billion.

Operating loss was ¥4.0 billion, an improvement of ¥1.4 billion from the previous fiscal year, due mainly to an increase in income attributable to increased net sales of power products, which was partially offset by increased selling, general and administrative expenses and negative foreign currency effects.

Japan

Honda’s consolidated unit sales for fiscal year 2012 increased 1.0% from the previous fiscal year, to 392 thousand units, due to higher sales of generators, snow blowers and certain other products, despite lower sales of general-purpose engines for OEM^* use.

^*	OEM (Original Equipment Manufacturer): refers to manufacturers of products and components sold under a third-party brand.

North America

Honda’s consolidated unit sales in fiscal year 2012 increased 11.0% from the previous fiscal year, to 2,314 thousand units. Although sales of lawn mowers and certain other products declined, increased sales of general-purpose engines to OEM manufacturers of pressure washers contributed to the increase.

Europe

Honda’s consolidated unit sales in fiscal year 2012 declined 4.5% from the previous fiscal year, to 1,121 thousand units due to decreased sales of general-purpose engines for OEM use. On a bright note, sales of completed products such as lawn mowers and other gardening equipment, as well as snow blowers were strong.

Asia

Honda’s consolidated unit sales in fiscal year 2012 increased 11.1% from the previous fiscal year, to 1,472 thousand units due to economic expansion and government support programs for farm households, which contributed to strong sales of engines for agricultural equipment and construction machinery, pumps, and brush cutters. This increase was realized despite decreased sales in Thailand due to the impact of the floods.

Other Regions

In Other Regions (including South America, the Middle East, Africa, Oceania and other areas), Honda’s consolidated unit sales in fiscal year 2012 declined 3.2% from the previous fiscal year, to 520 thousand units, the result of lower sales of general-purpose engines for OEM use. This was mainly due to lower demand in Brazil. Sales of brush cutters and general-purpose engines for OEM use rose in Australia.

Financial Services Business

Total amount of finance subsidiaries-receivables and property on operating leases of finance subsidiaries increased by ¥81.2 billion, or 1.7%, to ¥4,918.8 billion from the previous fiscal year. Honda estimates that by

applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, total amount of finance subsidiaries-receivables and property on operating leases of finance subsidiaries as of the end of the year would have increased by approximately ¥168.0 billion, or 3.5%, compared to the increase as reported of ¥81.2 billion, which includes negative foreign currency translation effects.

Revenue from external customers in Financial services business decreased ¥45.7 billion, or 8.1%, to ¥516.1 billion from the previous fiscal year, due mainly to negative foreign currency translation effects. Honda estimates that by applying Japanese yen exchange rates of the previous fiscal year to the current fiscal year, revenue for the year would have decreased by approximately ¥6.7 billion, or 1.2%, compared to the decrease as reported of ¥45.7 billion, which includes negative foreign currency translation effects. Revenue including intersegment sales decreased ¥46.8 billion, or 8.2%, to ¥526.5 billion from the previous fiscal year.

Operating costs and expenses decreased ¥30.6 billion, or 7.9%, to ¥356.5 billion from the previous fiscal year. Cost of sales decreased ¥16.6 billion, or 5.4%, to ¥293.2 billion from the previous fiscal year, due mainly to a decrease in costs related to lease residual values and positive foreign currency effect. Selling, general and administrative expenses decreased ¥13.9 billion, or 18.1%, to ¥63.3 billion from the previous fiscal year, due mainly to a decrease in provisions for credit losses, losses on lease residual values and positive foreign currency effects.

Operating income decreased ¥16.2 billion, or 8.7%, to ¥170.0 billion from the previous fiscal year, due mainly to negative foreign currency effects, which was partially offset by a decrease in losses on lease residual values.

Geographical Information

Japan

In Japan, revenue from domestic and export sales decreased ¥248.2 billion, or 6.9%, to ¥3,362.9 billion from the previous fiscal year, due mainly to a decrease in revenue in Automobile business by the Great East Japan Earthquake and the floods in Thailand. Operating loss was ¥109.8 billion, a decrease of ¥175.9 billion of operating income from the previous fiscal year, due mainly to a decrease in income attributable to decreased net sales and model mix, increased R&D expenses and negative foreign currency effects, which was partially offset by decreased selling, general and administrative expenses.

North America

In North America, which mainly consists of the United States, revenue decreased ¥433.1 billion, or 10.4%, to ¥3,714.7 billion from the previous fiscal year, due mainly to a decrease in revenue in Automobile business by the Great East Japan Earthquake, the floods in Thailand and negative foreign currency translation effects. Operating income decreased ¥77.6 billion, or 25.8%, to ¥223.2 billion from the previous fiscal year, due mainly to a decrease in income attributable to decreased net sales, model mix and negative foreign currency effects.

Europe

In Europe, revenue decreased ¥118.5 billion, or 16.9%, to ¥580.7 billion from the previous fiscal year, due mainly to a decrease in revenue in the Automobile business by the Great East Japan Earthquake, the floods in Thailand and negative foreign currency translation effects. Operating loss was ¥12.1 billion, a decrease of ¥1.9 billion of operating income from the previous fiscal year, due mainly to a decrease in income attributable to decreased net sales and model mix.

Asia

In Asia, revenue decreased ¥350.6 billion, or 19.0%, to ¥1,490.4 billion from the previous fiscal year, due mainly to a decrease in revenue in Automobile businesses by the Great East Japan Earthquake, the floods in

Thailand and negative foreign currency translation effects, which was partially offset by an increase in revenue in Motorcycle business. Operating income decreased ¥73.7 billion, or 49.0%, to ¥76.8 billion from the previous fiscal year, due mainly to a decrease in income attributable to decreased net sales and model mix and negative foreign currency effects.

Other Regions

In Other Regions, revenue decreased ¥88.9 billion, or 9.1%, to ¥893.1 billion from the previous fiscal year, due mainly to a decrease in revenue in Automobile businesses by the Great East Japan Earthquake, the floods in Thailand and negative foreign currency translation effects, which was partially offset by an increase in revenue in Motorcycle business. Operating income decreased ¥12.5 billion, or 18.1%, to ¥56.9 billion from the previous fiscal year, due mainly to a decrease in income attributable to increased selling, general and administrative expenses and negative foreign currency effects.

Application of Critical Accounting Policies

Critical accounting policies are those which require us to apply the most difficult, subjective or complex judgments, often requiring us to make estimates about the effect of matters that are inherently uncertain and which may change in subsequent periods, or for which the use of different estimates that could have reasonably been used in the current period would have had a material impact on the presentation of our financial condition and results of operations. Further changes in the economic environment surrounding us, effects by market conditions, effects of currency fluctuations or other factors have combined to increase the uncertainty inherent in such estimates and assumptions.

The following is not intended to be a comprehensive list of all our accounting policies. Our significant accounting policies are more fully described in note (1) to the accompanying consolidated financial statements.

We have identified the following critical accounting policies with respect to our financial presentation.

Product Warranty

We warrant our products for specific periods of time.

Product warranties vary depending upon the nature of the product, the geographic location of their sales and other factors.

We recognize costs for general warranties on products we sell and product recalls. We provide for estimated warranty costs at the time products are sold to customers or the time new warranty programs are initiated. Estimated warranty costs are provided based on historical warranty claim experience with consideration given to the expected level of future warranty costs, including current sales trends, the expected number of units to be affected and the estimated average repair cost per unit for warranty claims. Our products contain certain parts manufactured by third party suppliers. Since suppliers typically warrant these parts, the expected receivables from warranties of these suppliers are deducted from our estimates of accrued warranty obligations.

We believe our accrued warranty liability is a “critical accounting estimate” because changes in the calculation can materially affect net income attributable to Honda Motor Co., Ltd., and require us to estimate the frequency and amounts of future claims, which are inherently uncertain.

Our policy is to continuously monitor warranty cost accruals to determine the adequacy of the accrual. Therefore, warranty expense accruals are maintained at an amount we deem adequate to cover estimated warranty expenses.

Actual claims incurred in the future may differ from the original estimates, which may result in material revisions to the warranty expense accruals.

The changes in provisions for those product warranties and net sales and other operating revenue for each of the years in the three-year period ended March 31, 2013 are as follows:


	Yen (millions)
	2011			2012			2013
Provisions for product warranties
Balance at beginning of year	¥	226,038		¥	213,943		¥	170,562
Warranty claims paid during the period		(82,080	)		(82,547	)		(64,942	)
Liabilities accrued for warranties issued during the period		84,920			60,004			97,108
Changes in liabilities for pre-existing warranties during the period^*		(3,550	)		(17,697	)		(8,583	)
Foreign currency translation		(11,385	)		(3,141	)		13,888

Balance at end of year	¥	213,943		¥	170,562		¥	208,033

Net sales and other operating revenue	¥	8,936,867		¥	7,948,095		¥	9,877,947

Changes in liabilities for pre-existing warranties during the period for the fiscal year ended March 31, 2012, was ¥17.6 billion, due mainly to the change of the expected level of future warranty costs, including the expected number of units to be affected and estimated average repair cost per unit for product recalls.

Credit Losses

Our finance subsidiaries provide retail lending and leasing to customers and wholesale financing to dealers primarily to support sales of our products. Honda classifies retail and direct financing lease receivables (consumer finance receivables) derived from those services as finance subsidiaries-receivables. Operating leases are classified as property on operating leases. Certain finance receivables related to sales of inventory are included in trade accounts and notes receivable and other assets in the consolidated balance sheets. Receivables on past due operating lease rental payments are included in other current assets in the consolidated balance sheets.

Credit losses are an expected cost of extending credit. The majority of the credit risk is with consumer financing and to a lesser extent with dealer financing. Credit risk can be affected by general economic conditions. Adverse changes such as a rise in unemployment rates can increase the likelihood of defaults. Declines in used vehicle prices can reduce the amount of recoveries on repossessed collateral. Credit risk on dealer loans is affected primarily by the financial strength of the dealers within the portfolio. Exposure to credit risk is managed through purchasing standards, pricing of contracts for expected losses, focusing collection efforts to minimize losses, and ongoing reviews of the financial conditions of dealers.

The allowance for credit losses is management’s estimate of probable losses incurred on finance receivables. Estimated losses on past due operating lease rental payments are also recognized with an allowance for credit losses. In the case of property on operating leases, estimated losses due to customer defaults are not recognized in the allowance for credit losses because a loss is realized upon the early disposition of property. Therefore we present these losses as impairment losses on property on operating leases. The allowance for credit losses and impairment losses on operating leases are based on evaluation of many factors, including our historical credit loss experience, the value of the underlying collateral, delinquency trends, and economic conditions.

Consumer finance receivables consist of a large number of smaller-balance homogenous loans and leases and are collectively evaluated for impairment. Our finance subsidiaries utilize various methodologies when estimating the allowance for credit losses including models that incorporate vintage loss and delinquency migration analysis. The models take into consideration attributes of the portfolio including loan-to-value ratios, internal and external credit scores, and collateral types. Economic factors such as used vehicle prices,

unemployment rates, and consumer debt service burdens are also incorporated when estimating losses. The methodologies and models used to estimate losses on operating leases are consistent with those used for consumer finance receivables.

Wholesale receivables are considered to be impaired and recognized in the allowance for credit losses when it is probable that our finance subsidiaries will be unable to collect all amounts due according to the original terms of the contract. Wholesale receivables are evaluated for impairment on an individual dealer basis. Ongoing evaluations of dealerships are performed to determine whether there is evidence of impairment. Factors can include payment performance, overall dealership financial performance, or known difficulties experienced by the dealership.

We believe our allowance for credit losses and impairment losses on operating leases is a “critical accounting estimate” because it requires significant judgment about inherently uncertain items. We regularly review the adequacy of the allowance for credit losses and impairment losses on operating leases. The estimates are based on information available as of each reporting date. However actual losses may differ from the original estimates as a result of actual results varying from those assumed in our estimates.

As an example of the sensitivity of the allowance calculation, the following scenario demonstrates the impact that a deviation in one of the primary factors estimated as a part of our allowance calculation would have on the provision and allowance for credit losses. If we had experienced a 10% increase in net credit losses during fiscal 2013, the provision for fiscal 2013 and the allowance balance at the end of fiscal 2013 would have increased by approximately ¥3.2 billion and ¥1.9 billion, respectively. Note that this sensitivity analysis may be asymmetric, and are specific to the base conditions in fiscal 2013.

Additional Narrative of the Change in Credit Loss

The following tables summarize our allowance for credit losses on finance receivables:


	Yen (billions)
For the year ended March 31, 2011	Retail			Direct financing lease			Wholesale			Total
Allowance for credit losses
Balance at beginning of year	¥	33.9		¥	1.7		¥	1.6		¥	37.3
Adjustment resulting from the adoption of new accounting standards on variable interest entities		0.8			—			—			0.8
Adjusted balance at beginning of year	¥	34.8		¥	1.7		¥	1.6		¥	38.2
Provision		10.3			0.7			0.3			11.3
Charge-offs		(27.6	)		(1.5	)		(0.5	)		(29.7	)
Recoveries		11.1			0.5			0.0			11.7
Adjustments from foreign currency translation		(3.0	)		(0.0	)		(0.0	)		(3.2	)

Balance at end of year	¥	25.5		¥	1.4		¥	1.4		¥	28.4

Ending receivable balance	¥	3,368.0		¥	362.1		¥	301.6		¥	4,031.7
Average receivable balance, net	¥	3,346.5		¥	374.9		¥	309.5		¥	4,031.0
Net Charge-offs as a % of average receivable balance		0.49	%		0.26	%		0.15	%		0.45	%
Allowance as a % of ending receivable balance		0.76	%		0.40	%		0.47	%		0.71	%


	Yen (billions)
For the year ended March 31, 2012	Retail			Direct financing lease			Wholesale			Total
Allowance for credit losses
Balance at beginning of year	¥	25.5		¥	1.4		¥	1.4		¥	28.4
Provision		10.3			0.3			0.0			10.8
Charge-offs		(21.1	)		(0.7	)		(0.0	)		(21.9	)
Recoveries		6.6			0.1			0.0			6.8
Adjustments from foreign currency translation		(0.9	)		(0.0	)		(0.0	)		(1.0	)

Balance at end of year	¥	20.4		¥	1.1		¥	1.4		¥	23.0

Ending receivable balance	¥	3,328.1		¥	380.3		¥	301.3		¥	4,009.8
Average receivable balance, net	¥	3,233.1		¥	366.1		¥	243.7		¥	3,843.0
Net Charge-offs as a % of average receivable balance		0.45	%		0.16	%		0.03	%		0.39	%
Allowance as a % of ending receivable balance		0.62	%		0.30	%		0.46	%		0.57	%


	Yen (billions)
For the year ended March 31, 2013	Retail			Direct financing lease			Wholesale			Total
Allowance for credit losses
Balance at beginning of year	¥	20.4		¥	1.1		¥	1.4		¥	23.0
Provision		8.7			0.3			0.0			9.1
Charge-offs		(20.8	)		(0.9	)		(0.2	)		(22.0	)
Recoveries		8.1			0.1			0.0			8.2
Adjustments from foreign currency translation		1.1			0.0			0.0			1.3

Balance at end of year	¥	17.6		¥	0.7		¥	1.2		¥	19.7

Ending receivable balance	¥	3,865.4		¥	448.6		¥	431.9		¥	4,746.0
Average receivable balance, net	¥	3,429.8		¥	394.5		¥	334.1		¥	4,158.4
Net Charge-offs as a % of average receivable balance		0.37	%		0.21	%		0.08	%		0.33	%
Allowance as a % of ending receivable balance		0.46	%		0.18	%		0.30	%		0.42	%

The following table provides information related to losses on operating leases due to customer defaults:


	Yen (billions)
	2011		2012		2013
Provision for credit losses on past due rental payments	¥	1.6	¥	1.1	¥	1.1
Impairment losses on operating leases due to early termination	¥	0.8	¥	1.5	¥	4.7

Fiscal Year 2013 Compared with Fiscal Year 2012

The provision for credit losses on finance receivables decreased by ¥1.6 billion, or 15%, and net charge-offs decreased by ¥1.3 billion, or 9%. The decline in net charge-offs is due mainly to the improved credit quality of our North American portfolio. Impairment losses on operating leases due to early termination increased by ¥3.2 billion, or 213%. The increase was primarily attributable to the increase in the volume of operating lease assets in North America.

Fiscal Year 2012 Compared with Fiscal Year 2011

The provision for credit losses on finance receivables decreased by ¥0.5 billion, or 5%, and net charge-offs decreased by ¥2.8 billion, or 16%. The decline in net charge-offs is due mainly to the improved credit quality of our North American portfolio and sustained strength in used vehicle prices.

Losses on Lease Residual Values

Our finance subsidiaries in North America establish contract residual values of lease vehicles at lease inception based on expectations of future used vehicle values, taking into consideration external industry data. End-customers of leased vehicles typically have an option to buy the leased vehicle for the contractual residual value of the vehicle or to return the vehicle to our finance subsidiaries through the dealer at the end of the lease term. Likewise, dealers have the option to buy the vehicle returned by the customer or to return the vehicle to our finance subsidiaries. The likelihood that the leased vehicle will be purchased varies depending on the difference between the contractual residual value and the actual market value of the vehicle at the end of the lease term. We are exposed to risk of loss on the disposition of returned lease vehicles when the proceeds from the sale of the vehicles are less than the contractual residual values at the end of the lease term. For direct financing leases, our finance subsidiaries in North America purchase insurance to cover a portion of the estimated residual value.

We periodically review the estimate of residual values. For vehicle leases accounted for as operating leases, the adjustments to estimated residual values result in changes to the remaining depreciation expense to be recognized prospectively on a straight-line basis over the remaining term of the lease.

For vehicle leases accounted for as direct financing leases, downward adjustments are made for declines in estimated residual values that are deemed to be other-than-temporary. The adjustments on the uninsured portion of the vehicle’s residual value are recognized as a loss in the period in which the estimate changed.

The primary components in estimating losses on lease residual values are the expected frequency of returns, or the percentage of leased vehicles we expect to be returned by customers at the end of the lease term, and the expected loss severity, or the expected difference between the residual value and the amount we receive through sales of returned vehicles plus proceeds from insurance, if any. We estimate losses on lease residual values by evaluating several different factors, including trends in historical and projected used vehicle values and general economic measures.

We also test our operating leases for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable.

Recoverability of operating leases to be held is measured by a comparison of the carrying amount of operating leases to future net cash flows (undiscounted and without interest charges) expected to be generated by the operating leases. If such operating leases are considered to be impaired, impairment losses to be recognized is measured by the amount by which the carrying amount of the operating leases exceeds the estimated fair value of the operating leases.

We believe that our estimated losses on lease residual values and impairment losses is a “critical accounting estimate” because it is highly susceptible to market volatility and requires us to make assumptions about future economic trends and lease residual values, which are inherently uncertain. We believe that the assumptions used are appropriate. However actual losses incurred may differ from original estimates as a result of actual results varying from those assumed in our estimates.

If future auction values for all Honda and Acura vehicles in our North American operating lease portfolio as of March 31, 2013, were to decrease by approximately ¥10,000 per unit from our present estimates, holding all other assumption constant, the total impact would be an increase in depreciation expense by approximately ¥3.8 billion, which would be recognized over the remaining lease terms. Similarly, if future return rates for our existing portfolio of all Honda and Acura vehicles were to increase by one percentage point from our present estimates, the total impact would be an increase in depreciation expense by approximately ¥0.2 billion, which would be recognized over the remaining lease terms. With the same prerequisites shown above, if future auction values in our North American direct financing lease portfolio were to decrease by approximately ¥10,000 per unit from our present estimates, the total impact would be an increase in losses on lease residual values by

approximately ¥0.2 billion. And if future return rates were to increase by one percentage point from our present estimates, the total impact would be slight. Note that this sensitivity analysis may be asymmetric, and are specific to the base conditions in fiscal 2013. Also, declines in auction values are likely to have a negative effect on return rates which could affect the sensitivities.

Fiscal Year 2013 Compared with Fiscal Year 2012

Losses on lease residual values on direct financing leases declined by ¥0.6 billion, or 47%. Incremental deprecation on operating leases increased by ¥6.7 billion, due mainly to declines in used vehicle prices in North America compared with fiscal year 2012 which showed near historical high.

No impairment losses as a result of declines in estimated residual values were recognized during fiscal year 2013.

Fiscal Year 2012 Compared with Fiscal Year 2011

Used vehicle prices remained strong during fiscal year 2012. Disruptions in the supply of new vehicles caused by the natural disasters in Japan and Thailand supported the demand for used vehicles. Losses related to lease residual value of our finance subsidiaries in North America declined for higher estimates of lease residual values. No impairment losses as a result of declines in estimated residual values were recognized during fiscal year 2012.

Incremental deprecation on operating leases declined by ¥2.1 billion, or 81%. Losses on lease residual values on direct financing leases declined by ¥1.7 billion, or 56%.

Pension and Other Postretirement Benefits

We have various pension plans covering substantially all of our employees in Japan and certain employees in foreign countries. Benefit obligations and pension costs are based on assumptions of many factors, including the discount rate, the rate of salary increase and the expected long-term rate of return on plan assets. The discount rate is determined mainly based on the rates of high quality corporate bonds currently available and expected to be available during the period to maturity of the defined benefit pension plans. The salary increase assumptions reflect our actual experience as well as near-term outlook. Honda determines the expected long-term rate of return based on the investment policies. Honda considers the eligible investment assets under investment policies, historical experience, expected long-term rate of return under the investing environment, and the long-term target allocations of the various asset categories. Our assumed discount rate and rate of salary increase as of March 31, 2013 were 1.5% and 2.2%, respectively, and our assumed expected long-term rate of return for the year ended March 31, 2013 was 3.0% for Japanese plans. Our assumed discount rate and rate of salary increase as of March 31, 2013 were 4.5~4.7% and 2.5~4.1%, respectively, and our assumed expected long-term rate of return for fiscal 2013 was 6.2~7.7% for foreign plans.

We believe that the accounting estimates related to our pension plans is “critical accounting estimate” because changes in these estimates can materially affect our financial condition and results of operations.

Actual results may differ from our assumptions, and the difference is accumulated and amortized over future periods. Therefore, the difference generally will be reflected as our recognized expenses in future periods. We believe that the assumptions currently used are appropriate, however, differences in actual expenses or changes in assumptions could affect our pension costs and obligations, including our cash requirements to fund such obligations.

The following table shows the effect of a 0.5% change in the assumed discount rate and the expected long-term rate of return on our funded status, equity, and pension expense.

Japanese Plans

Yen (billions)

Assumptions

Percentage
point
change (%)

Funded
status

Equity

Pension
expense

Discount rate

+0.5/-0.5

-91.1/+102.6

+34.3/-44.2

-2.0/+2.6

Expected long-term rate of return

+0.5/-0.5

—

-4.0/+4.0

Foreign Plans

Yen (billions)

Assumptions

Percentage
point
change (%)

Funded
status

Equity

Pension
expense

Discount rate

+0.5/-0.5

-62.1/+71.1

+36.6/-45.4

-5.5/+6.3

Expected long-term rate of return

+0.5/-0.5

—

-2.1/+2.1

^*1	Note that this sensitivity analysis may be asymmetric, and are specific to the base conditions at March 31, 2013.

^*2	Funded status for fiscal 2013 is affected by March 31, 2013 assumptions.

Pension expense for fiscal 2013 is affected by March 31, 2012 assumptions.

Income Taxes

Honda is subject to income tax examinations in many tax jurisdictions because Honda conducts its operations in various regions of the world. We recognize the tax benefit from an uncertain tax position based on the technical merits of the position when the position is more likely than not to be sustained upon examination. Benefits from tax positions that meet the more likely than not recognition threshold are measured at the largest amount of benefit that is greater than 50% likelihood of being realized upon ultimate resolution. We performed a comprehensive review of any uncertain tax positions.

We believe our accounting for tax uncertainties is a “critical accounting estimate” because it requires us to evaluate and assess the probability of the outcome that could be realized upon ultimate resolution. Our estimates may change in the future due to new developments.

We believe that our estimates and assumptions of unrecognized tax benefits are reasonable, however, if our estimates of unrecognized tax benefits and potential tax benefits are not representative of actual outcomes, our consolidated financial statements could be materially affected in the period of settlement or when the statutes of limitations expire, as we treat these events as discrete items in the period of resolution.

Valuation of Deferred Tax Assets

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income over the periods in which those temporary differences become deductible and operating loss carryforwards utilized. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

We believe that our accounting for the valuation of deferred tax assets is a “critical accounting estimate” because it required us to evaluate and assess the probability of future taxable income and our business plan, which are inherently uncertain.

Based upon the level of historical taxable income and projections for future taxable income over the periods for which the deferred tax assets are deductible, we believe it is more likely than not that we will realize the benefits of these deductible differences and operating loss carryforwards, net of the existing valuation allowances at March 31, 2012 and 2013. The amount of the deferred tax assets considered realizable, however, could be significantly reduced in the near term if estimates of future taxable income during the carryforward period are reduced due to further changes in the economic environment surrounding us, effects by market conditions, effects of currency fluctuations or other factors and our consolidated results of operation could be adversely affected.

New Accounting Pronouncements Not Yet Adopted

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-02 “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”, which amends the FASB Accounting Standards Codification (ASC) 220 “Comprehensive Income” and the presentation requirements for reclassifications out of accumulated other comprehensive income which were required by ASU 2011-05 “Presentation of Comprehensive Income” and deferred by ASU 2011-12 “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No.2011-05”. ASU 2013-02 requires the Company to provide information about the amounts reclassified out of accumulated other comprehensive income by component, and to present, either on the face of the consolidated statements of income or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income.

This update is effective for the Company for fiscal years, and interim periods within those years, beginning after December 15, 2012. This update impacts the presentation only and the adoption will have no effect on the Company’s consolidated financial position or results of operations. Management has not yet determined the method of presentation.

B. Liquidity and Capital Resources

Overview of Capital Requirements, Sources and Uses

The policy of Honda is to support its business activities by maintaining sufficient capital resources, a sufficient level of liquidity and a sound balance sheet.

Honda’s main business is the manufacturing and sale of motorcycles, automobiles and power products. To support this business, it also provides retail financing and automobile leasing services for customers, as well as wholesale financing services for dealers.

Honda requires working capital mainly to purchase parts and raw materials required for production, as well as to maintain inventory of finished products and cover receivables from dealers and for providing financial services. Honda also requires funds for capital expenditures, mainly to introduce new models, upgrade, rationalize and renew production facilities, as well as to expand and reinforce sales and R&D facilities.

Honda meets its working capital requirements primarily through cash generated by operations, bank loans and the issuance of commercial paper. Honda believes that its working capital is sufficient for the Company’s present requirements. The year-end balance of liabilities associated with the Company and its subsidiaries’ funding for non-Financial services businesses was ¥540.2 billion as of March 31, 2013. In addition, the Company’s finance subsidiaries fund financial programs for customers and dealers primarily from medium-term notes, bank loans, securitization of finance receivables, commercial paper, corporate bonds, and intercompany loans. The year-end balance of liabilities associated with these finance subsidiaries’ funding for Financial services business was ¥4,863.5 billion as of March 31, 2013.

Cash Flows

Fiscal Year 2013 Compared with Fiscal Year 2012

Consolidated cash and cash equivalents on March 31, 2013 decreased by ¥40.9 billion from March 31, 2012, to ¥1,206.1 billion. The reasons for the increases or decreases for each cash flow activity, when compared with the previous fiscal year, are as follows:

Net cash provided by operating activities amounted to ¥800.7 billion of cash inflows. Cash inflows from operating activities increased by ¥39.2 billion compared with the previous fiscal year due mainly to an increase in cash received due to increased unit sales in Automobile business, which was partially offset by increased payments for parts and raw materials primarily caused by an increase in automobile production.

Net cash used in investing activities amounted to ¥1,069.7 billion of cash outflows. Cash outflows from investing activities increased by ¥396.6 billion compared with the previous fiscal year, due mainly to an increase in capital expenditure, acquisitions of finance subsidiaries-receivables and purchase of operating lease assets.

Net cash provided by financing activities amounted to ¥119.5 billion of cash inflows. Cash inflows from financing activities increased by ¥187.7 billion, compared with the previous fiscal year, due mainly to an increase in proceeds from debt, which was partially offset by an increase in dividends paid.

Fiscal Year 2012 Compared with Fiscal Year 2011

Consolidated cash and cash equivalents on March 31, 2012 decreased by ¥31.9 billion from March 31, 2011, to ¥1,247.1 billion. The reasons for the increases or decreases for each cash flow activity, when compared with the previous fiscal year, are as follows:

Net cash provided by operating activities amounted to ¥761.5 billion of cash inflows. Cash inflows from operating activities decreased by ¥335.0 billion compared with the previous fiscal year due mainly to a decrease in cash received due to decreased unit sales in the Automobile business, which was partially offset by decreased payments for parts and raw materials primarily caused by a decrease in automobile production.

Net cash used in investing activities amounted to ¥673.0 billion of cash outflows. Cash outflows from investing activities decreased by ¥58.3 billion compared with the previous fiscal year, due mainly to a decrease in acquisitions of finance subsidiaries-receivables and a decrease in purchase of operating lease assets, which was partially offset by increased capital expenditure and a decrease in collections of finance subsidiaries-receivables.

Net cash used in financing activities amounted to ¥68.2 billion of cash outflows. Cash outflows from financing activities decreased by ¥57.9 billion, compared with the previous fiscal year, due mainly to an increase in proceeds from debt and a decrease in purchases of treasury stock, which was partially offset by an increase in dividends paid.

Liquidity

The ¥1,206.1 billion in cash and cash equivalents at the end of the fiscal year 2013 corresponds to approximately 1.5 months of net sales, and Honda believes it has sufficient liquidity for its business operations.

At the same time, Honda is aware of the possibility that various factors, such as recession-induced market contraction and financial and foreign exchange market volatility, may adversely affect liquidity. For this reason, finance subsidiaries that carry total short-term borrowings of ¥1,397.8 billion have committed lines of credit equivalent to ¥805.6 billion that serve as alternative liquidity for the commercial paper issued regularly to replace debt. Honda believes it currently has sufficient credit limits, extended by prominent international banks, as of the date of the filing of Honda’s Form 20-F.

Honda’s short- and long-term debt securities are rated by credit rating agencies, such as Moody’s Investors Service, Inc., Standard & Poor’s Rating Services, and Rating and Investment Information, Inc. The following table shows the ratings of Honda’s unsecured debt securities by Moody’s, Standard & Poor’s and Rating and Investment Information as of March 31, 2013.


	Credit ratings for
	Short-term unsecured debt securities		Long-term unsecured debt securities
Moody’s Investors Service		P-1		A1
Standard & Poor’s Rating Services		A-1		A+
Rating and Investment Information		a-1+		AA

The above ratings are based on information provided by Honda and other information deemed credible by the rating agencies. They are also based on the agencies’ assessment of credit risk associated with designated securities issued by Honda. Each rating agency may use different standards for calculating Honda’s credit rating, and also makes its own assessment. Ratings can be revised or nullified by agencies at any time. These ratings are not meant to serve as a recommendation for trading in or holding Honda’s unsecured debt securities.

C. Research and Development

Honda and its consolidated subsidiaries use the most-advanced technologies to conduct R&D activities with the goal of creating distinctive products that are internationally competitive. To attain this goal, the Group’s main R&D divisions operate independently as subsidiaries, allowing technicians to pursue their tasks with significant freedom. Product-related R&D is spearheaded by Honda R&D Co., Ltd. in Japan; Honda R&D Americas, Inc. in the United States; and Honda R&D Europe (U.K.) Ltd. in the United Kingdom. R&D on production technologies centers around Honda Engineering Co., Ltd. in Japan and Honda Engineering North America, Inc. in the United States. All of these entities work in close association with our other entities and businesses in their respective regions.

Total consolidated R&D expenses for the fiscal year ended March 31, 2013 amounted to ¥560.2 billion.

Motorcycle Business

In the Motorcycle Business segment, Honda is aiming to deliver appealing products in a timely manner that offer outstanding environmental performance and that will enable customers to experience the joy of ownership. To this end, we prioritized initiatives designed to bolster product appeal refinement, strengthen cost competitiveness, quicken the pace of product and technology development, and respond to the demands of a low-carbon society.

Development, production and purchasing functions were integrated on the site of the Kumamoto Factory. The creation of a more collaborative set-up has supported progress in new model development, raising development efficiency, and in global procurement.

A major development during the year was the production and launch of middleweight motorbikes for the first time in Honda’s factory in Thailand. The global CBR500R, CB500F and CB500X models built in Thailand feature a newly developed parallel twin cylinder engine that improves handling at low and medium speeds while delivering sporty performance at higher speeds. In the U.S., Honda launched the CTX700N and CTX700 as the first models in the new-concept CTX series of cruisers developed around touring comfort. In Thailand, Honda introduced the MSX125, a new sports bike with a freshly individualistic design. Honda also launched the new CRF250L on/off-road model for an agile ride across a wide range of riding environments in Japan, North America and Europe.

In another significant R&D development, the Motorcycle Business unveiled the UNI-CUB personal mobility device. Featuring a proprietary balance control technology and an omni-directional driving wheel system, the compact UNI-CUB offers the same freedom of movement in all directions that a person enjoys while walking. Practical testing of the device began in June 2012.

R&D expenses in this segment in fiscal 2013 amounted to ¥66.4 billion.

In terms of major race results, Honda debuted the CRF450 Rally model based on the CRF450X road bike at the 2013 Dakar Rally, with the bike finishing among the top in this race traversing Peru, Argentina and Chile.

Automobile Business

In the Automobile Business segment, Honda’s aim is to become the premier manufacturer of interesting, cleverly designed cars that help customers experience the joy of driving. The policy is to develop “great products with speed, affordability and low CO₂ emissions.”

Development, production and purchasing functions were integrated on the site of the Suzuka Factory. For transmissions, the same functions were integrated at the Hamamatsu Factory. The creation of a collaborative set-up promises to support the development of new vehicle models and next-generation transmissions, while also enabling steady progress in improving development efficiency and global procurement.

Among major R&D achievements, in Japan Honda launched two mini-vehicle models, the N Box +, whose versatile interior can accommodate a wide range of customer needs from daily routines to recreational activities and special needs care-giving; and the N-ONE, which provides stable driving performance, a quiet ride and excellent fuel economy even during highway driving. It is also the first mini-vehicle to feature the Emergency Stop Signal (ESS) system as standard equipment. Honda also released the Fit EV for lease sales in North America and Japan as an electric vehicle that realizes extremely high power economy. In the U.S. market, Honda released the Accord Plug-In Hybrid, a version of the Accord boasting the highest power economy rating of any plug-in hybrid on the U.S. market. In Europe, Honda launched the 5-door Civic hatchback with a newly developed 1.6 liter i-DTEC diesel engine that is the lightest in its class.

In other automobile-related R&D, Honda completed the development of a new continuously variable transmission (CVT) for mid-size vehicles to deliver improved performance and fuel economy. The new CVT delivers 5% better fuel economy than earlier CVT transmissions and 10% better than 5-speed automatic transmissions of the same class. In addition, development of a new catalytic converter cut the volume of rhodium by 50% and total precious metals by 22%, reducing the cost of catalytic converters by 37%. Honda also developed new technology for welding steel and aluminum for reducing structural weight by 25% and improving fuel economy, and applied it for the first time in the world to the front subframe of a mass-production vehicle. Separately, Honda developed a new technology joining steel and aluminum for reducing structural weight 17%, and in another world first applied it to the outer door panel of a mass-production vehicle.

R&D expenses in this segment in fiscal 2013 amounted to ¥464.0 billion.

Power Product and Other Businesses

The Power Products business policy is to proactively propose new and useful ideas that will bring joy to customers worldwide. Core R&D programs focus on (1) creating new technology for developed countries to take account of socioeconomic, lifestyle and energy use changes, (2) developing strategic products for emerging markets, (3) building a platform to expand overseas production, and (4) building and testing eco-friendly and self-contained household systems for generating and consuming energy.

Among key R&D developments, Honda has created an industry-first low-pressure liquefied propane gas (LPG) generator capable of operating reliably for long periods during a disaster or emergency. Demand for emergency power generators has risen in Japan since the power outages caused by the Great East Japan

Earthquake. The product operates on LPG, a long-storage fuel already used with other household equipment. These units are being furnished to LPG equipment suppliers. Honda has also developed a gas engine cogeneration unit for households designed for autonomous operation in power outages, provided that the supply of gas remains intact. Sales have begun in Japan via gas utilities. Elsewhere, Honda launched the Salad CG FFV300 gas-powered tiller, which runs on widely used household gas canisters. Honda also put the Miimo robotic lawn mower on sale in Europe as part of developing this new market. The product boasts low noise and automatic recharging capabilities.

In other R&D developments, a special test house in Saitama City was built with the Honda Smart Home System, a residential energy management system that integrates household gas and solar power with electromotive mobility. System testing is underway.

R&D expenses in this segment in fiscal 2013 amounted to ¥29.7 billion.

Fundamental Research

During fiscal 2013, Honda continued its fundamental research activities to develop technologies in a diverse range of fields that will support the products of the future.

Please note that expenses incurred in fundamental research are allocated among each business segment.

Patents and Licenses

At March 31, 2013, Honda owned more than 19,400 patents in Japan and more than 25,200 patents abroad. Honda also had applications pending for more than 10,800 patents in Japan and for more than 15,800 patents abroad. While Honda considers that, in the aggregate, Honda’s patents are important, it does not consider any one of such patents, or any related group of them, to be of such importance that the expiration or termination thereof would materially affect Honda’s business.

D. Trend Information

See Item 5.A “Operating and Financial Review and Prospects” for information required by this item.

E. Off-Balance Sheet Arrangements

(Guarantee)

At March 31, 2013, we guaranteed ¥26.4 billion of employee bank loans for their housing costs. If an employee defaults on his/her loan payments, we are required to perform under the guarantee. The undiscounted maximum amount of our obligation to make future payments in the event of defaults is ¥26.4 billion. As of March 31, 2013, no amount was accrued for any estimated losses under the obligations, as it was probable that the employees would be able to make all scheduled payments.

F. Tabular Disclosure of Contractual Obligations

The following table shows our contractual obligations at March 31, 2013:

Contractual Obligations


	At March 31, 2013
	Yen (millions)
	Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		After 5 years
Long-term debt	¥	3,655,891		945,046		1,646,877		865,725		198,243
Operating leases		105,050		19,020		24,951		19,854		41,225
Purchase and other commitments^*¹		105,285		69,905		9,919		14,152		11,309
Interest payments^*2		183,261		75,619		78,426		26,676		2,540
Contributions to defined benefit pension plans^*3		94,944		94,944		—		—		—

Total	¥	4,144,431		1,204,534		1,760,173		926,407		253,317

^*¹	Honda had commitments for purchases of property, plant and equipment at March 31, 2013.

^*2	To estimate the schedule of interest payments, the company utilized the balances and average interest rates of borrowings and debts and derivative instruments as of March 31, 2013.

^*3	Since contributions beyond the next fiscal year are not currently determinable, contributions to defined benefit pension plans reflect only contributions expected for the next fiscal year.

If our estimates of unrecognized tax benefits and potential tax benefits are not representative of actual outcomes, our consolidated financial statements could be materially affected in the period of settlement or when the statutes of limitations expire, as we treat these events as discrete items in the period of resolution. Since it is difficult to estimate actual payment in the future related to our uncertain tax positions, unrecognized tax benefit totaled ¥39,151 million is not represented in the table above.

At March 31, 2013, we had no material capital lease obligations or long-term liabilities reflected on our balance sheet under U.S. GAAP other than those set forth in the table above.

G. Safe Harbor

All information disclosed under Item 5. E and F contains “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Such statements are based on management’s assumptions and beliefs taking into account information currently available to it. Therefore, please be advised that Honda’s actual results could differ materially from those described in these forward-looking statements as a result of numerous factors, including general economic conditions in Honda’s principal markets and foreign exchange rates between the Japanese yen and the U.S. dollar, the Euro and other major currencies, as well as other factors detailed from time to time.

Item 6. Directors, Senior Management and Employees

A. Directors and Senior Management

Honda’s articles of incorporation provide for a Board of Directors of not more than 15 Directors and for a Board of Corporate Auditors of not more than seven Corporate Auditors. Directors and Corporate Auditors are

elected by resolutions of the general meetings of shareholders. The Corporate Auditors are nominated by the Board of Directors as candidates for election with approval by the Board of Corporate Auditors. The normal term of office of a Director is one year and that of a Corporate Auditor is four years. Directors and Corporate Auditors may serve any number of consecutive terms.

The Board of Directors appoints one President and Director and may appoint one Chairman of the Board of Directors and several Executive Vice Presidents and Directors, Senior Managing Directors and Managing Directors from among its members. The President represents the Company. In addition, the Board of Directors may appoint, pursuant to its resolutions, Directors who shall each represent the Company. Under the Company Law, a representative director individually has authority to represent the Company generally in the conduct of its affairs. The Board of Directors has the ultimate responsibility for the administration of the affairs of the Company.

Under the Company Law, the Corporate Auditors of the Company have the duty to audit the Director’s execution of their duties. Corporate Auditors are not required to be certified public accountants, and may not at the same time be Directors or employees of the Company or any of its subsidiaries. They are required to attend at meetings of the Board of Directors but are not entitled to vote. Corporate Auditors of the Company form the Board of Corporate Auditors, which must consist of at least three Corporate Auditors. Not less than half of the members of the Board of Corporate Auditors must be outside Corporate Auditors, each of whom has never served as a director, accounting councilor, operating officer, manager or employee of the Company or any of its subsidiaries. Corporate Auditors are required to elect from among themselves at least one Full-time Corporate Auditor. Corporate Auditors also have a statutory duty to provide their report to the Board of Corporate Auditors, which must submit its audit report to the Representative Director each year. A Corporate Auditor may note his or her opinion in the audit report if his or her opinion is different from the opinion expressed in the audit report. The Board of Corporate Auditors is empowered to establish audit principles, methods of investigation by Corporate Auditors of the status of the corporate affairs and assets of the Company and other matters concerning the performance of the Corporate Auditors’ duties. In addition, the Company is required to appoint independent certified public accountants as accounting auditor. Such independent certified public accountants have as their primary statutory duties to audit the consolidated and non-consolidated financial statements of the Company prepared in accordance with the Company Law to be submitted by the Representative Director to general meetings of shareholders and to prepare an accounting audit report thereon and to notify the contents of such report to the specified Corporate Auditor and the specified Director in charge.

The following table provides the names of all Directors and Corporate Auditors of the Company and the current positions held by such persons.


Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Representative Directors

Fumihiko Ike (May 26, 1952)	Chairman and Representative Director of the Company, appointed in April 2013 (presently held) Chief Operating Officer for IT Operations, appointed in April 2012 Responsible for Government & Industrial Affairs, appointed in April 2012 Senior Managing Officer and Director of the Company, appointed in April 2011 Chief Operating Officer for Business Management Operations, appointed in April 2011 Risk Management Officer, appointed in April 2011 General Supervisor, Information Systems, appointed in April 2011 Chief Operating Officer for Regional Operations, (Asia & Oceania), appointed in April 2008 President and Director of Asian Honda Motor Co., Ltd., appointed in April 2008 Managing Director of the Company, appointed in June 2007 Chief Operating Officer for Business Management Operations, appointed in April 2006 Director of the Company, appointed in June 2003 Chief Operating Officer for Power Product Operations, appointed in April 2003 Joined Honda in February 1982		*3		27,400

Name

(Date of birth)

Current Positions and Biographies with Registrant

Term

Number of
Shares Owned

Takanobu Ito

(August 29, 1953)

President, Chief Executive Officer and

Representative Director of the Company,

appointed in April 2011 (presently held)

Chief Operating Officer for Automobile Operations,

appointed in April 2011

President and Director of the Company,

appointed in June 2009

President and Director of Honda R&D Co., Ltd.,

appointed in April 2009

Senior Managing Director of the Company,

appointed in June 2007

Chief Operating Officer for Automobile Operations,

appointed in April 2007

Managing Officer of the Company,

appointed in June 2005

General Manager of Suzuka Factory of Production Operations,

appointed in April 2005

General Supervisor, Motor Sports,

appointed in April 2004

Managing Director of the Company,

appointed in June 2003

Responsible for Motor Sports,

appointed in June 2003

President and Director of Honda R&D Co., Ltd.,

appointed in June 2003

Senior Managing Director of Honda R&D Co., Ltd.,

appointed in June 2001

Director of the Company,

appointed in June 2000

Executive Vice President of Honda R&D Americas, Inc.,

appointed in April 1998

Joined Honda in April 1978

26,400

Name

(Date of birth)

Current Positions and Biographies with Registrant

Term

Number of
Shares Owned

Tetsuo Iwamura

(May 30, 1951)

Chief Operating Officer for Automobile Operations,

appointed in April 2013 (presently held)

Risk Management Officer,

appointed in April 2013 (presently held)

Executive Vice President, Executive Officer and

Representative Director of the Company,

appointed in June 2012 (presently held)

Executive Vice President and Executive Officer,

appointed in April 2012

Senior Managing Officer of the Company,

appointed in June 2011

Senior Managing Officer and Director of the Company,

appointed in April 2011

Senior Managing Director of the Company,

appointed in June 2008

Chief Operating Officer for Regional Operations (North America),

appointed in April 2007 (presently held)

President and Director of Honda North America, Inc.,

appointed in April 2007 (presently held)

President and Chief Executive Officer of

American Honda Motor Co., Inc.,

appointed in April 2007 (presently held)

Managing Director of the Company,

appointed in June 2006

Chief Operating Officer for Regional Operations (Latin America),

appointed in April 2003

President and Director of Honda South America Ltda.,

appointed in April 2003

President and Director of Moto Honda da Amazonia Ltda.,

appointed in April 2003

President and Director of Honda Automoveis do Brasil Ltda.,

appointed in April 2003

Director of the Company,

appointed in June 2000

Chief Operating Officer for Parts Operations,

appointed in April 2000

Joined Honda in April 1978

26,400


Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Directors

Takashi Yamamoto (January 12, 1953)	Head of Automobile Production for Automobile Operations, appointed in April 2013 (presently held) Chief Production Officer, appointed in April 2013 (presently held) Senior Managing Officer and Director of the Company, appointed in June 2012 (presently held) Senior Managing Officer of the Company, appointed in April 2012 Chief Operating Officer for Production Operations, appointed in April 2012 Managing Officer of the Company, appointed in April 2011 General Manager of Automobile Production Planning Office in Production Operations, appointed in April 2011 President and Director of Yutaka Giken Co., Ltd., appointed in June 2009 Managing Officer of the Company, appointed in June 2007 General Manager of Saitama Factory of Production Operations, appointed in April 2007 Operating Officer of the Company, appointed in June 2005 President and Director of Honda Manufacturing of Alabama, LLC, appointed in April 2005 Responsible for Quality, Certification and Regulation Compliance, appointed in April 2004 Responsible for Quality, Certification and Regulation Compliance and Service Technology, appointed in April 2002 Director of the Company, appointed in June 2000 General Manager of Automobile Purchasing Division 1 for Purchasing Operations, appointed in April 2000 Joined Honda in April 1977		*3		18,400


Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Yoshiharu Yamamoto (March 19, 1953)	Chief Operating Officer for IT Operations, appointed in April 2013 (presently held) Senior Managing Officer and Director of the Company, appointed in April 2012 (presently held) Managing Officer and Director of the Company, appointed in June 2011 Managing Officer of the Company, appointed in April 2011 President Chief Executive Officer and Representative Director of Honda R&D Co., Ltd., appointed in April 2011 (presently held) Executive Vice President and Director of Honda R&D Co., Ltd., appointed in June 2010 Senior Managing Director of Honda R&D Co., Ltd., appointed in June 2007 Managing Director of Honda R&D Co., Ltd., appointed in June 2005 Joined Honda in April 1973		*3		18,400

Masahiro Yoshida (March 5, 1957)	Managing Officer and Director of the Company, appointed in April 2013 (presently held) Compliance Officer, appointed in April 2012 (presently held) Operating Officer and Director of the Company, appointed in April 2011 Director of the Company, appointed in June 2010 Chief Operating Officer for Business Support Operations, appointed in April 2010 (presently held) General Manager of Hamamatsu Factory of Production Operations, appointed in April 2008 Operating Officer of the Company, appointed in June 2007 Responsible for Human Resources and Associate Relations, appointed in April 2007 (also General Manager of Human Resources Division for Business Support Operations as of April 2006) Joined Honda in April 1979		*3		22,100


Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Kensaku Hogen (August 2, 1941)	Director of the Company, appointed in June 2005 (presently held) Ambassador to Canada, appointed in April 2001		*3		2,500

Nobuo Kuroyanagi (December 18, 1941)	Senior Advisor of The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), appointed in April 2012 (presently held) Director of Mitsubishi UFJ Financial Group, Inc. (MUFG), appointed in April 2010 Director of the Company, appointed in June 2009 (presently held) Chairman of BTMU, appointed in April 2008 President and CEO of MUFG, appointed in October 2005		*3		1,900

Takeo Fukui (November 28, 1944)	Director and Advisor of the Company, appointed in June 2009 (presently held) President and Director of the Company, appointed in June 2003 Responsible for Motor Sports, appointed in June 1999 Senior Managing Director of the Company, appointed in June 1999 President and Director of Honda R&D Co., Ltd., appointed in June 1998 Managing Director of the Company, appointed in June 1996 President and Director of Honda of America Mfg., Inc., appointed in June 1996 Executive Vice President and Director of Honda of America Mfg., Inc., appointed in June 1994 Senior Managing Director of Honda R&D Co., Ltd., appointed in June 1990 Director of the Company, appointed in June 1988 President and Director of Honda Racing Corporation, appointed in May 1987 Managing Director of Honda R&D Co., Ltd., appointed in May 1987 Joined Honda in April 1969		*3		45,400


Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Yuji Shiga (October 7, 1958)	Operating Officer and Director of the Company, appointed in June 2012 (presently held) Chief Operating Officer for Power Product Operations, appointed in April 2012 (presently held) Operating Officer of the Company, appointed in April 2011 Responsible for CIS countries, the Middle & Near East and Africa for Regional Operations, appointed in April 2011 General Manager of Operation Office No. 2 in Regional Operations (Asia & Oceania), appointed in April 2010 General Manager of Operation Office No. 1 in Regional Operations (North America), appointed in April 2009 Joined Honda in April 1982		*3		10,400

Kohei Takeuchi (February 10, 1960)	Operating Officer and Director of the Company, appointed in June 2013 (presently held) Chief Operating Officer for Business Management Operations, appointed in April 2013 (presently held) Operating Officer of the Company, appointed in April 2011 General Manager of Accounting Division for Business Management Operations, appointed in April 2010 Joined Honda in April 1982		*3		10,200

Shinji Aoyama (December 25, 1963)	Operating Officer and Director of the Company, appointed in June 2013 (presently held) Chief Operating Officer for Motorcycle Operations, appointed in April 2013 (presently held) Operating Officer of the Company, appointed in April 2012 General Manager of Motorcycle Business Planning Office for Motorcycle Operations, appointed in April 2011 Joined Honda in April 1986		*3		6,400


Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Noriya Kaihara (August 4, 1961)	Operating Officer and Director of the Company, appointed in June 2013 (presently held) Operating Officer of the Company, appointed in April 2013 Chief Quality Officer, appointed in April 2013 (presently held) General Manager of Automobile Quality Assurance Division, appointed in April 2012 General Manager of Parts Sales and Service Division for Customer Service Operations, appointed in April 2010 Joined Honda in April 1984		*3		3,000

Corporate Auditors

Masaya Yamashita (April 5, 1953)	Corporate Auditor of the Company (full-time), appointed in June 2012 (presently held) Managing Officer of the Company, appointed in June 2011 Managing Officer and Director of the Company, appointed in April 2011 Managing Director of the Company, appointed in June 2008 Chief Operating Officer for Purchasing Operations, appointed in April 2008 General Manager of Kumamoto Factory of Production Operations, appointed in April 2006 Operating Officer of the Company, appointed in June 2005 Director of the Company, appointed in June 2003 General Manager of Automobile Purchasing Division 1 for Purchasing Operations, appointed in April 2002 Joined Honda in April 1977		*5		24,900


Name (Date of birth)	Current Positions and Biographies with Registrant	Term		Number of Shares Owned
Kunio Endo (August 23, 1957)	Corporate Auditor of the Company (full-time), appointed in June 2013 (presently held) President and Director of American Honda Finance Corp., appointed in November 2010 President and Director of Honda Canada Finance Inc., appointed in November 2010 General Manager of Accounting Division for Business Management Operations, appointed in April 2007 General Manager of Finance Division for Business Management Operations, appointed in April 2006 Joined Honda in April 1981		*6		4,000

Hirotake Abe (November 13, 1944)	Corporate Auditor of the Company, appointed in June 2011 (presently held) Established the Certified Public Accountant Hirotake Abe Office in January 2010 (presently held) Senior Adviser of Deloitte Touche Tohmatsu (presently, Deloitte Touche Tohmatsu LLC) in June 2007 Executive Member of Deloitte Touche Tohmatsu Limited in June 2004 Registered as certified public accountant in March 1974		*4		800

Tomochika Iwashita (November 14, 1946)	Corporate Auditor of the Company, appointed in June 2011 (presently held) President and Director of Tokio Marine & Nichido Life Insurance Co., Ltd., appointed in June 2006 Vice President and Director of Tokio Marine & Nichido Fire Insurance Co., Ltd., appointed in June 2005 Director of Millea Holdings, Inc. (presently, Tokio Marine Holdings, Inc.), appointed in June 2005 Senior Managing Director of Tokio Marine & Nichido Fire Insurance Co., Ltd., appointed in October 2004 Senior Managing Director of Tokio Marine and Fire Insurance Co., Ltd. (presently, Tokio Marine & Nichido Fire Insurance Co., Ltd.), appointed in June 2003 Managing Director of Tokio Marine and Fire Insurance Co., Ltd. (presently, Tokio Marine & Nichido Fire Insurance Co., Ltd.), appointed in June 2002		*4		800

Name

(Date of birth)

Current Positions and Biographies with Registrant

Term

Number of
Shares Owned

Toshiaki Hiwatari

(August 4, 1945)

Corporate Auditor of the Company,

appointed in June 2012 (presently held)

Registered with the Daiichi Tokyo Bar Association

in September 2010

Advisor Attorney of TMI Associates

appointed in September 2010 (presently held)

Retired from office in June 2010

Prosecutor General appointed in July 2008

300

*1.	Directors Mr. Kensaku Hogen and Mr. Nobuo Kuroyanagi are outside directors.

*2.	Corporate Auditors Mr. Hirotake Abe, Mr. Tomochika Iwashita and Mr. Toshiaki Hiwatari are outside corporate auditors.

*3.	The term of office of a Director is one year after his/her election to office at the close of the ordinary general meeting of shareholders on June 19, 2013.

*4.	The term of office of a Corporate Auditor is four years after his/her election to office at the close of the ordinary general meeting of shareholders on June 23, 2011.

*5.	The term of office of a Corporate Auditor is four years after his/her election to office at the close of the ordinary general meeting of shareholders on June 21, 2012.

*6.	The term of office of a Corporate Auditor is four years after his/her election to office at the close of the ordinary general meeting of shareholders on June 19, 2013.

*7.

The Company has introduced an operating officer system to strengthen operations in regions and local workplaces, and implement quick and appropriate decisions. Executive Officers, Senior Managing Officers, Managing Officers and Operating Officers under the operating officer system are not statutory positions under the Company Law and do not conform to the definition of “Directors and Senior Management” as defined in Form 20-F. The Company’s Senior Managing Officers, Managing Officers and Operating Officers (excluding officers who also hold the position of Director) under the operating officer system, as voluntarily disclosed in Japan, are as follows:


Senior Managing Officers

Hidenobu Iwata		Representative of Automobile Development, Purchasing and Production (North America)

		President and CEO of Honda North America Services, LLC

		President and Director of Honda of America Mfg., Inc.

Sho Minekawa		Chief Operating Officer for Regional Sales Operations (Japan)

		Chief Officer of Honda Driving Safety Promotion Center

Managing Officers

Manabu Nishimae		Chief Operating Officer for Regional Operations (Europe, CIS, the Middle & Near East and Africa)

		President and Director of Honda Motor Europe Ltd.

Koichi Fukuo		Executive in Charge of Business Unit No. 1 for Automobile Operations

		Executive in Charge of Drivetrains for Automobile Operations


Hiroshi Kobayashi		Chief Operating Officer for Regional Operations (Asia & Oceania)

		President and Director of Asian Honda Motor Co., Ltd.

		President and Director of Honda Automobile (Thailand) Co., Ltd.

Toshihiko Nonaka		Executive in Charge of Product and Brand Strategy for Automobile Operations

		Executive Vice President, Executive Officer and Director of Honda R&D Co., Ltd.

Takuji Yamada		Executive Vice President and Director (COO) of American Honda Motor Co., Inc.

Masahiro Takedagawa		Chief Operating Officer for Regional Operations (Latin America)

		President and Director of Honda South America Ltda.

		President and Director of Honda Automoveis do Brazil Ltda.

Yoshiyuki Matsumoto		Representative of Development, Purchasing and Production (Asia and Oceania)

		Executive Vice President of Asian Honda Motor Co., Ltd.

		President and CEO of Honda Motor India Private Ltd.

Ko Katayama		Executive in Charge of Production Strategy for Automobile Operations

		Head of Supply Chain Management Supervisory Unit in Automobile Production for Automobile Operations

Katsushi Watanabe		Executive in Charge of Motorcycle Production for Motorcycle Operations

		General Manager of Kumamoto Factory for Motorcycle Operations

		Executive in Charge of Power Product Production for Power Product Operations

Chitoshi Yokota		Executive Vice President and Director of Honda North America Services, LLC

		Executive Vice President and Director of Honda of America Mfg., Inc.

Operating Officers

Seiji Kuraishi		Chief Operating Officer for Regional Operations (China)

		President of Honda Motor (China) Investment Co., Ltd.

Toshiaki Mikoshiba		President of Guangqi Honda Automobile Co., Ltd.

Yoshi Yamane		Representative of Automobile Development, Purchasing and Production (Japan)

		General Manager of Suzuka Factory in Automobile Production for Automobile Operations

Takashi Sekiguchi		Executive in Charge of Business Unit No.2 for Automobile Operations

Takahiro Hachigo		Representative of Development, Purchasing and Production (China)

		Vice President of Honda Motor (China) Investment Co., Ltd.

Hiroshi Sasamoto		President, Chief Executive Officer and Representative Director of Honda Engineering Co., Ltd.

Hiroyuki Yamada		Chief Operating Officer for Customer Service Operations

Michimasa Fujino		President and Director of Honda Aircraft Company, LLC


Soichiro Takizawa		Representative of Development, Purchasing and Production (Europe, CIS, the Middle & Near East and Africa)

		Executive Vice President and Director of Honda Motor Europe Ltd.

		Managing Director of Honda of the U.K. Manufacturing Ltd.

		Managing Officer of Honda R&D Co., Ltd.

		President and Director of Honda R&D Europe (U.K.) Ltd.

Naoto Matsui		Chief Operating Officer for Purchasing Operations

		Head of Purchasing Supervisory Unit in Automobile Production for Automobile Operations

Mitsugu Matsukawa		Head of Drivetrain Business Unit in Automobile Production for Automobile Operations

There is no family relationship between any director or executive officer and any other director or executive officer.

B. Compensation

Directors and Corporate Auditors receive remuneration, the aggregate maximum amount of which is approved at the annual general meeting of shareholders. The amounts of the remuneration approved to pay to Directors and Corporate Auditors are allocated among them at meeting of the Board of Directors and Corporate Auditors. Also, Directors receive bonuses, the aggregate amount of which is approved at the annual general meeting of shareholders. The amounts of the bonuses approved to pay to Directors are allocated among them at meeting of the Board of Directors. It is based on the Company’s performance for each fiscal year, Director’s bonuses in the past and other factors. All the Directors and Corporate Auditors contribute a portion of their remuneration to the officer shareholders’ association, purchase shares of the Company’s Common Stock and keep holding those shares during their services.

The total amount of remuneration paid to the Company’s Directors and Corporate Auditors during the fiscal year ended March 31, 2013 was ¥842 million. This amount includes remuneration paid to three Directors and two Corporate Auditors who retired during the fiscal year. The amount of remuneration paid to the Directors includes amount of wages paid to those Directors who were also Directors of subsidiaries of the Company.

The total amount of bonuses paid to the Company’s Directors during the fiscal year ended March 31, 2013 was ¥155 million.

The amounts of remuneration and bonuses that were paid during the year ended March 31, 2013 are as follows:


	Yen (millions)
	Directors excluding outside Directors				Outside Directors				Corporate Auditors excluding outside Corporate Auditors				Outside Corporate Auditors				Total
	number		amount		number		amount		number		amount		number		amount		number		amount
Remuneration		13	¥	635		2	¥	23		3	¥	135		4	¥	47		22	¥	842
Bonus		10		150		2		4		—		—		—		—		12		155

Total			¥	786			¥	28			¥	135			¥	47			¥	998

The amount of remuneration paid to Takanobu Ito during the fiscal year ended March 31, 2013 was ¥102 million. The amount of bonus for Takanobu Ito accrued for the fiscal year ended March 31, 2013 was ¥43 million.

C. Board Practices

See Item 6.A “Directors and Senior Management” for information concerning the Company’s Directors and Corporate Auditors required by this item.

D. Employees

The following tables list the number of Honda full-time employees as of March 31, 2013, 2012 and 2011.

As of March 31, 2013


Total	Motorcycle Business	Automobile Business	Financial Services Business	Power Product and Other Businesses
190,338	40,430	138,443	2,157	9,308

At March 31, 2013, Honda had 190,338 full-time employees, including 123,726 local nationals employed in its overseas operations.

As of March 31, 2012


Total	Motorcycle Business	Automobile Business	Financial Services Business	Power Product and Other Businesses
187,094	39,954	134,357	2,145	10,638

At March 31, 2012, Honda had 187,094 full-time employees, including 118,923 local nationals employed in its overseas operations.

As of March 31, 2011


Total	Motorcycle Business	Automobile Business	Financial Services Business	Power Product and Other Businesses
179,060	35,454	130,900	2,145	10,561

At March 31, 2011, Honda had 179,060 full-time employees, including 109,400 local nationals employed in its overseas operations.

Most of the Company’s regular employees in Japan, except management personnel, are required by the terms of the Company’s collective bargaining agreement with its labor union to become members of the Federation of All Honda Workers’ Union (AHWU), which is affiliated with the Japan Council of the International Metalworkers’ Federation. Approximately 86% of the employees of the Company and its Japanese subsidiaries were members of AHWU at March 31, 2013.

In Japan, basic wages are negotiated annually and the average increases in wages of the Company’s employees in fiscal 2011, 2012 and 2013 were 1.8%, 1.8% and 1.7%, respectively. In addition, in accordance with Japanese custom, each employee is paid a semi-annual bonus. Bonuses are negotiated during wage negotiations and are based on the overall performance of the Company or the applicable subsidiary in the previous year, the outlook for the current year and other factors.

The Company has had labor contracts with its labor union in Japan since 1970. These contracts are renegotiated with respect to basic wages and other working conditions. The regular employees of the Company’s Japanese subsidiaries are covered by similar contracts. Since 1957, neither the Company nor any of its subsidiaries has experienced any strikes or other labor disputes that materially affected its business activities. The Company considers labor relations with its employees to be very good.

E. Share Ownership

The total amount of the Company’s voting securities owned by its officers, Directors and Corporate Auditors as a group as of June 19, 2013 is as follows.


Title of Class	Amount Owned	% of Class
Common Stock	249,700 shares	0.014%

The Company’s full-time employees are eligible to participate in the Honda Employee Shareholders’ Association, whereby participating employees contribute a portion of their salaries to the Association and the Association purchases shares of the Company’s Common Stock on their behalf. As of March 31, 2013, the Association owned 5,564,108 shares of the Company’s common stock.

Item 7. Major Shareholders and Related Party Transactions

A. Major Shareholders

As of March 31, 2013, 1,811,428,430 shares of Honda’s Common Stock were issued and 1,802,297,290 shares were outstanding.

The following table shows the shareholders that owned of record 5% or more of the issued shares of Honda’s Common Stock as of March 31, 2013:


Name	Shares owned (thousands)	Ownership (%)
Japan Trustee Services Bank, Ltd. (trust account)	126,568	6.99%

According to a statement on Schedule 13G (Amendment No. 9) filed by Mitsubishi UFJ Financial Group, Inc. with the Securities and Exchange Commission on February 13, 2013, Mitsubishi UFJ Financial Group, Inc. directly and indirectly held, as of December 31, 2012, 110,511,496 shares, or 6.1% of the then issued shares, of Honda’s Common Stock.

None of the above shareholders has voting rights that are different from those of our other shareholders.

ADSs representing American Depositary Shares are issued by JPMorgan Chase Bank, N.A., as Depositary. The normal trading unit is 100 American Depositary Shares. Total issued shares of Honda as of the close of business on March 31, 2013 were 1,811,428,430 shares of Common Stock, of which 50,168,219 shares represented by ADSs and 304,001,357 shares not represented by ADSs were owned by residents of the United States. The number of holders of record of the Company’s shares of Common Stock in the United States was 261 at March 31, 2013.

To the knowledge of Honda, it is not directly or indirectly owned or controlled by any other corporation, by any government, or by any other natural or legal person or persons severally or jointly. As far as is known to the Company, there are no arrangements, the operation of which may at a subsequent date, result in a change in control of the Company.

B. Related Party Transactions

Honda purchases materials, supplies and services from numerous suppliers throughout the world in the ordinary course of business, including firms with which Honda is affiliated.

During the fiscal year ended March 31, 2013, Honda had sales of ¥636.2 billion and purchases of ¥789.2 billion with equity affiliates accounted under the equity method. As of March 31, 2013, Honda had receivables of ¥160.4 billion from affiliated companies, and had payables of ¥97.9 billion to affiliated companies.

Honda does not consider the amounts involved in such transactions to be material to its business.

C. Interests of Experts and Counsel

Not applicable.

Item 8. Financial Information

A. Consolidated Statements and Other Financial Information

1 – 3. Consolidated Financial Statements

Honda’s audited consolidated financial statements are included under “Item 18—Financial Statements”.

4. Not applicable.

5. Not applicable.

6. Export Sales.

See “Information on the Company—Marketing and Distribution—Overseas Sales”.

7. Legal Proceedings.

Various legal proceedings are pending against us. We believe that such proceedings constitute ordinary routine litigation incidental to our business. With respect to product liability, personal injury claims or lawsuits, we believe that any judgment that may be recovered by any plaintiff for general and special damages and court costs will be adequately covered by our insurance and accrued liabilities. Punitive damages are claimed in certain of these lawsuits. We are also subject to potential liability under other various lawsuits and claims.

Honda recognizes an accrued liability for loss contingencies when it is probable that an obligation has been incurred and the amount of loss can be reasonably estimated. Honda reviews these pending lawsuits and claims periodically and adjusts the amounts recorded for these contingent liabilities, if necessary, by considering the nature of lawsuits and claims, the progress of the case and the opinions of legal counsel. After consultation with legal counsel, and taking into account all known factors pertaining to existing lawsuits and claims, Honda believes that the ultimate outcome of such lawsuits and pending claims should not result in liability to Honda that would be likely to have an adverse material effect on its consolidated financial position, results of operations or cash flows.

8. Profit Redistribution Policy

The Company strives to carry out its operations from a global perspective and to increase its corporate value. With respect to the redistribution of profits to its shareholders, which it considers to be one of the most important management issues, its basic policy for dividends is to make distributions after taking into account its long-term consolidated earnings performance.

In addition, the Company’s basic policy for dividends is to make quarterly distributions. The Company may determine dividends from surplus by a resolution of the Board of Directors. Annual dividends for the fiscal year ended March 31 of each year require a resolution at the general meeting of shareholders.

The Company may also acquire its own shares at a timing that it deems optimal, with the goal of improving efficiency of the Company’s capital structure and implementing a flexible capital structure policy. The present goal is to maintain a shareholders’ return ratio (i.e. the ratio of the total of the dividend payment and the

repurchase of the Company’s own shares to consolidated net income attributable to Honda Motor Co., Ltd.) of approximately 30%. Retained earnings will be allocated toward financing R&D activities that are essential for the future growth of the Company and capital expenditures and investment programs that will expand its operations for the purpose of improving business results and strengthening the Company’s financial condition.

The Company determined year-end dividends of ¥19 per share for the year ended March 31, 2013. As a result, total dividends for the year ended March 31, 2013, together with the first quarter dividends of ¥19, the second quarter dividends of ¥19 and the third quarter dividends of ¥19, were ¥76 per share, an increase of ¥16 from the annual dividends paid for the year ended March 31, 2012.

Details of Distribution of Surplus (Record dates of the fiscal year ended March 31, 2013)


	Resolution of the Board of Directors		Resolution of the Board of Directors		Resolution of the Board of Directors		Resolution at General Meeting of Shareholders
	July 31, 2012		October 29, 2012		January 31, 2013		June 19, 2013
Dividend per Share of Common Stock (yen)		19.00		19.00		19.00		19.00
Total Amount of Dividends (millions of yen)		34,243		34,243		34,243		34,243

B. Significant Changes

Except otherwise disclosed in this Annual Report on Form 20-F, no significant change has occurred since the date of the annual financial statements.

Item 9. The Offer and Listing

A. Offer and Listing Details

Honda’s shares have been listed on the Tokyo Stock Exchange (TSE) since 1957 and as of March 31, 2013, Honda’s shares were traded on two stock exchanges in Japan.

Since February 11, 1977, American Depositary Shares (each representing one share of Common Stock and evidenced by American Depositary Receipts (ADRs)) have been listed and traded on the New York Stock Exchange (the NYSE), having been traded on the over-the-counter markets in the United States since 1962. In addition, European Shares (each representing ten shares of Common Stock and evidenced by European Depositary Receipts (EDRs)) have been traded in bearer form on the over-the-counter markets in several European countries since 1963. In June 1981, the shares of Common Stock were admitted to the official list of the London Stock Exchange. In May 1983, the Company listed its shares on the stock exchanges in Zurich, Geneva and Basel in the form of Swiss Bearer Depositary Receipts. In June 1985, the shares of Common Stock were admitted to trading on the Paris Stock Exchange. As for the stock exchanges in Switzerland, the floor exchanges in Zurich, Basel and Geneva were consolidated to form a single national bourse—the Swiss Exchange, in 1995. The Paris Stock Exchange was merged with the exchanges in Amsterdam and Brussels and created Euronext in September 2000. The Company delisted itself from Euronext Paris and SWX Swiss Exchange and terminated European Depositary Receipts during fiscal year 2008. The Company delisted the share from the London Stock Exchange during fiscal year 2013.

The monthly average turnover of Honda’s shares of Common Stock and American Depositary Shares for the fiscal year ended March 31, 2013 was approximately 125,281,792 shares of Common Stock on the TSE and approximately 13,703,792 American Depositary Shares on the NYSE.

The following table sets out, for the periods indicated, the reported high and low sales prices of Honda’s shares on the TSE in yen and its American Depositary Shares on the NYSE in the U.S. dollars.


	Yen per share of Common Stock on the TSE				U.S. dollars per American Depositary Share on the NYSE
Fiscal year	High		Low		High		Low
2009	¥	3,910	¥	1,643	$	36.40	$	17.35
2010		3,410		2,300		37.23		24.83
2011		3,745		2,470		44.54		28.33

2012
1st quarter	¥	3,255	¥	2,843	$	39.59	$	33.76
2nd quarter		3,295		2,227		41.23		28.90
3rd quarter		2,511		2,127		32.65		27.52
4th quarter		3,300		2,393		39.35		31.11

2013
1st quarter	¥	3,250	¥	2,354	$	38.96	$	30.30
2nd quarter		2,799		2,339		34.81		28.50
3rd quarter		3,185		2,294		37.00		29.26
4th quarter		3,830		3,100		40.00		36.18

CY 2012
Dec	¥	3,185	¥	2,675	$	37.00	$	32.55

CY 2013
Jan	¥	3,510	¥	3,100	$	38.75	$	36.18
Feb		3,620		3,330		38.66		36.28
Mar		3,830		3,425		40.00		37.14
Apr		4,060		3,350		41.03		36.37
May		4,405		3,800		42.13		38.32

B. Plan of Distribution

Not applicable.

C. Markets

See Item 9.A, “Offer and Listing Details”.

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

Item 10. Additional Information

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

Set forth below is information relating to Honda’s Common Stock, including brief summaries of the relevant provisions of Honda’s articles of incorporation and share handling regulations as currently in effect, and of the Company Law of Japan and related legislation.

General

Honda’s authorized share capital as of the date of the filing of this Form 20-F is 7,086,000,000 shares of Common Stock, of which 1,811,428,430 shares were issued.

In 2009, a new central clearing system for shares of Japanese listed companies was established pursuant to the Law Concerning Book-Entry Transfer of Corporate Bonds, Shares, Etc. of Japan (including the cabinet order and ministerial ordinances promulgated thereunder; the “Book-Entry Law”), and since then the shares of all Japanese companies listed on any Japanese financial instruments exchange, including Honda’s shares, have become subject to this new system. On the same day, all existing shares were dematerialized and all existing share certificates for such shares became null and void. At present, the Japan Securities Depository Center, Inc. (“JASDEC”) is the sole institution that is designated by the relevant authorities as a book-entry transfer institution which is permitted to engage in the clearing operations of shares of Japanese listed companies under the Book-Entry Law. Under the new clearing system, in order for any person to hold, sell or otherwise dispose of shares of Japanese listed companies, such person must have an account at an account management institution unless such person has an account directly at JASDEC. “Account management institutions” are, in general, financial instruments firms engaged in type 1 financial instruments business (i.e., securities brokers/dealers), banks, trust companies and certain other financial institutions which meet the requirements prescribed by the Book-Entry Law.

Under the Book-Entry Law, any transfer of shares of Japanese listed companies is effected through book entry, and title to the shares passes to the transferee at the time when the transferred number of the shares is by an application for book entry recorded in the transferee’s account at an account management institution. The holder of an account at an account management institution is presumed to be the legal owner of the shares recorded in such account.

Under the Company Law and the Book-Entry Law, in order to assert shareholders’ rights against Honda, a shareholder must have its name and address registered in the register of shareholders, except in limited circumstances. Although, in general, holders of an account with shares recorded are to be registered in the register of shareholders on the basis of an all shareholders notice from JASDEC to Honda at certain prescribed times, in order to exercise minority shareholders’ rights (other than those the record dates for which are fixed) against Honda, a holder of an account with shares needs to make an application through an account management institution to JASDEC, which will then give a notice of the name and address of such holder, the number of shares held by such holder and other requisite information to Honda, and to exercise rights within four weeks from such notice.

Non-resident shareholders are required to appoint a standing proxy in Japan or provide a mailing address in Japan. Each such shareholder must give notice of such standing proxy or mailing address to the relevant account management institution. Such notice will be forwarded to Honda through JASDEC. Japanese financial instruments firms and commercial banks customarily act as standing proxies and provide related services for standard fees. Notices from Honda to non-resident shareholders are delivered to such standing proxies or mailing addresses.

Objects and Purposes

Article 2 of the articles of incorporation of Honda states that its purpose is to engage in the following businesses:

•

Manufacture, sale, lease and repair of motor vehicles, ships and vessels, aircrafts and other transportation machinery and equipment.

•

Manufacture, sale, lease and repair of prime movers, agricultural machinery and appliances, generators, processing machinery and other general machinery and apparatus, electric machinery and apparatus and precision machinery and apparatus.

•

Manufacture and sale of fiber products, paper products, leather products, lumber products, rubber products, chemical industry products, ceramic products, metal products and other products.

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Overland transportation business, marine transportation business, air transportation business, warehousing business, travel business and other transport business and communication business.

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Sale of sporting goods, articles of clothing, stationary, daily sundries, pharmaceuticals, drink and foodstuffs and other goods.

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Financial business, nonlife insurance agency business, life insurance agency business, construction business including building construction work and real estate business including real estate brokerage.

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Publishing business, advertising business, translation business, interpretation business, management consultancy business, information services including information processing, information and communication and information provision, industrial planning and design, comprehensive security business and labor dispatch services.

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Management of parking garages, driving schools, training and education facilities, racecourses, recreation grounds, sporting facilities, marina facilities, hotels, restaurants and other facilities.

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Electricity generation and supply and sale of electricity.

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Manufacture, sale and licensing of equipment, parts and supplies and all other relevant business activities and investments relating to each of the foregoing items.

Dividends

Under its articles of incorporation, Honda’s financial accounts will be closed on March 31 of each year. The record dates for dividends are June 30, September 30, December 31 and March 31 of each year. In addition, Honda may distribute dividends from surplus by determining any record date.

Under the Company Law, a company is permitted to make distributions of surplus to the shareholders any number of times per fiscal year pursuant to resolutions of a general meeting of shareholders, subject to certain limitations provided by the Company Law and the Ordinances of the Ministry of Justice thereunder. Distributions of surplus are required, in principle, to be authorized by a resolution of a general meeting of shareholders. However, if the articles of incorporation so provide and certain other requirements under the Company Law are met, distributions of surplus may be made pursuant to a board resolution. Pursuant to the provisions of the Company Law and its articles of incorporation, the Board of Directors of Honda may determine distributions of its surplus.

Distributions of surplus may be made in cash or in-kind in proportion to the number of shares held by each shareholder. If a distribution of surplus is to be made in-kind, a special resolution of a general meeting of shareholders is required, except in the case that a right to receive cash distribution instead of distribution in-kind is granted to shareholders. If such right is granted, distributions in-kind may be made pursuant to an ordinary resolution of a general meeting of shareholders or, as the case may be, a board resolution.

Under the Company Law, Honda is permitted to prepare non-consolidated extraordinary financial statements consisting of a balance sheet as of any date subsequent to the end of the previous fiscal year and an income statement for the period from the first day of the current fiscal year to the date of such balance sheet. If such extraordinary financial statements are prepared and approved in accordance with the provisions of the Company Law and the Ordinances of the Ministry of Justice thereunder, the results of such extraordinary financial statements may be considered in the calculation of distributable amount.

Under its articles of incorporation, Honda is not obligated to pay any dividends which are left unclaimed for a period of three full years after the date on which they first became payable.

Capital and Reserves

The entire amount of the issue price of the shares to be issued in the future will generally be required to be accounted for as stated capital. However, Honda may account for an amount not exceeding one-half of such issue price as additional paid-in capital by resolution of the Board of Directors in accordance with the Company Law. Honda may at any time reduce the whole or any part of its additional paid-in capital or transfer them to stated capital by resolution of a general meeting of shareholders. The whole or any part of surplus may also be transferred to stated capital, additional paid-in capital or legal reserve by resolution of a general meeting of shareholders.

Stock Splits

Honda may at any time split its shares into a greater number of shares by resolution of the Board of Directors. When the Board of Directors approves a stock split, it may also amend the articles of incorporation of Honda without approval of shareholders to increase the number of its authorized shares to such number as it determines, provided such number is equal to or less than the then-current number multiplied by the ratio of the stock split, so long as Honda does not issue more than one class of shares.

Under the Book-Entry Law, Honda must give notice to JASDEC regarding a stock split at least two weeks prior to the relevant effective date. On the effective date of the stock split, the numbers of shares recorded in all accounts held by its shareholders at account management institutions or at JASDEC will be increased in accordance with the applicable ratio.

Consolidation of Shares

Honda may at any time consolidate its shares into a smaller number of shares by a special resolution of the general meeting of shareholders. A representative director of Honda must disclose the reason for the consolidation of the shares at the general meeting of shareholders.

Under the Book-Entry Law, Honda must give notice to JASDEC regarding a consolidation of shares at least two weeks prior to the relevant effective date. On the effective date of the consolidation of shares, the numbers of shares recorded in all accounts held by its shareholders at account management institutions or at JASDEC will be decreased in accordance with the applicable ratio.

Japanese Unit Share System

Consistent with the requirements of the Company Law, the articles of incorporation of Honda adopts unit share system called as “tan-gen-kabu”, under which 100 shares constitute one voting unit of shares. The Board of Directors of Honda by itself may reduce, but not increase, the number of shares that constitute one voting unit or abolish the unit share system entirely by amendments to the articles of incorporation by a board resolution without approval of shareholders. An increase in the number of shares that constitute one voting unit requires an amendment to the articles of incorporation by a special resolution of a general shareholders’ meeting. In any case, the number of shares constituting one voting unit may not exceed 1,000 shares or 0.5% of the total issued shares.

Under the Book-Entry Law, shares constituting less than one voting unit are transferable. Under the rules of the Japanese financial instruments exchanges, however, shares constituting less than one voting unit do not comprise a trading unit, except in limited circumstances, and accordingly may not be sold on the Japanese financial instruments exchanges.

The holder of shares constituting less than one voting unit may at any time require Honda to purchase or sell such shares to constitute one voting unit at the market price in accordance with Honda’s share handling regulations (see below). Because the transfer of ADRs does not require changes in the ownership of the underlying shares, holders of ADRs evidencing ADSs that constitute less than one voting unit of shares are not affected by these restrictions in their ability to transfer the ADRs. However, because transfers of less than one voting unit of the underlying shares are normally prohibited under the unit share system, under the Deposit Agreement, the right of ADR holders to surrender their ADRs and withdraw the underlying shares for sale in Japan may only be exercised as to whole voting units.

Right of a Holder of Shares Representing Less Than One Voting Unit to Require Honda to Purchase or Sell Its Shares

A holder of Honda’s shares representing less than one voting unit may at any time require Honda to purchase its shares. These shares will be purchased at (a) the closing price of the shares reported by the Tokyo Stock Exchange on the day when the request for purchase reaches the share handling agent, or (b) if no sale takes place on the Tokyo Stock Exchange on that day, then the price at which the first sale of shares is effected on the Tokyo Stock Exchange thereafter. In each case, Honda will request the payment of an amount determined by Honda as an amount equal to the brokerage commission required for the sale and purchase of the shares. A holder of shares representing less than one voting unit may, in accordance with the provisions of Honda’s share handling regulations, also make a request to the effect that such number of shares should be sold to it that will, when added to the shares less than one voting unit already held by that shareholder, constitute one voting unit. However, because holders of ADSs representing less than one unit are not able to withdraw the underlying shares from deposit, these holders will not be able to exercise many shareholder rights as a practical matter.

Other Rights of a Holder of Shares Representing Less Than One Voting Unit

In addition to the right described in the preceding paragraph, a holder of shares representing less than one voting unit also has the rights including the followings and these rights may not be restricted by the articles of incorporation:

•

rights to receive any consideration for acquisition by a corporation of special shares all of which may be acquired by such corporation (zembu shutoku joukou tsuki shurui kabushiki) as provided by Article 171, paragraph 1, item 1 of the Company Law,

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rights to receive any cash or other consideration for acquisition by a corporation of shares which may be acquired by such corporation on occurrence of certain event (shutoku joukou tsuki shurui kabushiki) as provided by Article 107, paragraph 1, item 3 of the Company Law,

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rights to be allocated any shares without consideration as provided by Article 185 of the Company Law,

•

rights to receive distribution of any residual assets of a corporation, and

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any other rights provided in the relevant Ordinance of the Ministry of Justice, including rights to receive cash or other distribution derived from consolidation of shares, stock split, allocation of stock acquisition rights without consideration, distribution of surplus or reorganization of a corporation.

Other rights of a holder of shares constituting less than one voting unit may be restricted if the articles of incorporation so provide.

Voting rights under the unit share system

Under the unit share system, the shareholders shall have one voting right for each voting unit of shares that they hold. A shareholder who owns shares representing less than one voting unit will not be able to exercise voting rights and any other rights relating thereto.

Voting Rights

Honda holds its ordinary general meeting of shareholders in June of each year. In addition, Honda may hold an extraordinary general meeting of shareholders whenever necessary by giving at least two weeks’ advance notice. Under the Company Law, notice of any shareholders’ meeting must be given to each shareholder having voting rights or, in the case of a non-resident shareholder, to his resident proxy or mailing address in Japan in accordance with Honda’s share handling regulations, at least two weeks prior to the date of the meeting. The record date for an ordinary shareholders’ meeting is March 31 of each year.

A shareholder of Honda is generally entitled to one vote per voting unit of shares as described in this paragraph and under “Japanese Unit Share System” above. In general, under the Company Law and the articles of incorporation of Honda, a resolution may be adopted at a meeting of shareholders by a majority of the shares having voting rights represented at the meeting. The Company Law and Honda’s articles of incorporation require a quorum for the election of Directors and Corporate Auditors of not less than one-third of the total number of voting rights of all shareholders and the resolution shall be adopted by majority voting. Honda’s shareholders are not entitled to cumulative voting in the election of directors. A corporate shareholder whose voting rights are in turn more than one-quarter directly or indirectly owned by Honda does not have voting rights. Also, Honda does not have voting rights with respect to its own shares.

Shareholders may exercise their voting rights through proxies, provided that those proxies are also shareholders who have voting rights. Shareholders who intend to be absent from a general meeting of shareholders may exercise their voting rights in writing. In addition, they may exercise their voting rights by electronic means if the Board of Directors decides to accept such means.

Under the Company Law, in order to approve certain significant matters of a corporation, more strict requirement for the quorum or the number of voting rights to approve is provided. The articles of incorporation of Honda provide that such resolution may be adopted at a meeting of shareholders by two thirds of the voting rights of the shareholders present at the meeting representing at least one third of all the shareholders having voting rights. Such significant matters include, but not limited to:

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acquisition of its own shares by Honda from a specific shareholder other than its subsidiary,

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acquisition of special shares all of which may be acquired by Honda (zembu shutoku joukou tsuki shurui kabushiki),

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consolidation of the shares,

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reduction of stated capital (with certain exceptions),

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issuance or transfer of new shares or existing shares held by Honda as treasury stock to persons other than the shareholders at a “specially favorable” price,

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issuance of stock acquisition rights (including those incorporated in bonds with stock acquisition rights) to persons other than the shareholders under “specially favorable” conditions,

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discharge of a part of responsibilities of Directors, Corporate Auditors or accounting auditors,

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distribution of surplus by property other than cash (only in the case that no cash distribution is allowed to shareholders),

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amendments to the articles of incorporation,

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transfer of whole or important part of business,

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dissolution of a corporation,

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reorganization of a corporation.

Pursuant to the terms of the Deposit Agreement, upon receipt of notice of any meeting of holders of Common Stock of the Registrant, the Depositary will mail to the record holders of ADRs and publish a notice which will contain the information in the notice of the meeting. The record holders of ADRs at the close of business on a date specified by the Depositary will be entitled to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of Common Stock of the Registrant represented by their respective Depositary Receipts. The Depositary will endeavor, in so far as practicable, to vote the amount of Common Stock of the Registrant represented by such Depositary Receipts in accordance with such instructions, and the Registrant has agreed to take all action which may at any time be deemed necessary by the Depositary in order to enable the Depositary to so vote such Common Stock. In the absence of such instructions, the Depositary has agreed to use its best efforts to give a discretionary proxy to a person designated by the Registrant. However, such proxy may not be given with respect to any proposition of which the Depositary has knowledge regarding any contest related to the action to be taken at the meeting, or the purpose of which is to authorize a merger, consolidation or any other matter which may substantially affect the rights or privileges of the Common Stock of the Registrant or other securities, property or cash received by the Depositary or the Custodian in respect thereof.

Subscription Rights and Stock Acquisition Rights

Holders of Honda’s shares have no preemptive rights under Honda’s articles of incorporation. Under the Company Law, the Board of Directors may, however, determine that shareholders be given subscription rights in connection with a particular issue of new shares. In this case, such rights must be given to all shareholders as of a specified record date by at least two weeks’ prior public notice to shareholders of the record date. In addition, individual notice must be given to each of these shareholders at least two weeks prior to the date of expiration of the subscription rights.

Honda also may decide to grant the stock acquisition rights (shinkabu-yoyakuken), with or without bonds, to any person including its shareholders, by resolution of its Board of Directors unless issued under specially favorable conditions. The holder of such rights may exercise its rights within the exercise period by paying subscription moneys all as prescribed in the terms of such rights.

Liquidation Rights

In the event of a liquidation of Honda, the assets remaining after payment of all debts, liquidation expenses and taxes will be distributed among the shareholders in proportion to the number of shares they own.

Liability to Further Calls or Assessments

All of Honda’s currently issued shares, including shares represented by the ADSs, are fully paid and nonassessable.

Shareholders’ Register Manager

Sumitomo Mitsui Trust Bank, Limited is the Shareholders’ Register Manager for the shares. Sumitomo Mitsui’s office is located at 4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo, 100-8233, Japan. Sumitomo Mitsui maintains Honda’s register of shareholders and records the names and addresses of its shareholders and other relevant information in its register of shareholders upon notice thereof from JASDEC, as described in “Record Date” below.

Record Date

As mentioned above, the record dates for Honda’s dividends are June 30, September 30, December 31 and March 31, if paid. A holder of shares constituting one or more whole voting units who is registered as a holder on Honda’s register of shareholders at the close of business as of March 31 is entitled to exercise its voting rights at the ordinary general meeting of shareholders with respect to the fiscal year ended on March 31. In addition, Honda may set a record date for determining the shareholders entitled to other rights and for other purposes by giving at least two weeks’ prior public notice.

Under the Book-Entry Law, Honda is required to give notice of each record date to JASDEC at least two weeks prior to such record date. JASDEC is required to promptly give notice to Honda of the names and addresses of all of its shareholders of record, the numbers of shares held by them and other relevant information as of such record date.

The shares generally trade ex-dividend or ex-rights on the Japanese financial instruments exchanges on the second business day prior to a record date (or if the record date is not a business day, the third business day prior thereto).

Acquisition by Honda of Shares

Under the Company Law, Honda is generally required to obtain authorization for any acquisition of its own shares by means of:

(i)	a resolution at a general meeting of shareholders, which may be effective for one year at the most from the date thereof;

(ii)	a resolution of the Board of Directors if the acquisition is in accordance with its articles of incorporation; or

(iii)

a resolution of the Board of Directors if the acquisition is to purchase its shares from a subsidiary.

Honda may only dispose of shares so acquired in accordance with the procedures applicable to a new share issuance under the Company Law.

Upon due authorization, Honda may acquire its own shares:

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in the case of (i) and (ii) above, from stock markets or by way of tender offer;

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in the case of (i) above, from a specific person, but only if its shareholders approve such acquisition by special resolution; and

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in the case of (iii) above, from such subsidiary.

In the event Honda is to acquire its own shares from a specific person other than its subsidiary at a price which is higher than the higher of (x) the final market price on the market trading such shares as of the date immediately preceding the date of the required resolution or (y) in the event that such shares are subject to a tender offer, etc., the price set in the contract regarding such tender offer, any shareholder may request that Honda includes such shareholder’s shares in the proposed purchase.

Acquisitions described in (i) through (iii) above must satisfy certain other requirements, including the restriction of the source of consideration in which the total amount of the purchase price of such own shares may not exceed the distributable amount of the corporation.

Reports to Shareholders

Honda currently furnishes shareholders with notices of shareholders’ meetings, business reports, including financial statements, and notices of resolutions adopted at the shareholders’ meetings, all of which are in Japanese. Such notices as described above may be furnished by electronic means to those shareholders who have

approved such way of furnishing notices. Pursuant to its articles of incorporation, upon convening a general meeting of shareholders, Honda may deem that the information required to be described or indicated in the reference documents for the general meeting of shareholders, business reports, financial statements and consolidated financial statements shall have been provided to the shareholders when such information is disclosed, pursuant to laws or regulations, through a method that uses the Internet. Further, pursuant to its articles of incorporation, Honda’s public notices to shareholders shall be given in Japanese by way of electronic public notice; provided, however, that if any public notice is unable to be given by electronic method due to any accident or for any other unavoidable reason, such public notice shall be given by publication in the Nihon Keizai Shimbun, a Japanese newspaper of general circulation.

Report of Substantial Shareholdings

The Financial Instruments and Exchange Law of Japan and regulations under such law require any person who has become a holder (together with its related persons) of more than 5% of the total issued shares of a corporation listed on any Japanese financial instruments exchange or whose shares are traded on the over-the-counter market (including ADSs representing such shares) to file with the Director of a competent Local Finance Bureau, within five business days, in general, a report concerning those shareholdings. A similar report must also be filed to reflect any change of 1% or more in any shareholding or any change in material matters set out in reports previously filed. Copies of any report must also be furnished to the corporation and to all Japanese financial instruments exchanges on which the corporation’s shares are listed or in the case of shares traded on the over-the-counter market, the Japan Securities Dealers Association. For this purpose, shares issuable or transferable to such person upon exercise of exchangeable securities, conversion of convertible securities or exercise of warrants or stock acquisition rights are taken into account in determining both the number of shares held by that holder and the corporation’s total issued share capital.

Daily Price Limits under Japanese Financial Instruments Exchange Rules

Share prices on Japanese financial instruments exchanges are determined on a real-time basis by the equilibrium between bids and offers. These exchanges set daily price limits, which limit the maximum range of fluctuation within a single trading day. Daily price limits are set in absolute yen according to the previous day’s closing price or special quote. Although transactions may continue at the upward or downward limit price if the limit price is reached on a particular trading day, no transactions may take place outside these limits. Consequently, an investor wishing to sell at a price above or below the relevant daily limit may not be able to sell its shares at such price on a particular trading day, or at all.

C. Material Contracts

All contracts concluded by Honda during the two years preceding this filing were entered into in the ordinary course of business.

D. Exchange Controls

There are no laws, decrees, regulations or other legislation which materially affect our ability to import or export capital for our use or our ability to pay dividends to nonresident holders of our shares.

E. Taxation

Japanese Taxes

The following is a summary of the principal Japanese tax consequences as of the date of filing of this Form 20-F to owners of Honda’s shares or ADSs who are non-resident individuals or non-Japanese corporations without a permanent establishment in Japan to which income from Honda’s shares is attributable. The tax

treatment is subject to possible changes in the applicable Japanese laws or double taxation conventions occurring after that date. This summary is not exhaustive of all possible tax considerations that may apply to a particular investor. Potential investors should consult their own tax advisers as to:

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the overall tax consequences of the acquisition, ownership and disposition of shares or ADSs, including specifically the tax consequences under Japanese law;

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the laws of the jurisdiction of which they are resident; and

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any tax treaty between Japan and their country of residence.

Generally, a non-resident of Japan or a non-Japanese corporation is subject to Japanese withholding tax on dividends paid by Japanese corporations.

In the absence of any applicable tax treaty, convention or agreement reducing the maximum rate of withholding tax, the rate of Japanese withholding tax applicable to dividends paid by Japanese corporations to a non-resident of Japan or a non-Japanese corporation is (a) 20.42% for dividends to be paid on or before December 31, 2037, and (b) 20% for dividends to be paid thereafter. With respect to dividends paid on listed shares issued by Japanese corporations (such as Honda’s shares) to a non-resident of Japan or a non-Japanese corporation, the aforementioned 20.42% or 20% withholding tax rate is reduced to (i) 7.147% for dividends to be paid on or before December 31, 2013, (ii) 15.315% for dividends to be paid from and including January 1, 2014 to and including December 31, 2037, and (iii) 15% for dividends to be paid thereafter, except for dividends paid to any individual shareholder who holds 3% or more of the issued shares of that corporation. Japan has entered into income tax treaties, conventions or agreements, whereby the maximum withholding tax rate is generally set at 15% or 10% for portfolio investors (15% under the income tax treaties with, among others, Belgium, Canada, Denmark, Finland, Germany, Ireland, Italy, Luxembourg, New Zealand, Norway, Singapore, Spain, and Sweden, and 10% under the income tax treaties with, among others, Australia, France, the Netherlands, Switzerland, the United Kingdom, and the United States).

Pursuant to the Convention Between the United States of America and Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “U.S.-Japan Tax Treaty”), a portfolio investor that is a U.S. holder is generally subject to Japanese withholding tax on dividends on shares at a rate of 10%. Under Japanese tax law, the maximum rate applicable under the tax treaties, conventions or agreements shall be applicable except when such maximum rate is more than the Japanese statutory rate.

Gains derived from the sale outside Japan of common stock or Depositary Receipts by a non-resident of Japan or a non-Japanese corporation, or from the sale of common stock within Japan by a non-resident of Japan or by a non-Japanese corporation not having a permanent establishment in Japan, are in general not subject to Japanese income or corporation taxes. Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has acquired common stock or Depositary Receipt as a legatee, heir or donee, even if the individual is not a Japanese resident.

United States Taxes

This section describes the material U.S. federal income tax consequences of the ownership of shares or ADSs by U.S. holders, as defined below. It applies only to persons who hold shares or ADSs as capital assets for tax purposes.

This section is based on the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, existing and proposed regulations, published rulings and court decisions, all as currently in effect, as well as on the U.S.-Japan Tax Treaty. These laws are subject to change, possibly on a retroactive basis. In addition, this section is based in part upon the representations of the Depositary and the assumption that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms.

For purposes of the U.S.-Japan Tax Treaty and the Code, U.S. holders of ADRs evidencing ADSs will be treated as the owners of the Shares represented by those ADRs. Exchanges of shares for ADRs and ADRs for shares generally will not be subject to U.S. federal income tax. For purposes of this discussion, a “U.S. holder” is a beneficial owner of shares or ADSs that is for U.S. federal income tax purposes, (i) a citizen or resident individual of the United States, (ii) a domestic corporation, (iii) an estate whose income is subject to United States federal income tax regardless of its source, or (iv) a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust; and that, for purposes of the U.S.-Japan Tax Treaty, (i) holds the shares and ADSs that do not form part of the business property of a permanent establishment through which the beneficial owner carries on or has carried on business and (ii) is not otherwise ineligible for benefits under the U.S.-Japan Tax Treaty, as the case may be, with respect to income and gain from the shares or ADSs.

This section does not apply to a person who is a member of a special class of holders subject to special rules, including a dealer in securities, a trader in securities that elects to use a mark-to-market method of accounting for its securities holdings, a tax-exempt organization, a life insurance company, a person liable for alternative minimum tax, a person that actually or constructively owns 10% or more of the voting stock of Honda, a person that holds shares or ADSs as part of a straddle or a hedging or conversion transaction, a person that purchases or sells shares or ADSs as part of a wash sales for tax purposes, or a person whose functional currency is not the U.S. dollar.

This summary is not a comprehensive description of all the tax considerations that may be relevant with respect to a U.S. holder’s shares or ADSs. Each beneficial owner of shares or ADSs should consult its own tax advisor regarding the U.S. federal, state and local and other tax consequences of owning and disposing of shares and ADSs in its particular circumstances.

Taxation of Dividends

Under the U.S. federal income tax laws and subject to the passive foreign investment company, or PFIC, rules discussed below, the gross amount of any dividend paid by Honda out of its current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) is subject to U.S. federal income taxation. A U.S. holder must include any Japanese tax withheld from the dividend payment in this gross amount even though it does not in fact receive it.

Dividends paid to a noncorporate U.S. holder that constitute qualified dividend income will be taxable to such holder at the preferential rates applicable to long term capital gains provided that the noncorporate U.S. holder holds the shares or ADSs with respect to which the dividends are paid for more than 60 days during the 121 day period beginning 60 days before the ex-dividend date and meets other holding period requirements. Dividends that Honda pays with respect to the shares or ADSs generally will be qualified dividend income. A U.S. holder must include the dividend in its taxable income when the holder, in the case of shares, or the Depositary, in the case of ADSs, receives the dividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. The amount of the dividend distribution that a U.S. holder must include in its income will be the U.S. dollar value of the Japanese yen payments made, determined at the spot Japanese yen/U.S. dollar rate on the date of the dividend distribution, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the U.S. holder includes the dividend payment in income to the date it converts the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the U.S. for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as a non-taxable return of capital to the extent of U.S. holder’s basis in the shares or ADSs and thereafter as capital gain.

Subject to certain limitations, the Japanese tax withheld in accordance with the U.S.-Japan Tax Treaty and paid over to Japan will be creditable against a U.S. holder’s United States federal income tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the preferential rates. To the extent a refund of the tax withheld is available to a U.S. holder under Japanese law or under the U.S.-Japan Tax Treaty, the amount of tax withheld that is refundable will not be eligible for credit against the U.S. holder’s United States federal income tax liability.

Dividends will be income from sources outside the United States. Dividends will, depending on your circumstances, be either “passive” or “general” income for purposes of computing the foreign tax credit allowable to a U.S. holder.

Taxation of Capital Gains

Subject to the PFIC rules discussed below, if a U.S. holder sells or otherwise disposes of its shares or ADSs, it will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the U.S. dollar value of the amount that it realizes and its tax basis, determined in U.S. dollars, in its shares or ADSs. Capital gain of a noncorporate U.S. holder is generally taxed at preferential rates where the property is held for more than one year. The gain or loss will generally be income or loss from sources within the U.S. for foreign tax credit limitation purposes.

Passive Foreign Investment Company (PFIC) Rules

Honda believes its shares and ADSs should not be treated as stock of a PFIC for United States federal income tax purposes. This conclusion is a factual determination that is made annually and thus may be subject to change.

In general, Honda will be a PFIC with respect to a U.S. holder if for any taxable year in which such holder held shares or ADSs of Honda:

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at least 75% of Honda’s gross income for the taxable year is passive income; or

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at least 50% of the value, determined on the basis of a quarterly average, of Honda’s assets is attributable to assets that produce or are held for the production of passive income.

Passive income generally includes dividends, interest, royalties, rents (other than certain rents and royalties derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income. If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving directly its proportionate share of the other corporation’s income.

If Honda is treated as a PFIC, and a U.S. holder does not make a mark-to-market election, as described below, that U.S. holder will be subject to special rules with respect to:

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any gain it realizes on the sale or other disposition of its shares or ADSs; and

•

any excess distribution that Honda makes to the U.S holder (generally, any distributions to it during a single taxable year that are greater than 125% of the average annual distributions received by it in respect of the shares or ADSs during the three preceding taxable years or, if shorter, its holding period for the shares or ADSs).

Under these rules:

•

the gain or excess distribution will be allocated ratably over the U.S. holder’s holding period for the shares or ADSs,

•

the amount allocated to the taxable year in which it realized the gain or excess distribution will be taxed as ordinary income,

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the amount allocated to each prior year, with certain exceptions, will be taxed at the highest tax rate in effect for that year, and

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the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such year.

Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions by a PFIC.

If a U.S. holder owns shares or ADSs in a PFIC that are treated as marketable stock, such holder may make a mark-to-market election. If a U.S. holder makes this election, it will not be subject to the PFIC rules described above. Instead, in general, a U.S. holder will include as ordinary income each year the excess, if any, of the fair market value of its shares or ADSs at the end of the taxable year over its adjusted basis in its shares or ADSs. These amounts of ordinary income will not be eligible for the favorable tax rates applicable to qualified dividend income or long-term capital gains. A U.S. holder will also be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its shares or ADSs over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. holder’s basis in the shares or ADSs will be adjusted to reflect any such income or loss amount.

In addition, notwithstanding any election that a U.S. holder makes with regard to the shares or ADSs, dividends that a U.S. holder receives from Honda will not constitute qualified dividend income to such holder if Honda is a PFIC either in the taxable year of the distribution or the preceding taxable year. Moreover, shares or ADSs held by a U.S. holder will be treated as stock in a PFIC if Honda was a PFIC at any time during the U.S. holder’s holding period in its shares or ADSs, even if Honda is not currently a PFIC. For purposes of this rule, if a U.S. holder makes a mark-to-market election with respect to its shares or ADSs, the U.S. holder will be treated as having a new holding period in its shares or ADSs beginning on the first day of the first taxable year beginning after the last taxable year for which the mark-to-market election applies. Dividends that a U.S. holder receives that do not constitute qualified dividend income are not eligible for taxation at the 15% maximum rate applicable to qualified dividend income. Instead, the U.S. holder must include the gross amount of any such dividend paid by Honda out of Honda’s accumulated earnings and profits (as determined for United States federal income tax purposes) in the U.S. holder’s gross income, and it will be subject to tax at rates applicable to ordinary income.

If a U.S. holder owns shares or ADSs during any year that Honda is a PFIC with respect to such U.S. holder, it must file Internal Revenue Service Form 8621. U.S. holders should consult their own tax advisors regarding the PFIC rules and potential filing and other requirements.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

Honda is subject to the information requirements of the Securities Exchange Act of 1934 and, in accordance therewith, it will file annual reports on Form 20-F within six months of its fiscal year-end and furnish other reports and information on Form 6-K with the Securities and Exchange Commission. These reports and other

information can be inspected without charge at the public reference room at the Securities and Exchange Commission at 100 F Street, N.E., Washington, D.C. 20549. You can also obtain copies of such material by mail from the public reference room of the Securities and Exchange Commission at prescribed fees. You may obtain information on the operation of the Securities and Exchange public reference room by calling the Securities and Exchange Commission in the United States at 1-800-SEC-0330. The Securities and Exchange Commission also maintains a web site at www.sec.gov that contains reports, proxy statements and other information regarding registrants that file electronically with the Securities and Exchange Commission. Also, as a foreign private issuer, Honda is exempt from the rules under the Securities Exchange Act of 1934 prescribing the furnishing and content of proxy statements to shareholders.

I. Subsidiary Information

Not applicable.

Item 11. Quantitative and Qualitative Disclosure about Market Risk

Honda is exposed to market risks, which are changes in foreign currency exchanges rates, in interest rates and in prices of marketable equity securities. Honda is a party to derivative financial instruments in the normal course of business in order to manage risks associated with changes in foreign currency exchange rates and in interest rates. Honda does not hold any derivative financial instruments for trading purposes.

Foreign Currency Exchange Rate Risk

Foreign currency forward exchange contracts and purchased option contracts are used to hedge currency risk of sale commitments denominated in foreign currencies (principally U.S. dollars).

Foreign currency written option contracts are entered into in combination with purchased option contracts to offset premium amounts to be paid for purchased option contracts.

The tables below provide information about our derivatives related to foreign currency exchange rate risk as of March 31, 2012 and 2013. For forward exchange contracts and currency options, the table presents the contract amounts and fair value. All forward exchange contracts and currency contracts to which we are a party have original maturities within one year.

Foreign Exchange Risk


	2012							2013
	Yen (millions)					Average contractual rate		Yen (millions)					Average contractual rate
Forward Exchange Contracts	Contract amount		Fair value			Average contractual rate		Contract amount		Fair value			Average contractual rate
To sell US$	¥	301,538		(10,554	)		79.47	¥	390,548		(33,197	)		85.72
To sell EUR		18,895		(1,023	)		103.83		14,751		(2,311	)		99.80
To sell CA$		63		(1	)		81.09		13		375			92.10
To sell GBP		4,047		(19	)		130.69		6,230		17			143.55
To sell other foreign currencies		87,342		(6,040	)		various		108,215		(14,318	)		various
To buy US$		5,674		34			81.20		3,441		4			93.92
To buy other foreign currencies		4,346		109			various		7,656		100			various
Cross-currencies		201,744		588			various		216,905		1,441			various

Total	¥	623,649		(16,906	)			¥	747,759		(47,889	)


	Yen (millions)					Average contractual rate		Yen (millions)					Average contractual rate
Currency Option Contracts	Contract amount		Fair value			Average contractual rate		Contract amount		Fair value			Average contractual rate
Option purchased to sell US$	¥	27,216		—			various	¥	2,020		33			various
Option written to sell US$		51,874		(2,148	)		various		2,019		(9	)		various
Option purchased to sell other foreign currencies		—		—			—		53		1			various
Option written to sell other foreign currencies		—		—			—		53		—			various

Total	¥	79,090		(2,148	)			¥	4,145		25

Interest Rate Risk

Honda is exposed to market risk for changes in interest rates related primarily to its debt obligations and finance receivables. In addition to short-term financing such as commercial paper, Honda has long-term debt with both fixed and floating rates. Our finance receivables are primarily fixed rate. Interest rate swap agreements are mainly used to manage interest rate risk exposure and to convert floating rate financing to fixed rate financing (normally three-five years) in order to match financing costs with income from finance receivables. Foreign currency and interest rate swap agreements used among different currencies, also serve to hedge foreign currency exchange risk as well as interest rate risk.

The following tables provide information about Honda’s financial instruments that were sensitive to changes in interest rates at March 31, 2012 and 2013. For finance receivables and long-term debt, these tables present principal cash flows, fair value and related weighted average interest rates. For interest rate swaps and currency and interest rate swaps, the table presents notional amounts, fair value and weighted average interest rates. Variable interest rates are determined using formulas such as LIBOR+a and an index.

Interest Rate Risk

Finance Subsidiaries-Receivables


	2012				2013
	Yen (millions)				Yen (millions)
							Expected maturity date														Average interest rate
	Total		Fair value		Total		Within 1 year		1-2 year		2-3 year		3-4 year		4-5 year		There- after		Fair value		Average interest rate
Direct financing leases
JP¥	¥	73,920		*	¥	106,735		26,777		18,899		16,657		15,116		13,794		15,492		*		3.90	%
Other		306,419		*		341,937		93,446		91,386		86,075		62,807		8,214		9		*		2.22	%

Total—Direct financing leases	¥	380,339		*	¥	448,672		120,223		110,285		102,732		77,923		22,008		15,501		*

Other finance subsidiaries-receivables
JP¥	¥	525,494		521,726	¥	542,165		166,889		123,447		101,285		79,878		51,356		19,310		544,441		3.90	%
US$		2,541,603		2,574,794		3,025,075		1,119,666		718,304		571,747		382,177		178,190		54,991		3,059,686		3.53	%
Other		562,365		557,330		730,185		323,080		175,169		117,710		68,189		30,528		15,509		722,206		6.98	%

Total—Other finance subsidiaries-receivables	¥	3,629,462		3,653,850	¥	4,297,425		1,609,635		1,016,920		790,742		530,244		260,074		89,810		4,326,333

Total^**	¥	4,009,801			¥	4,746,097

^* :	Under U.S. generally accepted accounting principles, disclosure of fair values of direct financing leases is not required.

^** :

The finance subsidiaries-receivables include finance subsidiaries-receivables contained in trade accounts and notes receivable and other assets in the consolidated balance sheets. Additional detailed information is described in note (3) to the accompanying consolidated financial statements.

Long-Term Debt (including current portion)



	2012				2013
	Yen (millions)				Yen (millions)
							Expected maturity date														Average interest rate
	Total		Fair value		Total		Within 1 year		1-2 year		2-3 year		3-4 year		4-5 year		Thereafter		Fair value		Average interest rate
Japanese yen bonds	¥	330,000		331,770	¥	340,000		40,000		30,000		60,000		80,000		95,000		35,000		342,627		0.61	%
Japanese yen medium-term notes (Fixed rate)		67,740		68,266		42,923		6,489		5,989		27,450		—		—		2,995		43,445		0.93	%
Japanese yen medium-term notes (Floating rate)		63,574		63,655		5,490		3,494		—		1,996		—		—		—		5,488		0.38	%
U.S. dollar medium-term notes (Fixed rate)		692,185		732,402		942,086		160,135		201,341		187,293		117,059		117,059		159,199		994,988		3.02	%
U.S. dollar medium-term notes (Floating rate)		155,535		156,450		235,427		15,077		159,198		48,509		3,278		9,365		—		237,547		0.72	%
Asset backed notes		511,384		515,790		681,020		344,667		225,063		111,290		—		—		—		684,741		0.89	%
Loans and others—primarily fixed rate		1,325,978		1,343,180		1,408,945		375,184		346,113		242,635		336,054		107,910		1,049		1,419,185		2.49	%

Total	¥	3,146,396		3,211,513	¥	3,655,891		945,046		967,704		679,173		536,391		329,334		198,243		3,728,021

Interest Rate Swaps


		2012					2013
		Yen (millions)					Yen (millions)																	Average receive rate			Average pay rate
									Expected maturity date
Notional principal currency	Receive/Pay	Contract amount		Fair value			Contract amount		Within 1 year		1-2 year		2-3 year		3-4 year		4-5 year		Thereafter		Fair value
JP¥	Float/Fix	¥	300		(7	)	¥	—		—		—		—		—		—		—		—			—			—
US$	Float/Fix		2,465,885		(14,818	)		2,424,360		426,859		788,240		769,519		359,611		80,131		—		(11,508	)		0.29	%		0.86	%
	Fix/Float		736,422		27,384			993,168		207,849		202,208		188,100		117,563		117,563		159,885		30,934			3.08	%		1.45	%
	Float/Float		12,329		(3	)		—		—		—		—		—		—		—		—			—			—
CA$	Float/Fix		448,897		(3,679	)		493,374		75,137		89,280		73,611		119,434		96,361		39,551		(2,743	)		1.29	%		1.84	%
	Fix/Float		123,446		2,929			120,174		83,197		—		—		—		36,977		—		924			4.44	%		2.85	%
GBP	Float/Fix		31,456		(59	)		32,213		15,750		12,884		3,579		—		—		—		(94	)		0.52	%		0.90	%
Other	Float/Fix		4,904		(12	)		—		—		—		—		—		—		—		—			—			—

Total		¥	3,823,639		11,735		¥	4,063,289		808,792		1,092,612		1,034,809		596,608		331,032		199,436		17,513

Currency & Interest Rate Swaps


			2012					2013
Receiving side currency	Paying side currency	Receive/Pay	Yen (millions)					Yen (millions)																	Average receive rate			Average pay rate
										Expected maturity date												Fair value
			Contract amount		Fair value			Contract amount		Within 1 year		1-2 year		2-3 year		3-4 year		4-5 year		Thereafter		Fair value
JP¥	US$	Fix/Float	¥	57,585		10,773		¥	46,029		5,754		6,263		31,369		—		—		2,643		(2,704	)		0.93	%		0.97	%
		Float/Float		46,563		17,045			5,383		3,254		—		2,129		—		—		—		88			0.38	%		0.82	%
Other	Other	Fix/Float		309,357		(7,023	)		253,922		112,066		141,856		—		—		—		—		(20,306	)		4.98	%		2.05	%
		Float/Float		19,033		961			—		—		—		—		—		—		—		—			—			—
		Float/Fix		17,555		44			31,920		1,920		17,200		12,800		—		—		—		(1,610	)		1.18	%		3.13	%

Total			¥	450,093		21,800		¥	337,254		122,994		165,319		46,298		—		—		2,643		(24,532	)

Equity Price Risk

Honda is exposed to equity price risk as a result of its holdings of marketable equity securities. Marketable equity securities included in Honda’s investment portfolio are held for purposes other than trading, and are reported at fair value, with unrealized gains or losses, net of deferred taxes, included in accumulated other comprehensive income (loss) in equity section of the consolidated balance sheets. At March 31, 2012 and 2013, the estimated fair values of marketable equity securities were ¥100.8 billion and ¥117.1 billion, respectively.

Item 12. Description of Securities Other than Equity Securities

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American Depositary Shares

1.2.3. Fees and charges.

JP Morgan Chase Bank, N.A., as ADR depositary, collects fees for delivery and surrender of ADSs directly from investors, or from intermediaries acting for them, depositing ordinary shares or surrendering ADSs for the purpose of withdrawal. The ADR depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of the distributable property to pay the fees.

The charges of the ADR depositary payable by investors are as follows:


Category (as defined by SEC)	Depositary Actions	Associated Fee
(a) Depositing or substituting the underlying shares	Each person to whom ADRs are issued against deposits of Shares, including deposits and issuances in respect of: • Share distributions, stock split, rights, merger • Exchange of securities or any other transaction or event or other distribution affecting the ADSs or the Deposited Securities	USD 5.00 for each 100 ADSs (or portion thereof) evidenced by the new ADRs delivered

(b) Receiving or distributing dividends	Not applicable

(c) Selling or exercising rights	Distribution or sale of securities, the fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities	USD 5.00 for each 100 ADSs (or portion thereof)

(d) Withdrawing an underlying security	Acceptance of ADRs surrendered for withdrawal of deposited securities	USD 5.00 for each 100 ADSs (or portion thereof) evidenced by the ADRs surrendered

(e) Transferring, splitting or grouping receipts	Transfers, combining or grouping of depositary receipts	USD 2.50 per ADS certificate

(f) General depositary services, particularly those charged on an annual basis	Not applicable

Category

(as defined by SEC)

Depositary Actions

Associated Fee

(g) Expenses of the depositary

Expenses incurred on behalf of Holders in connection with

• Compliance with foreign exchange control regulations or any law or regulation relating to foreign investment

• The depositary’s or its custodian’s compliance with applicable law, rule or regulation

• Stock transfer or other taxes and other governmental charges

• Cable, telex, facsimile transmission/delivery

• Expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars (which are paid out of such foreign currency)

• Any other charge payable by the depositary or its agents

Expenses payable at the sole discretion of the depositary by billing Holders or by deducting charges from one or more dividends or other cash distributions

4. Direct / Indirect Payment Disclosure

Honda does not receive any reimbursement from the depositary bank. JPMorgan agreed to waive an out-of-pocket expense of $50,000 associated with the administration of the ADR program. The out-of-pocket expenses relate to depositary service administration, including but not limited to, dividend disbursement and proxy process.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

Item 14. Material Modifications to the Rights of Security Holders and Use Proceeds

None.

Item 15. Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and participation of our management, including our Chief Executive Officer and Chief Operating Officer for Business Management Operations (who is our Chief Financial Officer), we performed an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the U.S. Securities Exchange Act of 1934) as of March 31, 2013. Based on that evaluation, our Chief Executive Officer and Chief Operating Officer for Business Management Operations concluded that our disclosure controls and procedures were effective as of that date.

Management’s Report on Internal Control over Financial Reporting

The management of Honda is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the U.S. Securities Exchange Act of 1934). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in

accordance with U.S. generally accepted accounting principles and includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with policies or procedures may deteriorate.

Our management assessed the effectiveness of internal control over financial reporting as of March 31, 2013 based on the criteria established in “Internal Control-Integrated Framework” published by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on that assessment, our management concluded that our internal control over financial reporting was effective as of March 31, 2013.

The Company’s independent registered public accounting firm, KPMG AZSA LLC has audited the effectiveness of the Company’s internal control over financial reporting, as stated in their report which is included herein.

Changes in Internal Control over Financial Reporting

No significant changes were made in our internal control over financial reporting during the fiscal year ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 16A. Audit Committee Financial Expert

Honda’s Board of Corporate Auditors has determined that Mr. Kunio Endo and Mr. Hirotake Abe are qualified as an “audit committee financial expert” as defined by the rules of the SEC. Mr. Endo and Mr. Abe were elected as one of Honda’s Corporate Auditors at the general meeting of shareholders held on June 19, 2013 and June 23, 2011, respectively. See Item 6.A. for additional information regarding them. They meet the independence requirements imposed on Corporate Auditors under the Company Law of Japan. See Item 6.C. for an explanation of such independence requirements.

Item 16B. Code of Ethics

Honda has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of Honda’s code of ethics is attached as an exhibit to this annual report on Form 20-F.

Item 16C. Principal Accountant Fees and Services

KPMG AZSA LLC has served as Honda’s independent registered public accounting firm for each of the fiscal years in the three-year period ended March 31, 2013, for which audited financial statements appear in this annual report on Form 20-F.

The following table presents the aggregate fees for professional services and other services rendered by KPMG AZSA LLC and the various member firms of KPMG International, a Swiss Cooperative, to Honda in fiscal year 2012 and 2013:


	Yen (millions)
	2012		2013
Audit Fees	¥	2,301	¥	2,486
Audit-Related Fees		45		59
All Other Fees		1		16

Total	¥	2,347	¥	2,561

“Audit fees” means fees for audit services, which are professional services provided by independent auditors for the audit of our annual financial statements or for services that are normally provided by independent auditors with respect to any submissions required under applicable laws and regulations.

“Audit-related fees” means fees for audit-related services, which are assurance services provided by independent auditors that are reasonably related to the carrying out of auditing or reviewing of our financial reports and other related services. This category includes fees for agreed-upon or expanded audit procedures related to accounting and/or other records.

Pre-approval policies and procedures of the Board of Corporate Auditors

Under applicable SEC rules, our Board of Corporate Auditors must pre-approve audit services, audit-related services, tax services and other services to be provided by the principal accountant to ensure that the independence of the principal accountant under such rules is not impaired as a result of the provision of any of these services.

While, as a general rule, specific pre-approval must be obtained for these services to be provided, our Board of Corporate Auditors has adopted pre-approval policies and procedures which list particular audit and non-audit services that may be provided without specific pre-approval. Our Board of Corporate Auditors reviews this list of services on an annual basis, and is informed of each such service that is actually provided.

All services to be provided to us by the principal accountant and its affiliates which are not specifically set forth in this list must be specifically pre-approved by our Board of Corporate Auditors.

None of the services described above in this Item 16C. were waived from the pre-approval requirements pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.

Item 16D. Exemptions from the Listing Standards for Audit Committees

With respect to the requirements of Rule 10A-3 under the Securities Exchange Act of 1934 relating to listed company audit committees, which apply to us through Section 303A.06 of the New York Stock Exchange’s Listed Company Manual, we rely on an exemption provided by paragraph (c)(3) of that Rule available to foreign private issuers with Boards of Corporate Auditors meeting certain requirements. For a New York Stock Exchange-listed Japanese company with a Board of Corporate Auditors, the requirements for relying on paragraph (c)(3) of Rule 10A-3 are as follows:

•

The Board of Corporate Auditors must be established, and its members must be selected, pursuant to Japanese law expressly requiring such a board for Japanese companies that elect to have a corporate governance system with Corporate Auditors.

•

Japanese law must and does require the Board of Corporate Auditors to be separate from the Board of Directors.

•

None of the members of the Board of Corporate Auditors may be elected by management, and none of the listed company’s executive officers may be a member of the Board of Corporate Auditors.

•

Japanese law must and does set forth standards for the independence of the members of the Board of Corporate Auditors from the listed company or its management.

•

The Board of Corporate Auditors, in accordance with Japanese law or the listed company’s governing documents, must be responsible, to the extent permitted by Japanese law, for the appointment, retention and oversight of the work of any registered public accounting firm engaged (including, to the extent permitted by Japanese law, the resolution of disagreements between our management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the listed company, including its independent registered public accounting firm that audits its consolidated financial statements included in its annual reports on Form 20-F.

•

To the extent permitted by Japanese law:

—

the Board of Corporate Auditors must establish procedures for (i) the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;

—

the Board of Corporate Auditors must have the authority to engage independent counsel and other advisers, as it determines necessary to carry out its duties; and

—

the listed company must provide for appropriate funding, as determined by its Board of Corporate Auditors, for payment of (i) compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for us, (ii) compensation to any advisers employed by the Board of Corporate Auditors, and (iii) ordinary administrative expenses of the Board of Corporate Auditors that are necessary or appropriate in carrying out its duties.

In our assessment, our Board of Corporate Auditors, which meets the requirements for reliance on the exemption in paragraph (c)(3) of Rule 10A-3 as described above, is not materially less effective than an audit committee meeting all the requirements of paragraph (b) of Rule 10A-3 (without relying on any exemption provided at acting independently of management and performing the functions of an audit committee as contemplated therein).

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table sets forth certain information with respect to purchases by Honda of its own shares during the year ended March 31, 2013. There were no purchases of Honda’s shares by its affiliated purchasers during that year.


Period	(a) Total Number of Shares Purchased^(*)		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Yen Amount of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 to April 30, 2012		94	¥	3,092		—		—
May 1 to May 31, 2012		40	¥	2,775		—		—
June 1 to June 30, 2012		190	¥	2,562		—		—
July 1 to July 31, 2012		319	¥	2,570		—		—
August 1 to August 31, 2012		100	¥	2,520		—		—
September 1 to September 30, 2012		142	¥	2,632		—		—
October 1 to October 31, 2012		189	¥	2,417		—		—
November 1 to November 30, 2012		212	¥	2,575		—		—
December 1 to December 31, 2012		126	¥	2,732		—		—
January 1 to January 31, 2013		148	¥	3,279		—		—
February 1 to February 28, 2013		420	¥	3,497		—		—
March 1 to March 31, 2013		714	¥	3,573		—		—

Total		2,694	¥	3,039		—

For each month, the number of shares shown in column (a) in excess of the number of shares shown in column (c) represents the aggregate number of shares representing less than one unit that Honda purchased from the holders thereof upon their request. For an explanation of the right of such holders, see “Japanese Unit Share System—Right of a Holder of Shares Representing Less Than One Voting Unit to Require Honda to Purchase or Sell Its Shares” under Item 10.B of this Annual Report.

Item 16F. Change in Registrant’s Certifying Accountant

Not applicable.

Item 16G. Corporate Governance

Companies listed on the New York Stock Exchange (the “NYSE”) must comply with certain standards regarding corporate governance under Section 303A of the NYSE Listed Company Manual.

However, listed companies that are foreign private issuers, such as Honda, are permitted to follow home country practice in lieu of certain provisions of Section 303A.

The following table shows the significant differences between the corporate governance practices followed by U.S. listed companies under Section 303A of the NYSE Listed Company Manual and those followed by Honda.


Corporate Governance Practices Followed by NYSE-listed U.S. Companies		Corporate Governance Practices Followed by Honda
A NYSE-listed U.S. company must have a majority of directors meeting the independence requirements under Section 303A of the NYSE Listed Company Manual.		For Japanese companies, which employ a corporate governance system based on a Board of Corporate Auditors (the “Board of Corporate Auditors system”), including Honda, Japan’s Company Law has no independence requirement with respect to directors. The task of overseeing management and, together with the accounting audit firm, accounting is assigned to the Corporate Auditors, who are separate from the company’s management and meet certain independence requirements under Japan’s Company Law.

		In the case of Japanese companies which employ the Board of Corporate Auditors system, including Honda, at least half of the Corporate Auditors must be “outside” Corporate Auditors who must meet additional independence requirements under Japan’s Company Law. An outside Corporate Auditor is defined as a Corporate Auditor who has not served as a director, accounting councilor, executive officer, manager or any other employee of the company or any of its subsidiaries. Currently, Honda has three outside Corporate Auditors which constitute 60% of Honda’s five Corporate Auditors.

A NYSE-listed U.S. company must have an audit committee composed entirely of independent directors, and the audit committee must have at least three members.		Like a majority of Japanese companies, Honda employs the Board of Corporate Auditors system as described above. Under this system, the Board of Corporate Auditors is a legally separate and independent body from the Board of Directors. The main function of the Board of Corporate Auditors is similar to that of independent directors, including those who are members of the audit committee, of a U.S. company: to monitor the performance of the directors, and review and express opinion on the method of auditing by the company’s accounting audit firm and on such accounting audit firm’s audit reports, for the protection of the company’s shareholders.

100


Corporate Governance Practices Followed by NYSE-listed U.S. Companies		Corporate Governance Practices Followed by Honda
		Japanese companies which employ the Board of Corporate Auditors system, including Honda, are required to have at least three Corporate Auditors. Currently, Honda has five Corporate Auditors. Each Corporate Auditor has a four-year term. In contrast, the term of each director of Honda is one year.

		With respect to the requirements of Rule 10A-3 under the U.S. Securities Exchange Act of 1934 relating to listed company audit committees, Honda relies on an exemption under that rule which is available to foreign private issuers with Board of Corporate Auditors meeting certain criteria.

A NYSE-listed U.S. company must have a nominating/corporate governance committee entirely of independent directors.		Honda’s directors are elected at a meeting of shareholders. Its Board of Directors does not have the power to fill vacancies thereon. Honda’s Corporate Auditors are also elected at a meeting of shareholders. A proposal by Honda’s Board of Directors to elect a Corporate Auditor must be approved by a resolution of its Board of Corporate Auditors. The Board of Corporate Auditors is empowered to request that Honda’s directors submit a proposal for election of a Corporate Auditor to a meeting of shareholders. The Corporate Auditors have the right to state their opinion concerning election of a Corporate Auditor at the meeting of shareholders.

A NYSE-listed U.S. company must have a compensation committee composed entirely of independent directors.		Maximum total amounts of compensation for Honda’s Directors and Corporate Auditors are proposed to, and voted on, by a meeting of shareholders. Once the proposals for such maximum total amounts of compensation are approved at the meeting of shareholders, each of the Board of Directors and Board of Corporate Auditors determines the compensation amount for each member within the respective maximum total amounts.

A NYSE-listed U.S. company must generally obtain shareholder approval with respect to any equity compensation plan.		Currently, Honda does not adopt stock option compensation plans. If Honda were to adopt such a plan, Honda must obtain shareholder approval for stock options only if the stock options are issued with specifically favorable conditions or price concerning the issuance and exercise of the stock options.

Item 16H. Mine Safety Disclosure

Not applicable.

101

PART III

Item 17. Financial Statements

Not applicable.

Item 18. Financial Statements

See Consolidated Financial Statements attached hereto.

Item 19. Exhibits


	1.1			Articles of Incorporation of the registrant (English translation)

	1.2			Share Handling Regulations of the registrant (English translation)

	1.3			Regulations of Board of Directors of the registrant (English translation)

	1.4			Regulations of the Board of Corporate Auditors of the registrant (English translation)

	2.1			Specimen common stock certificates of the registrant (English translation) (1)

	2.2			Deposit Agreement dated as of December 19, 1962, as amended and restated as of October 1, 1982 (including changes from Amendment to Deposit Agreement dated as of April 1, 1989) among the registrant, Morgan Guaranty Trust Company of New York (now JP Morgan Chase Bank), as Depositary, and all owners and holders from time to time of American Depositary Receipts and European Depositary Receipts, including the form of American Depositary Receipt (2)

	2.3			Form of Amendment No. 2 to Deposit Agreement dated as of April, 1995, among the parties referred to in Exhibit 2.2 above (2)

	2.4			Form of Amendment No. 3 to Deposit Agreement dated as of January, 2002, among the parties referred to in Exhibit 2.2 above (3)

	2.5			Form of Amendment No. 4 to Deposit Agreement dated as of June, 2006, among the parties referred to in Exhibit 2.2 above (4)

	2.6			Form of Amendment No. 5 to Deposit Agreement dated as of June, 2007, among the parties referred to in Exhibit 2.2 above (5)

	8.1			List of Significant Subsidiaries (See “Organizational Structure” in Item 4.C of this Form 20-F)

	11.1			Code of Ethics (6)

	12.1			Certification of the principal executive officer required by 17 C.F.R. 240. 13a-14(a)

	12.2			Certification of the principal financial officer required by 17 C.F.R. 240. 13a-14(a)

	13.1			Certification of the chief executive officer required by 18 U.S.C. Section 1350

	13.2			Certification of the chief financial officer required by 18 U.S.C. Section 1350

	101.INS			XBRL Instance Document

	101.SCH			XBRL Taxonomy Extension Schema Document

	101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document

	101.DEF			XBRL Taxonomy Extension Definition Linkbase Document

	101.LAB			XBRL Taxonomy Extension Label Linkbase Document

	101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

(1)	Incorporated by reference to the registrant’s annual report on Form 20-F filed on September 27, 2001.

(2)	Incorporated by reference to the Registration Statement on Form F-6 (File No. 33-91842) filed on May 1, 1995.

(3)	Incorporated by reference to the Registration Statement on Form F-6 (File No. 333-14228) filed on December 20, 2001.

102

(4)	Incorporated by reference to the Registration Statement on Form F-6 (File No. 333-114874) filed on June 28, 2006.

(5)	Incorporated by reference to the Registration Statement on Form F-6 (File No. 333-143589) filed on June 8, 2007.

(6)	Incorporated by reference to the registrant’s annual report on Form 20-F filed on July 9, 2004.

The Company has not included as exhibits certain instruments with respect to its long-term debt, the amount of debt authorized under each of which does not exceed 10% of its total assets, and it agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.

103

HONDA MOTOR CO., LTD.

(Honda Giken Kogyo Kabushiki Kaisha)

(A Japanese Company)

AND SUBSIDIARIES

Consolidated Financial Statements

and

Reports of Independent Registered

Public Accounting Firm

March 31, 2013

To be Included in

The Annual Report

Form 20-F

Filed with

The Securities and Exchange Commission

Washington, D.C., U.S.A.

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Index to Consolidated Financial Statements


Reports of Independent Registered Public Accounting Firm			F-3
Consolidated Balance Sheets – March 31, 2012 and 2013			F-5
Consolidated Statements of Income – Years ended March 31, 2011, 2012 and 2013			F-6
Consolidated Statements of Comprehensive Income – Years ended March 31, 2011, 2012 and 2013			F-7
Consolidated Statements of Changes in Equity – Years ended March 31, 2011, 2012 and 2013			F-8
Consolidated Statements of Cash Flows – Years ended March 31, 2011, 2012 and 2013			F-10
Notes to Consolidated Financial Statements			F-11

Financial statements of affiliates are omitted because such affiliates are not individually significant.

F-2

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Honda Motor Co., Ltd.:

We have audited the accompanying consolidated balance sheets of Honda Motor Co., Ltd. and subsidiaries as of March 31, 2012 and 2013, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended March 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Honda Motor Co., Ltd. and subsidiaries as of March 31, 2012 and 2013, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2013, in conformity with U.S. generally accepted accounting principles.

As further described in Note 1(k) to the consolidated financial statements, the Company changed its method of accounting for calculating depreciation of certain property, plant and equipment beginning April 1, 2012.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Honda Motor Co., Ltd.’s internal control over financial reporting as of March 31, 2013, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated June 25, 2013 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG AZSA LLC

Tokyo, Japan

June 25, 2013

F-3

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Honda Motor Co., Ltd.:

We have audited Honda Motor Co., Ltd.’s internal control over financial reporting as of March 31, 2013, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Honda Motor Co., Ltd.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Honda Motor Co., Ltd. maintained, in all material respects, effective internal control over financial reporting as of March 31, 2013, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Honda Motor Co., Ltd. and subsidiaries as of March 31, 2012 and 2013, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended March 31, 2013, and our report dated June 25, 2013 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG AZSA LLC

Tokyo, Japan

June 25, 2013

F-4

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2012 and 2013


	Yen (millions)
	2012			2013
Assets
Current assets:
Cash and cash equivalents	¥	1,247,113		¥	1,206,128
Trade accounts and notes receivable, net of allowance for doubtful accounts of ¥7,293 million in 2012 and ¥7,885 million in 2013 (notes 3, 9 and 20)		812,155			1,005,981
Finance subsidiaries-receivables, net (notes 3, 4, 9 and 20)		1,081,721			1,243,002
Inventories (notes 5 and 9)		1,035,779			1,215,421
Deferred income taxes (note 11)		188,755			234,075
Other current assets (notes 4, 7, 9 and 17)		373,563			418,446

Total current assets		4,739,086			5,323,053

Finance subsidiaries-receivables, net (notes 3, 4, 9 and 20)		2,364,393			2,788,135

Investments and advances:
Investments in and advances to affiliates (note 6)		434,744			459,110
Other, including marketable equity securities (notes 4 and 7)		188,863			209,680

Total investments and advances		623,607			668,790

Property on operating leases (note 8):
Vehicles		1,773,375			2,243,424
Less accumulated depreciation		300,618			400,292

Net property on operating leases		1,472,757			1,843,132

Property, plant and equipment, at cost (note 9):
Land		488,265			515,661
Buildings		1,492,823			1,686,638
Machinery and equipment		3,300,727			3,832,090
Construction in progress		191,107			288,073

		5,472,922			6,322,462
Less accumulated depreciation and amortization		3,499,464			3,922,932

Net property, plant and equipment		1,973,458			2,399,530

Other assets, net of allowance for doubtful accounts of ¥23,036 million in 2012 and ¥22,754 million in 2013 (notes 1(w), 3, 4, 9, 11, 13, 17 and 20)		614,298			612,717

Total assets	¥	11,787,599		¥	13,635,357


Liabilities and Equity
Current liabilities:
Short-term debt (notes 4 and 9)	¥	964,848		¥	1,238,297
Current portion of long-term debt (notes 4 and 9)		911,395			945,046
Trade payables:
Notes		26,499			31,354
Accounts		942,444			956,660
Accrued expenses (note 13)		489,110			593,570
Income taxes payable (note 11)		24,099			48,454
Other current liabilities (notes 9, 11 and 17)		221,364			283,304

Total current liabilities		3,579,759			4,096,685

Long-term debt, excluding current portion (notes 4 and 9)		2,235,001			2,710,845
Other liabilities (notes 1(w), 4, 10, 11 and 13)		1,454,937			1,630,085

Total liabilities		7,269,697			8,437,615

Equity:
Honda Motor Co., Ltd. shareholders’ equity:
Common stock, authorized 7,086,000,000 shares; issued 1,811,428,430 shares		86,067			86,067
Capital surplus		172,529			171,117
Legal reserves (note 12)		47,184			47,583
Retained earnings (notes 1(w) and 12)		5,758,641			5,995,626
Accumulated other comprehensive income (loss), net (notes 7, 11, 13, 15 and 17)		(1,646,078	)		(1,236,792	)
Treasury stock, at cost 9,128,871 shares in 2012 and 9,131,140 shares in 2013		(26,117	)		(26,124	)

Total Honda Motor Co., Ltd. shareholders’ equity		4,392,226			5,037,477

Noncontrolling interests		125,676			160,265

Total equity		4,517,902			5,197,742

Commitments and contingent liabilities (notes 18 and 19)
Total liabilities and equity	¥	11,787,599		¥	13,635,357

See accompanying notes to consolidated financial statements.

F-5

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Income

Years ended March 31, 2011, 2012 and 2013


	Yen (millions)
	2011			2012			2013
Net sales and other operating revenue (notes 2 and 6)	¥	8,936,867		¥	7,948,095		¥	9,877,947

Operating costs and expenses:
Cost of sales (notes 1(k), 1(u), 1(v) and 2)		6,496,841			5,919,633			7,345,162
Selling, general and administrative (notes 1(k), 1(u) and 1(v))		1,382,660			1,277,280			1,427,705
Research and development (note 1(k))		487,591			519,818			560,270

		8,367,092			7,716,731			9,333,137

Operating income		569,775			231,364			544,810

Other income (expenses):
Interest income		23,577			33,461			25,742
Interest expense		(8,474	)		(10,378	)		(12,157	)
Other, net (notes 1(p), 6, 7 and 17)		45,670			2,956			(69,504	)

		60,773			26,039			(55,919	)

Income before income taxes and equity in income of affiliates		630,548			257,403			488,891

Income tax expense (note 11):
Current		76,647			86,074			125,724
Deferred		130,180			49,661			53,252

		206,827			135,735			178,976

Income before equity in income of affiliates		423,721			121,668			309,915

Equity in income of affiliates (note 6)		139,756			100,406			82,723

Net income		563,477			222,074			392,638

Less: Net income attributable to noncontrolling interests		29,389			10,592			25,489


Net income attributable to Honda Motor Co., Ltd.	¥	534,088		¥	211,482		¥	367,149


	Yen
	2011			2012			2013
Basic net income attributable to Honda Motor Co., Ltd. per common share (note 1(o))	¥	295.67		¥	117.34		¥	203.71

See accompanying notes to consolidated financial statements.

F-6

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

Years ended March 31, 2011, 2012 and 2013


	Yen (millions)
	2011			2012			2013
Net income	¥	563,477		¥	222,074		¥	392,638

Other comprehensive income (loss), net of tax:
Adjustments from foreign currency translation		(297,541	)		(118,135	)		430,812
Unrealized gains (losses) on available-for-sale securities, net		548			5,812			7,984
Unrealized gains (losses) on derivative instruments, net		168			(29	)		(52	)
Pension and other postretirement benefits adjustments		2,543			(39,653	)		(15,297	)

Other comprehensive income (loss), net of tax (note 15)		(294,282	)		(152,005	)		423,447

Comprehensive income (loss)		269,195			70,069			816,085
Less: Comprehensive income attributable to noncontrolling interests		22,325			9,285			39,650

Comprehensive income (loss) attributable to Honda Motor Co., Ltd.	¥	246,870		¥	60,784		¥	776,435

See accompanying notes to consolidated financial statements.

F-7

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

Years ended March 31, 2011, 2012 and 2013


	Yen (millions)
	Common stock		Capital surplus		Legal reserves		Retained earnings (note 1(w))			Accumulated other comprehensive income (loss), net			Treasury stock			Total Honda Motor Co., Ltd. shareholders’ equity			Noncontrolling interests			Total equity
Balance at April 1, 2010	¥	86,067	¥	172,529	¥	45,463	¥	5,294,085		¥	(1,208,162	)	¥	(71,730	)	¥	4,318,252		¥	127,790		¥	4,446,042

Cumulative effect of adjustments resulting from the adoption of new accounting standards on variable interest entities, net of tax								1,432									1,432						1,432

Adjusted balance at April 1, 2010	¥	86,067	¥	172,529	¥	45,463	¥	5,295,517		¥	(1,208,162	)	¥	(71,730	)	¥	4,319,684		¥	127,790		¥	4,447,474

Transfer to legal reserves						867		(867	)								—						—
Dividends paid to Honda Motor Co., Ltd. shareholders								(92,170	)								(92,170	)					(92,170	)
Dividends paid to noncontrolling interests																				(16,232	)		(16,232	)
Capital transactions and others																				(946	)		(946	)
Comprehensive income (loss):
Net income								534,088									534,088			29,389			563,477
Other comprehensive income (loss), net of tax (note 15)
Adjustments from foreign currency translation											(290,745	)					(290,745	)		(6,796	)		(297,541	)
Unrealized gains (losses) on available-for-sale securities, net											575						575			(27	)		548
Unrealized gains (losses) on derivative instruments, net											168						168						168
Pension and other postretirement benefits adjustments											2,784						2,784			(241	)		2,543

Total comprehensive income (loss)																	246,870			22,325			269,195

Purchase of treasury stock														(34,800	)		(34,800	)					(34,800	)
Reissuance of treasury stock														3			3						3
Retirement of treasury stock								(80,417	)					80,417			—						—

Balance at March 31, 2011	¥	86,067	¥	172,529	¥	46,330	¥	5,656,151		¥	(1,495,380	)	¥	(26,110	)	¥	4,439,587		¥	132,937		¥	4,572,524

Transfer to legal reserves						854		(854	)								—						—
Dividends paid to Honda Motor Co., Ltd. shareholders								(108,138	)								(108,138	)					(108,138	)
Dividends paid to noncontrolling interests																				(15,763	)		(15,763	)
Capital transactions and others																				(783	)		(783	)
Comprehensive income (loss):
Net income								211,482									211,482			10,592			222,074
Other comprehensive income (loss), net of tax (note 15)
Adjustments from foreign currency translation											(116,812	)					(116,812	)		(1,323	)		(118,135	)
Unrealized gains (losses) on available-for-sale securities, net											5,899						5,899			(87	)		5,812
Unrealized gains (losses) on derivative instruments, net											(29	)					(29	)					(29	)
Pension and other postretirement benefits adjustments											(39,756	)					(39,756	)		103			(39,653	)

Total comprehensive income (loss)																	60,784			9,285			70,069

Purchase of treasury stock														(8	)		(8	)					(8	)
Reissuance of treasury stock														1			1						1

Balance at March 31, 2012	¥	86,067	¥	172,529	¥	47,184	¥	5,758,641		¥	(1,646,078	)	¥	(26,117	)	¥	4,392,226		¥	125,676		¥	4,517,902

F-8

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity—(Continued)

Years ended March 31, 2011, 2012 and 2013


	Yen (millions)
	Common stock		Capital surplus			Legal reserves		Retained earnings (note 1(w))			Accumulated other comprehensive income (loss), net			Treasury stock			Total Honda Motor Co., Ltd. shareholders’ equity			Noncontrolling interests			Total equity
Transfer to legal reserves							399		(399	)								—						—
Dividends paid to Honda Motor Co.,Ltd. shareholders									(129,765	)								(129,765	)					(129,765	)
Dividends paid to noncontrolling interests																					(6,250	)		(6,250	)
Capital transactions and others				(1,412	)													(1,412	)		1,189			(223	)
Comprehensive income (loss):
Net income									367,149									367,149			25,489			392,638
Other comprehensive income (loss), net of tax (note 15)
Adjustments from foreign currency translation												415,462						415,462			15,350			430,812
Unrealized gains (losses) on available-for-sale securities, net												7,933						7,933			51			7,984
Unrealized gains (losses) on derivative instruments, net												(52	)					(52	)					(52	)
Pension and other postretirement benefits adjustments												(14,057	)					(14,057	)		(1,240	)		(15,297	)

Total comprehensive income (loss)																		776,435			39,650			816,085

Purchase of treasury stock															(8	)		(8	)					(8	)
Reissuance of treasury stock															1			1						1

Balance at March 31, 2013	¥	86,067	¥	171,117		¥	47,583	¥	5,995,626		¥	(1,236,792	)	¥	(26,124	)	¥	5,037,477		¥	160,265		¥	5,197,742

See accompanying notes to consolidated financial statements.

F-9

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended March 31, 2011, 2012 and 2013


	Yen (millions)
	2011			2012			2013
Cash flows from operating activities (note 14):
Net income	¥	563,477		¥	222,074		¥	392,638
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation excluding property on operating leases (note 1(x))		377,272			345,105			335,536
Depreciation of property on operating leases		212,143			209,762			254,933
Deferred income taxes		130,180			49,661			53,252
Equity in income of affiliates		(139,756	)		(100,406	)		(82,723	)
Dividends from affiliates		98,182			95,106			84,705
Gain on sales of investments in affiliates (note 6)		(46,756	)		—			—
Provision for credit and lease residual losses on finance subsidiaries-receivables		13,305			13,032			10,059
Impairment loss on investments in securities		2,133			1,062			—
Damaged and impairment loss on long-lived assets excluding property on operating leases (notes 1(u) and 1(v))		16,833			10,590			—
Impairment loss on property on operating leases		835			1,514			4,773
Loss (gain) on derivative instruments, net		(7,788	)		(1,847	)		35,027
Decrease (increase) in assets:
Trade accounts and notes receivable		38,700			(35,475	)		(90,495	)
Inventories		(33,676	)		(154,222	)		(74,662	)
Other current assets		266			2,883			2,019
Other assets		(40,729	)		(24,000	)		(27,243	)
Increase (decrease) in liabilities:
Trade accounts and notes payable		(55,331	)		242,814			(95,192	)
Accrued expenses		39,103			(25,718	)		52,021
Income taxes payable		9,461			(7,568	)		21,764
Other current liabilities		32,209			(12,395	)		(4,489	)
Other liabilities		(83,115	)		(14,744	)		(4,384	)
Other, net		(30,335	)		(55,690	)		(66,795	)

Net cash provided by operating activities		1,096,613			761,538			800,744

Cash flows from investing activities:
Increase in investments and advances		(11,412	)		(23,129	)		(34,426	)
Decrease in investments and advances		13,995			14,647			19,850
Payments for purchases of available-for-sale securities		(262	)		(1,784	)		(5,642	)
Proceeds from sales of available-for-sale securities		2,739			1,879			1,347
Payments for purchases of held-to-maturity securities		(179,951	)		(26,078	)		(5,186	)
Proceeds from redemptions of held-to-maturity securities		154,977			47,193			17,005
Proceeds from sales of investments in affiliates (note 6)		71,073			9,957			—
Capital expenditures		(318,543	)		(397,218	)		(626,879	)
Proceeds from sales of property, plant and equipment		24,725			23,260			44,182
Proceeds from insurance recoveries for damaged property, plant and equipment (note 1(v))		—			16,217			9,600
Acquisitions of finance subsidiaries-receivables		(1,927,673	)		(1,784,720	)		(1,951,802	)
Collections of finance subsidiaries-receivables		1,829,097			1,765,204			1,833,669
Purchases of operating lease assets		(798,420	)		(683,767	)		(793,118	)
Proceeds from sales of operating lease assets		408,265			365,270			418,086
Other, net		—			—			3,558

Net cash used in investing activities		(731,390	)		(673,069	)		(1,069,756	)

Cash flows from financing activities:
Proceeds from short-term debt		7,465,130			6,778,336			6,775,636
Repayments of short-term debt		(7,351,461	)		(6,882,932	)		(6,621,897	)
Proceeds from long-term debt		799,520			1,151,971			1,101,469
Repayments of long-term debt		(870,406	)		(967,588	)		(970,702	)
Dividends paid (note 12)		(92,170	)		(108,138	)		(129,765	)
Dividends paid to noncontrolling interests		(16,232	)		(15,763	)		(6,250	)
Sales (purchases) of treasury stock, net		(34,797	)		(7	)		(7	)
Other, net (note 1(x))		(25,776	)		(24,109	)		(28,917	)

Net cash provided by (used in) financing activities		(126,192	)		(68,230	)		119,567

Effect of exchange rate changes on cash and cash equivalents		(79,909	)		(52,150	)		108,460

Net change in cash and cash equivalents		159,122			(31,911	)		(40,985	)

Cash and cash equivalents at beginning of year		1,119,902			1,279,024			1,247,113

Cash and cash equivalents at end of year	¥	1,279,024		¥	1,247,113		¥	1,206,128

See accompanying notes to consolidated financial statements.

F-10

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(1) General and Summary of Significant Accounting Policies

(a) Description of Business

Honda Motor Co., Ltd. (the “Company”) and its subsidiaries (collectively “Honda”) mainly develop, manufacture and distribute motorcycles, automobiles, power products, and also provide financing for the sale of those products. Principal manufacturing facilities are located in Japan, the United States of America, Canada, Mexico, the United Kingdom, Italy, China, India, Thailand, Vietnam, Indonesia, Argentina, Brazil and Turkey.

(b) Basis of Presenting Consolidated Financial Statements

The Company and its Japanese subsidiaries maintain their books of account in conformity with financial accounting standards of Japan, and its foreign subsidiaries generally maintain their books of account in conformity with those of the countries of their domicile.

The consolidated financial statements presented herein have been prepared in a manner and reflect the adjustments which are necessary to conform them with U.S. generally accepted accounting principles (U.S.GAAP).

(c) Consolidation Policy

The consolidated financial statements include the accounts of the Company, its subsidiaries and those variable interest entities where Honda is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.

Noncontrolling interests in the net assets of subsidiary are reported as a component of equity in the consolidated financial statements. Changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. Noncontrolling interests in a subsidiary’s earnings or losses are reported as a component of net income in the consolidated financial statements.

There are some subsidiaries and affiliates of which the fiscal year-end is December 31.

(d) Use of Estimates

Management of Honda has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities to prepare its consolidated financial statements in conformity with U.S. GAAP. Significant items subject to such estimates and assumptions include, but are not limited to, allowance for credit losses, losses on lease residual values, realizable values of inventories, realization of deferred tax assets, damaged and impairment losses on long-lived assets, unrecognized tax benefits, product warranty obligations, the fair values of assets and obligations related to employee benefits, and the fair value of derivative financial instruments. Further changes in the economic environment surrounding Honda, effects by market conditions, effects of currency fluctuations or other factors have combined to increase the uncertainty inherent in such estimates and assumptions. Actual results could differ from those estimates.

F-11

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(e) Revenue Recognition

Sales of manufactured products are recognized when persuasive evidence of an arrangement exists, delivery has occurred, title and risk of loss have passed to the customers, the sales price is fixed or determinable, and collectibility is probable.

Honda provides dealer incentives passed on to the end customers generally in the form of below-market interest rate loans or lease programs. The amount of interest or lease subsidies paid is the difference between the amount offered to retail customers and the amount stemmed from a market-based interest or lease rate. Honda also provides dealer incentives retained by the dealer, which generally represent discounts provided from Honda to the dealers. These incentives are classified as a reduction of sales revenue as the consideration is paid in cash, because Honda does not receive an identifiable benefit in exchange for this consideration. The incentives are estimated and accrued at the time the product is sold to the dealer.

Operating lease revenues are recorded on a straight-line basis over the term of the lease.

Interest income from finance receivables is recognized using the interest method. Finance receivable origination fees and certain direct origination costs are deferred, and the net fee or cost is amortized using the interest method over the contractual life of the finance receivables.

Taxes collected from customers and remitted to governmental authorities on revenue-producing transactions are accounted for on a net basis and therefore are excluded from revenues in the consolidated statements of income.

(f) Cash Equivalents

Honda considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash equivalents mainly consist of money market funds and certificates of deposit.

(g) Inventories

Inventories are stated at the lower of cost or market. Cost is determined principally on a first-in, first-out basis.

(h) Investments in Securities

Investments in securities consist of investment in affiliates and debt and equity securities.

Investments in affiliates in which Honda has the ability to exercise significant influence over their operating and financial policies, but where Honda does not have a controlling financial interest are accounted for using the equity method. Differences between the cost of investments in affiliates and the amount of underlying equity of the affiliates principally represent investor level goodwill.

Honda considers whether the fair value of any of its equity method investments have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable. If Honda considers any such decline to be other-than-temporary based on various factors, then a write-down will be recorded to estimated fair value.

Honda classifies its debt and marketable equity securities into the following categories: available-for-sale, trading, or held-to-maturity. Debt securities classified as “held-to-maturity” securities are reported at amortized

F-12

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

cost. Debt and marketable equity securities classified as “trading” securities are reported at fair value, with unrealized gains and losses included in earnings. Other debt and marketable equity securities are classified as “available-for-sale” securities and are reported at fair value, with unrealized gains or losses, net of deferred taxes included in accumulated other comprehensive income (loss) in the equity section of the consolidated balance sheets. The costs of available-for-sale securities sold are accounted for using the moving-average method. Honda did not hold any “trading” securities at March 31, 2012 and 2013.

Honda periodically compares the fair value of debt and marketable equity securities with their cost basis. If the fair value of the securities has declined below the cost basis and such decline is judged to be other-than-temporary, Honda recognizes the impairment of the securities through a charge to income. The determination of other-than-temporary impairment is based upon an assessment of the facts and circumstances related to each investment security. In assessing impairment of securities, Honda considers the factors such as degree and period of the decline in fair value, financial position and results of operations of investees and forecast earnings based on market and economic trend in which the investees operate. Honda did not recognize significant impairment loss on investments in securities for the years ended March 31, 2011, 2012 and 2013.

Non-marketable equity securities are carried at cost, and are examined for the possibility of impairment periodically.

(i) Goodwill

Goodwill, all of which is allocated to Honda’s reporting units, is not amortized but is tested for impairment at least annually. Honda performs its annual impairment review of goodwill at March 31, and when a triggering event occurs between annual impairment dates. For the years ended March 31, 2011, 2012 and 2013, Honda did not recognize any goodwill impairment losses.

The carrying amount of goodwill at March 31, 2012 and 2013 was ¥10,426 million and ¥10,296 million, respectively and is included in other assets of the consolidated balance sheets.

(j) Property on Operating Leases

Property on operating leases is reported at cost, less accumulated depreciation. Depreciation of vehicles is generally provided on a straight-line basis to an estimated residual value over the lease term. The residual values of the vehicles related to operating leases are estimated by using the estimate of future used vehicle values, taking into consideration data obtained from third parties.

(k) Depreciation and Amortization

Depreciation of property, plant and equipment is calculated principally by the straight line method based on estimated useful lives and salvage values of the respective assets.

The estimated useful lives used in computing depreciation and amortization of property, plant and equipment are as follows:


Asset	Life
Buildings		3 to 50 years
Machinery and equipment		2 to 20 years

F-13

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Previously, Honda used principally the declining-balance method for calculating the depreciation of property, plant and equipment. In recent years, because sales of global strategic product models are increasing, Honda has been enhancing its production systems and the versatility of production equipment to have better flexibility to meet changes in global customer demand. Further, Honda has resumed more normalized capital expenditures which Honda had previously held down due to the financial crisis beginning in the fiscal year ended March 31, 2009. Effective April 1, 2012, Honda changed to the straight line method of depreciation because management believes it better reflects the future economic benefit from the usage of property, plant and equipment under this more flexible and versatile production arrangement. The effect of the change in depreciation method is recognized prospectively as a change in accounting estimate in accordance with the FASB Accounting Standards Codification (ASC) 250 “Accounting Changes and Error Corrections”.

As a result of the change in depreciation method, depreciation expense for the year ended March 31, 2013 decreased by approximately ¥56,300 million. Net income attributable to Honda Motor Co., Ltd. and Basic net income attributable to Honda Motor Co., Ltd. per common share for the year ended March 31, 2013 increased by approximately ¥35,746 million and ¥19.83, respectively.

(l) Impairment of Long-Lived Assets to Be Held and Used and Long-Lived Assets to Be Disposed of

Honda’s long-lived assets and identifiable intangible assets other than goodwill having finite useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows (undiscounted and without interest charges) expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Honda did not recognize any significant impairment losses on long-lived assets, excluding property on operating leases for the years ended March 31, 2011, 2012 and 2013.

Assets to be disposed of by sale are reported at the lower of the carrying amount or estimated fair value less costs to sell.

(m) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date.

Honda recognizes in the consolidated financial statements the impact of a tax position, if any, based on the technical merits of the position, when that position is more likely than not to be sustained upon examination. Benefits from tax positions that meet the more likely than not recognition threshold are measured at the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. Honda accounts for interest and penalties related to the liability for unrecognized tax benefits as a component of income tax expense in the consolidated statements of income.

(n) Product-Related Expenses

Advertising and sales promotion costs are expensed as incurred. Advertising expenses were ¥210,803 million, ¥195,284 million and ¥254,016 million, for the years ended March 31, 2011, 2012 and 2013,

F-14

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

respectively. Provisions for estimated costs related to product warranty are made at the time the products are sold to customers or new warranty programs are initiated. Estimated warranty expenses are provided based on historical warranty claim experience with consideration given to the expected level of future warranty costs as well as current information on repair costs. Included in warranty expenses accruals are costs for general warranties on vehicles Honda sells and product recalls.

(o) Basic Net Income Attributable to Honda Motor Co., Ltd. per Common Share

Basic net income attributable to Honda Motor Co., Ltd. per common share has been computed by dividing net income attributable to Honda Motor Co., Ltd. by the weighted average number of common shares outstanding during each year. The weighted average number of common shares outstanding for the years ended March 31, 2011, 2012 and 2013 was 1,806,360,505 shares, 1,802,300,720 shares and 1,802,298,819 shares, respectively. There were no potentially dilutive shares outstanding during the years ended March 31, 2011, 2012 or 2013.

(p) Foreign Currency Translation and Transactions

Foreign currency financial statement amounts are translated into Japanese yen on the basis of the year-end exchange rate for all assets and liabilities and the weighted average rate for the year for all income and expense amounts. The resulting translation adjustments are included in accumulated other comprehensive income (loss) in the equity section of the consolidated balance sheets.

All revenues and expenses associated with foreign currencies are converted at the rates of exchange prevailing when such transactions occur and foreign currency receivables and payables are re-measured at the applicable exchange rates on the balance sheet date. Foreign currency translation and transaction gains or losses are included in other income (expenses)-other, net and these net gains or losses for each of the years in the three-year period ended March 31, 2013 are as follows:


Yen (millions)
2011	2012	2013
¥ (60,514)	¥ 4,563	¥ 36,794

The gains or losses on translation of receivables and payables dominated in foreign currencies intended to be hedged are presented on a net basis with derivative financial instruments (note 17).

(q) Derivative Financial Instruments

Honda has entered into foreign exchange agreements and interest rate agreements to manage currency and interest rate exposures. These instruments include foreign currency forward contracts, currency swap agreements, currency option contracts and interest rate swap agreements (notes 16 and 17).

Honda recognizes all derivative financial instruments at fair value in its consolidated balance sheets. Derivative asset and liability positions are presented net by counterparty on the consolidated balance sheets when valid master netting agreements exist and the other conditions set out in the FASB Accounting Standards Codification (ASC) 210-20 “Balance Sheet-Offsetting” are met.

The Company applies hedge accounting for certain foreign currency forward contracts related to forecasted foreign currency transactions between the Company and its subsidiaries. These are designated as cash flow hedges on the date derivative contracts are entered into. The Company has a documented currency rate risk

F-15

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

management policy. In addition, it documents all relationships between derivative financial instruments designated as cash flow hedges and the relevant hedged items to identify the relationship between them. The Company assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative financial instruments designated as cash flow hedge are highly effective to offset changes in cash flows of hedged items.

When it is determined that a derivative financial instrument is not highly effective as a cash flow hedge, when the hedged item matures, is sold or is terminated, or when it is identified that the forecasted transaction is no longer probable, the Company discontinues hedge accounting. To the extent derivative financial instruments are designated as cash flow hedges and have been assessed as being highly effective, changes in their fair value are recognized in other comprehensive income (loss). The amounts are reclassified into earnings in the period when forecasted hedged transactions affect earnings. When these cash flow hedges prove to be ineffective, changes in the fair value of the derivatives are immediately recognized in earnings.

Changes in the fair value of derivative financial instruments not designated as accounting hedges are recognized in earnings in the period of the change.

Honda does not hold any derivative financial instruments for trading purposes.

(r) Shipping and Handling Costs

Shipping and handling costs included in selling, general and administrative expenses for each of the years in the three-year period ended March 31, 2013 are as follows:


Yen (millions)
2011	2012	2013
¥ 160,773	¥ 155,276	¥ 160,843

(s) Asset Retirement Liability

Honda recognizes an asset retirement liability if the fair value of the obligation can be reasonably estimated. Asset retirement obligations include those for which an entity has a legal obligation to perform an asset retirement activity, however, the timing and (or) method of settling the obligation are conditional on a future event that may or may not be within the control of the entity.

(t) Adoption of New Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-05 “Presentation of Comprehensive Income”, which amends the FASB Accounting Standards Codification (ASC) 220 “Comprehensive Income”. This amendment requires reporting entities to report other comprehensive income as components of comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements and is effective retrospectively.

In December 2011, the FASB issued ASU 2011-12 “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05”, which defers the effective date of pending amendments to current accounting guidance prescribed in ASU 2011-05.

Honda adopted ASU 2011-05 as amended by ASU 2011-12, effective April 1, 2012, and discloses consolidated statements of comprehensive income as two separate but consecutive statements.

F-16

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(u) Impact on the Company’s Consolidated Financial Position or Results of Operations of the Great East Japan Earthquake Occurred on March 11, 2011

As a result of the Great East Japan Earthquake on March 11, 2011, the Company and its domestic consolidated subsidiaries recognized ¥45,720 million of costs and expenses, of which ¥17,450 million is included in cost of sales and ¥28,270 million is included in selling, general and administrative expenses in the accompanying consolidated statement of income for the year ended March 31, 2011. These costs and expenses mainly consist of unallocated fixed production overhead of ¥15,062 million caused by temporary suspension of production which is included in cost of sales, and loss on damaged property, plant and equipment of ¥15,647 million which is included in selling, general and administrative expenses. Fixed costs of ¥7,723 million pertaining to certain R&D activities incurred during the period such activities were suspended are not included in research and development, but selling, general and administrative expenses.

The costs of restoration activities amounted to ¥19,797 million and ¥11,056 million are included in selling, general and administrative expenses in the accompanying consolidated statements of income for the years ended March 31, 2012 and 2013, respectively.

(v) Impact on the Company’s Consolidated Financial Position or Results of Operations of the Floods in Thailand

In October 2011, Thailand suffered from severe floods that caused damage to inventories, and machinery and equipment of certain consolidated subsidiaries and affiliates of the Company. Accordingly, production activities in plant facilities at Honda and its affiliates had been temporarily affected by the floods for the year ended March 31, 2012.

Honda recognized ¥23,420 million of costs and expenses, of which ¥10,680 million is included in cost of sales and ¥12,740 million is included in selling, general and administrative expenses in the accompanying consolidated statements of income for the year ended March 31, 2012. These costs and expenses mainly consist of losses on damaged inventories of ¥7,330 million which is included in cost of sales, and losses on damaged property, plant and equipment of ¥7,654 million which is included in selling, general and administrative expenses.

In addition, Honda recognized insurance recoveries of ¥21,725 million and ¥16,278 million for the years ended March 31, 2012 and 2013, respectively, which are included in selling, general and administrative expenses in the accompanying consolidated statements of income. Honda recognizes insurance recoveries in excess of the incurred losses when settlements with insurance companies are reached.

(w) Immaterial Corrections of the Prior Years’ Consolidated Balance Sheets and Consolidated Statements of Changes in Equity

Honda corrected its attribution method used to calculate the projected benefit obligation for certain pension plans, which resulted in an increase in other liabilities for prior fiscal years. Cumulative effect adjustments have been made as of April 1, 2010, the earliest period presented, to increase other liabilities by ¥17,228 million and to decrease retained earnings by ¥10,388 million, net of tax. Honda believes that the effects of this correction were inconsequential to the Company’s consolidated financial statements for the fiscal years ended March 31, 2011 and 2012, therefore, no other adjustments were made to those consolidated financial statements.

(x) Immaterial Corrections of the Prior Years’ Consolidated Statements of Cash Flows

Adjustments have been made to correct previous immaterial understatements in both depreciation excluding property on operating leases, which is included in cash flows from operating activities, and payments of other

F-17

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

debt, which is included in Other, net in cash flows from financing activities, in the consolidated statements of cash flows for the years ended March 31, 2011 and 2012. These adjustments increased previously reported net cash provided by operating activities and increased previously reported net cash used in financing activities by ¥25,776 million for the year ended March 31, 2011 and ¥24,109 million for the year ended March 31, 2012.

(2) Finance Income and Related Costs of Finance Subsidiaries

Net sales and other operating revenue and cost of sales include finance income and related costs of finance subsidiaries for each of the years in the three-year period ended March 31, 2013 as follows:


	Yen (millions)
	2011		2012		2013
Finance income	¥	573,458	¥	526,576	¥	560,256
Finance costs		309,850		293,216		336,203

(3) Finance Receivables

The finance subsidiaries of the Company provide retail lending and leasing to customers and wholesale financing to dealers primarily to support sales of our products. Honda classifies retail and direct financing lease receivables (consumer finance receivables) derived from those services as finance subsidiaries-receivables. Operating leases are classified as property on operating leases. Certain finance receivables related to sales of inventory are included in trade accounts and notes receivable and other assets in the consolidated balance sheets. Receivables on past due operating lease rental payments are included in other current assets in the consolidated balance sheets.

Finance subsidiaries-receivables, net, consisted of the following at March 31, 2012 and 2013:


	Yen (millions)
	2012		2013
Retail	¥	3,328,140	¥	3,865,430
Direct financing lease		380,339		448,672
Wholesale flooring		265,644		389,562
Commercial loans		35,678		42,433

Total finance receivables		4,009,801		4,746,097
Less:
Allowance for credit losses		23,049		19,716
Allowance for losses on lease residual values		5,366		3,354
Unearned interest income and fees		16,951		18,697

		3,964,435		4,704,330
Less:
Finance receivables included in trade accounts and notes receivables, net		334,044		461,450
Finance receivables included in other assets, net		184,277		211,743

Finance subsidiaries-receivables, net		3,446,114		4,031,137
Less current portion		1,081,721		1,243,002

Noncurrent finance subsidiaries-receivables, net	¥	2,364,393	¥	2,788,135

F-18

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Allowance for credit losses

The majority of the credit risk is with consumer financing and to a lesser extent with dealer financing. Credit risk is affected by general economic conditions. The allowance for credit losses is management’s estimate of probable losses incurred on finance receivables.

Consumer finance receivables consist of a large number of smaller-balance homogenous loans and leases and are collectively evaluated for impairment. The finance subsidiaries of the Company utilize various methodologies when estimating the allowance for credit losses including models that incorporate vintage loss and delinquency migration analysis. The models take into consideration attributes of the portfolio including loan-to-value ratios, internal and external credit scores, and collateral types. Economic factors such as used vehicle prices, unemployment rates, and consumer debt service burdens are also incorporated when estimating losses.

Wholesale receivables are considered to be impaired when it is probable that the finance subsidiaries of the Company will be unable to collect all amounts due according to the original terms of the contract. Wholesale receivables are evaluated for impairment on an individual dealer basis. Ongoing evaluations of dealerships are performed to determine whether there is evidence of impairment. Factors can include payment performance, overall dealership financial performance, or known difficulties experienced by the dealership.

Honda regularly reviews the adequacy of the allowance for credit losses. The estimates are based on information available as of each reporting date. However, actual losses may differ from the original estimates as a result of actual results varying from those assumed in our estimates with inherently uncertain items.

The following tables present the changes in the allowance for credit losses on finance receivables for the years ended March 31, 2012 and 2013.


	Yen (millions)
For the year ended March 31, 2012	Retail			Direct financing lease			Wholesale			Total
Balance at beginning of year	¥	25,578		¥	1,455		¥	1,404		¥	28,437
Provision		10,386			333			95			10,814
Charge-offs		(21,163	)		(726	)		(75	)		(21,964	)
Recoveries		6,671			134			5			6,810
Adjustments from foreign currency translation		(975	)		(45	)		(28	)		(1,048	)

Balance at end of year	¥	20,497		¥	1,151		¥	1,401		¥	23,049


	Yen (millions)
For the year ended March 31, 2013	Retail			Direct financing lease			Wholesale			Total
Balance at beginning of year	¥	20,497		¥	1,151		¥	1,401		¥	23,049
Provision		8,707			392			59			9,158
Charge-offs		(20,838	)		(940	)		(289	)		(22,067	)
Recoveries		8,143			117			16			8,276
Adjustments from foreign currency translation		1,134			69			97			1,300

Balance at end of year	¥	17,643		¥	789		¥	1,284		¥	19,716

In the finance subsidiaries of the Company in North America, retail and direct financing lease receivables are charged off when they become 120 days past due or earlier if they have been specifically identified as uncollectible. Wholesale receivables are charged off when they have been individually identified as

F-19

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

uncollectible. In the finance subsidiaries of the Company in other areas except for North America, finance receivables are charged off when they have been identified as substantially uncollectible according to the internal standards of each subsidiary.

Allowance for losses on lease residual values

Finance subsidiaries of the Company purchase insurance to cover a substantial amount of the estimated residual value of vehicles leased as direct financing leases to customers. The allowance for losses on lease residual values is maintained at an amount management deems adequate to cover estimated losses on the uninsured portion of the vehicles’ lease residual values. The allowance is also based on management’s evaluation of many factors, including current economic conditions, industry experience and the finance subsidiaries’ historical experience with residual value losses.

Delinquencies

In the finance subsidiaries of the Company in North America, retail and direct financing lease receivables are considered delinquent if more than 10% of a monthly scheduled payment is contractually past due on a cumulative basis. Wholesale receivables are considered delinquent when any principal payments are past due. In the finance subsidiaries of the Company in other areas except for North America, finance receivables are considered delinquent when any principal payments are past due.

The following tables present an age analysis of past due finance receivables at March 31, 2012 and 2013.


	Yen (millions)
As of March 31, 2012	30-59 days past due		60-89 days past due		90 days and greater past due		Total past due		Current*		Total finance receivables
Retail
New auto	¥	10,027	¥	1,359	¥	2,832	¥	14,218	¥	2,752,386	¥	2,766,604
Used & certified auto		4,250		553		354		5,157		414,365		419,522
Others		1,200		474		963		2,637		139,377		142,014

Total retail		15,477		2,386		4,149		22,012		3,306,128		3,328,140
Direct financing lease		1,050		171		893		2,114		378,225		380,339
Wholesale
Wholesale flooring		15		15		253		283		265,361		265,644
Commercial loans		—		—		—		—		35,678		35,678

Total wholesale		15		15		253		283		301,039		301,322

Total finance receivables	¥	16,542	¥	2,572	¥	5,295	¥	24,409	¥	3,985,392	¥	4,009,801

F-20

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)


	Yen (millions)
As of March 31, 2013	30-59 days past due		60-89 days past due		90 days and greater past due		Total past due		Current*		Total finance receivables
Retail
New auto	¥	12,947	¥	1,805	¥	2,607	¥	17,359	¥	3,247,241	¥	3,264,600
Used & certified auto		5,064		643		276		5,983		434,183		440,166
Others		1,213		419		1,353		2,985		157,679		160,664

Total retail		19,224		2,867		4,236		26,327		3,839,103		3,865,430
Direct financing lease		966		161		1,644		2,771		445,901		448,672
Wholesale
Wholesale flooring		205		67		311		583		388,979		389,562
Commercial loans		—		—		—		—		42,433		42,433

Total wholesale		205		67		311		583		431,412		431,995

Total finance receivables	¥	20,395	¥	3,095	¥	6,191	¥	29,681	¥	4,716,416	¥	4,746,097

*	Includes recorded investment of finance receivables that are less than 30 days past due.

Credit quality indicators

The collection experience of consumer finance receivables provides an indication of the credit quality of consumer finance receivables. The likelihood of accounts charging off becomes significantly higher once an account becomes 60 days delinquent. The table below segments the Company’s portfolio of consumer finance receivables between groups the Company considers to be performing and nonperforming. Accounts that are delinquent for 60 days or greater are included in the nonperforming group and all other accounts are considered to be performing.

The following tables present the balances of consumer finance receivables by this credit quality indicator at March 31, 2012 and 2013.


	Yen (millions)
As of March 31, 2012	Performing		Nonperforming		Total consumer finance receivables
Retail
New auto	¥	2,762,413	¥	4,191	¥	2,766,604
Used & certified auto		418,615		907		419,522
Others		140,577		1,437		142,014

Total retail		3,321,605		6,535		3,328,140

Direct financing lease		379,275		1,064		380,339

Total	¥	3,700,880	¥	7,599	¥	3,708,479

F-21

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)


	Yen (millions)
As of March 31, 2013	Performing		Nonperforming		Total consumer finance receivables
Retail
New auto	¥	3,260,188	¥	4,412	¥	3,264,600
Used & certified auto		439,247		919		440,166
Others		158,892		1,772		160,664

Total retail		3,858,327		7,103		3,865,430

Direct financing lease		446,867		1,805		448,672

Total	¥	4,305,194	¥	8,908	¥	4,314,102

A credit quality indicator for wholesale receivables is the internal risk ratings for the dealerships. Dealerships are assigned an internal risk rating based primarily on their financial condition. At a minimum, risk ratings for dealerships are updated annually and more frequently for dealerships with weaker risk ratings. The table below presents outstanding wholesale receivables balances by the internal risk rating group. Group A includes the loans of dealerships with the highest credit quality characteristics in the strongest risk rating tier. Group B includes the loans of all remaining dealers and are considered to have weaker credit quality characteristics. Although the likelihood of losses can be higher for dealerships in Group B, the overall risk of losses is not considered to be significant.

The following tables present the balances of wholesale receivables by this credit quality indicator at March 31, 2012 and 2013.


	Yen (millions)
As of March 31, 2012	Group A		Group B		Total
Wholesale
Wholesale flooring	¥	150,473	¥	115,171	¥	265,644
Commercial loans		18,306		17,372		35,678

Total	¥	168,779	¥	132,543	¥	301,322


	Yen (millions)
As of March 31, 2013	Group A		Group B		Total
Wholesale
Wholesale flooring	¥	236,203	¥	153,359	¥	389,562
Commercial loans		24,198		18,235		42,433

Total	¥	260,401	¥	171,594	¥	431,995

F-22

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Contractual maturities

The following schedule shows the contractual maturities of finance receivables for each of the five years following March 31, 2013 and thereafter:


Years ending March 31	Yen (millions)
2014	¥	1,729,858

2015		1,127,205
2016		893,474
2017		608,167
2018		282,082
After five years		105,311

		3,016,239

Total	¥	4,746,097

Other finance receivables

Except for the finance subsidiaries-receivables, the other finance receivables about which credit quality information and the allowance for credit losses are required to be disclosed by the FASB Accounting Standards Codification (ASC) 310 “Receivables” of ¥48,544 million and ¥37,274 million are included in other current assets, investments and advances-other and other assets in the consolidated balance sheets at March 31, 2012 and 2013, respectively. Honda estimates, individually, the collectibility of the other finance receivables based on the financial condition of the debtor. The impaired finance receivables amounted to ¥20,320 million and ¥19,562 million at March 31, 2012 and 2013, respectively, for which the allowance for credit losses were ¥20,299 million and ¥19,541 million at March 31, 2012 and 2013, respectively.

Regarding the other finance receivables which are not impaired, there are no past due receivables.

(4) Variable Interest Entities

Honda considers its involvement with a variable interest entity (VIE) under the FASB Accounting Standards Codification (ASC) 810 “Consolidation”. This standard prescribes that the reporting entity shall consolidate a VIE as its primary beneficiary when it is deemed to have a controlling financial interest in a VIE, meeting both of the following characteristics:

(a)

The power to direct the activities of a VIE that most significantly impact the VIE’s economic performance.

(b)

The obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The finance subsidiaries of the Company periodically securitize for liquidity and funding purposes and transfer finance receivables to the trust which is newly established to issue asset-backed securities. The finance subsidiaries of the Company are deemed to have the power to direct the activities of these trusts that most significantly impact the trusts’ economic performance, as they retain servicing rights in all securitizations, and manage delinquencies and defaults of the underlying receivables. Furthermore, the finance subsidiaries of the Company are deemed to have the obligation to absorb losses of these trusts that could potentially be significant to these trusts, as they would absorb the majority of the expected losses of these trusts by retaining certain subordinated interests of these trusts. Therefore, the Company has consolidated these trusts, as it is deemed to have controlling financial interests in these trusts.

F-23

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The following table presents the balances of the assets and liabilities of consolidated VIEs at March 31, 2012 and 2013.


	Yen (millions)
	2012		2013
Finance subsidiaries-receivables, net	¥	562,947	¥	713,631
Restricted cash*¹		17,486		20,885
Other assets		1,367		1,545

Total assets	¥	581,800	¥	736,061

Secured debt*²	¥	563,460	¥	718,980
Other liabilities		255		237

Total liabilities	¥	563,715	¥	719,217

*¹	Restricted cash as collateral for the payment of the related secured debt obligation is included in other current assets and investment and advances-other on the consolidated balance sheets.

*²	Secured debt is included in short-term and long-term debt on the consolidated balance sheets.

The creditors of these trusts do not have recourse to the finance subsidiaries’ general credit with the exception of representations and warranties customary in the industry provided by the finance subsidiaries to these trusts.

There is no VIE in which Honda holds a significant variable interest but is not the primary beneficiary as of March 31, 2012 and 2013.

(5) Inventories

Inventories at March 31, 2012 and 2013 are summarized as follows:


	Yen (millions)
	2012		2013
Finished goods	¥	603,721	¥	726,034
Work in process		44,891		53,035
Raw materials		387,167		436,352

	¥	1,035,779	¥	1,215,421

(6) Investments in and Advances to Affiliates

The difference between the carrying amount of investments in affiliates and the amount of underlying equity is mainly investor level goodwill. The amounts are not material as of March 31, 2012 and 2013.

Investments in affiliates include equity securities which have quoted market values at March 31, 2012 and 2013 compared with related carrying amounts as follows:


	Yen (millions)
	2012		2013
Carrying amounts	¥	182,770	¥	175,420
Market values		191,870		220,221

F-24

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

For the year ended March 31, 2013, Honda recognized impairment losses of ¥12,757 million, net of tax, on certain investments in affiliates which have quoted market values because of other-than-temporary declines in fair values below their carrying values. The fair values of the investments were based on quoted market prices. The impairment losses are included in equity in income of affiliates in the accompanying consolidated statement of income.

Certain combined financial information in respect of affiliates accounted for under the equity method at March 31, 2012 and 2013, and for each of the years in the three-year period ended March 31, 2013 is shown below (note 21):


	Yen (millions)
As of March 31, 2012	Motorcycle Business		Automobile Business		Power Product and Other Businesses		Total
Current assets	¥	216,751	¥	1,338,679	¥	20,718	¥	1,576,148
Other assets, principally property, plant and equipment		108,971		1,012,363		26,328		1,147,662

Total assets		325,722		2,351,042		47,046		2,723,810

Current liabilities		134,395		1,005,935		7,253		1,147,583
Other liabilities		7,969		223,095		5,911		236,975

Total liabilities		142,364		1,229,030		13,164		1,384,558

Equity	¥	183,358	¥	1,122,012	¥	33,882	¥	1,339,252


	Yen (millions)
As of March 31, 2013	Motorcycle Business		Automobile Business		Power Product and Other Businesses		Total
Current assets	¥	228,358	¥	1,335,075	¥	25,438	¥	1,588,871
Other assets, principally property, plant and equipment		134,901		1,137,654		27,219		1,299,774

Total assets		363,259		2,472,729		52,657		2,888,645

Current liabilities		149,033		1,013,565		8,358		1,170,956
Other liabilities		10,075		242,194		2,979		255,248

Total liabilities		159,108		1,255,759		11,337		1,426,204

Equity	¥	204,151	¥	1,216,970	¥	41,320	¥	1,462,441


	Yen (millions)
For the year ended March 31, 2011	Motorcycle Business		Automobile Business		Power Product and Other Businesses			Total
Net sales	¥	1,189,024	¥	3,857,890	¥	24,572		¥	5,071,486
Net income (loss) attributable to Honda’s affiliates		104,790		253,468		(1,436	)		356,822


	Yen (millions)
For the year ended March 31, 2012	Motorcycle Business		Automobile Business		Power Product and Other Businesses		Total
Net sales	¥	888,914	¥	3,579,019	¥	23,934	¥	4,491,867
Net income attributable to Honda’s affiliates		72,168		177,309		1,516		250,993

F-25

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)


	Yen (millions)
For the year ended March 31, 2013	Motorcycle Business		Automobile Business		Power Product and Other Businesses		Total
Net sales	¥	891,343	¥	3,876,766	¥	25,918	¥	4,794,027
Net income attributable to Honda’s affiliates		60,586		162,037		1,717		224,340

Significant investments in affiliates accounted for under the equity method at March 31, 2012 and 2013 are shown below:


Business	Company	Percentage ownership
Motorcycle	P.T. Astra Honda Motor		50.0	%
Automobile	Guangqi Honda Automobile Co., Ltd.		50.0	%
	Dongfeng Honda Automobile Co., Ltd.		50.0	%
	Dongfeng Honda Engine Co., Ltd.		50.0	%

On March 22, 2011, Honda sold its investment in Hero Honda Motors Ltd. (HHML) with a book value of ¥34,275 million, which represented 26.0% of HHML’s total outstanding shares, to its joint venture partner for ¥71,073 million cash consideration. In conjunction with the sale, the joint venture agreement with the partner was dissolved. In addition, Honda and HHML entered into a new licensing agreement that enables HHML to continue producing, selling and servicing its current products. Consideration for the licensing agreement was ¥45,000 million, and will be paid by installments due through 2014. Total consideration received less interest, including the fair value attributable to the termination of certain obligations under the joint venture agreement, was allocated to each element using the relative selling price method in accordance with the FASB Accounting Standards Codification (ASC) 605 “Revenue Recognition”. As a result, the Company recognized revenue of ¥32,015 million related to the new licensing agreement in Net sales and other operating revenue, and a gain on sale of the investment of ¥46,756 million in Other income (expense) – Other, net in the consolidated statements of income.

There are no equity method affiliates that are in Financial services business.

Sales to affiliates by the Company and its subsidiaries and sales among such affiliates are made on the same basis as sales to unaffiliated parties.

Honda’s equity in undistributed income of affiliates at March 31, 2012 and 2013 included in retained earnings was ¥380,271 million and ¥376,888 million, respectively.

Trade receivables and trade payables include the following balances with affiliates at March 31, 2012 and 2013, and purchases and sales include the following transactions with affiliates for each of the years in the three-year period ended March 31, 2013. Honda mainly purchases materials, supplies and services from affiliates, and sells finished goods, parts used in its products, equipment and services to affiliates.


	Yen (millions)
	2012		2013
Amounts due from	¥	176,255	¥	160,470
Amounts due to		142,490		97,958

F-26

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)


	Yen (millions)
	2011		2012		2013
Purchases from	¥	806,744	¥	762,415	¥	789,261
Sales to		617,603		561,426		636,299

(7) Investments and Advances-Other

Investments and advances at March 31, 2012 and 2013 consist of the following:


	Yen (millions)
	2012		2013
Current
Corporate debt securities	¥	1,404	¥	1,553
U.S. government agency debt securities		822		—
Advances		824		926
Certificates of deposit		1,509		1,550
Other		—		10,846

Total	¥	4,559	¥	14,875

Investments and advances due within one year are included in other current assets in the consolidated balance sheets.


	Yen (millions)
	2012		2013
Noncurrent
Auction rate securities	¥	6,651	¥	6,928
Marketable equity securities		100,829		117,110
Government bonds		1,999		2,000
U.S. government agency debt securities		10,913		1,068
Non-marketable equity securities accounted for under the cost method
Non-marketable preferred stocks		969		969
Other		11,697		10,780
Guaranty deposits		21,679		20,210
Advances		1,276		2,132
Other		32,850		48,483

Total	¥	188,863	¥	209,680

F-27

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Certain information with respect to available-for-sale securities and held-to-maturity securities at March 31, 2012 and 2013 is summarized below:


	Yen (millions)
	2012		2013
Available-for-sale
Cost	¥	44,818	¥	49,990
Fair value		107,480		128,848
Gross unrealized gains		64,704		80,453
Gross unrealized losses		2,042		1,595

Held-to-maturity*
Amortized cost	¥	26,693	¥	16,511
Fair value		26,757		16,556
Gross unrealized gains		84		45
Gross unrealized losses		20		—

*	The amounts of amortized cost and fair value related to held-to-maturity securities at March 31, 2012 have been revised from the amounts previously disclosed.

Maturities of debt securities classified as held-to-maturity at March 31, 2013 are as follows:


	Yen (millions)
Due within one year	¥	3,103
Due after one year through five years		2,037
Due after five years through ten years		9,405
Due after ten years		1,966

Total	¥	16,511

There were no significant realized gains and losses from available-for-sale securities included in other income (expenses) – other, net for the years ended March 31, 2011, 2012 and 2013.

Gross unrealized losses on available-for-sale securities and fair value of the related securities, aggregated by length of time that individual securities have been in a continuous unrealized loss position at March 31, 2013 are as follows:


	Yen (millions)
	Fair value		Unrealized losses
Available-for-sale
Less than 12 months	¥	8,778	¥	192
12 months or longer		8,753		1,403

	¥	17,531	¥	1,595

There were no held-to-maturity securities in a loss position at March 31, 2013.

F-28

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Honda does not believe the decline in fair value of any of its investment securities to be other than temporary, based on factors such as financial and operating conditions of the issuer, the industry in which the issuer operates, degree and period of the decline in fair value and other relevant factors.

(8) Property on Operating Leases

Future minimum lease rentals expected to be received from property on operating leases at March 31, 2013 are as follows:


Years ending March 31	Yen (millions)
2014	¥	311,700
2015		200,696
2016		65,449
2017		2,634
2018		564

Total future minimum lease rentals	¥	581,043

Future minimum rentals as shown above should not necessarily be considered indicative of future cash collections.

(9) Short-term and Long-term Debt

Short-term debt at March 31, 2012 and 2013 is as follows:


	Yen (millions)
	2012		2013
Short-term bank loans	¥	282,238	¥	347,842
Asset backed notes		49,636		37,448
Medium-term notes		141,033		159,963
Commercial paper		491,941		693,044

	¥	964,848	¥	1,238,297

The weighted average interest rates on short-term debt outstanding at March 31, 2012 and 2013 were 0.88% and 0.86%, respectively.

F-29

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Long-term debt at March 31, 2012 and 2013 is as follows:


	Yen (millions)
	2012		2013
Honda Motor Co., Ltd.:
Loans, maturing through 2031:
Unsecured, principally from banks	¥	198	¥	160
0.76% Japanese yen unsecured bond due 2012		70,000		—

		70,198		160
Subsidiaries:
Loans, maturing through 2029:
Secured, principally from banks		14,746		15,830
Unsecured, principally from banks		897,769		1,043,857
Asset backed notes, maturing through 2016		511,384		681,020
1.48% Japanese yen unsecured bond due 2012		30,000		—
0.49% Japanese yen unsecured bond due 2012		20,000		—
1.31% Japanese yen unsecured bond due 2013		40,000		40,000
1.05% Japanese yen unsecured bond due 2014		30,000		30,000
0.56% Japanese yen unsecured bond due 2015		30,000		30,000
0.59% Japanese yen unsecured bond due 2015		30,000		30,000
0.47% Japanese yen unsecured bond due 2016		40,000		40,000
0.48% Japanese yen unsecured bond due 2017		40,000		40,000
0.37% Japanese yen unsecured bond due 2017		—		30,000
0.35% Japanese yen unsecured bond due 2017		—		35,000
0.27% Japanese yen unsecured bond due 2018		—		30,000
0.59% Japanese yen unsecured bond due 2019		—		10,000
0.56% Japanese yen unsecured bond due 2019		—		15,000
0.55% Japanese yen unsecured bond due 2020		—		10,000
Medium-term notes, maturing through 2023		1,397,532		1,580,951
Less unamortized discount, net		5,233		5,927

		3,076,198		3,655,731

Total long-term debt		3,146,396		3,655,891
Less current portion		911,395		945,046

Total long-term debt, excluding current portion	¥	2,235,001	¥	2,710,845

Pledged assets at March 31, 2012 and 2013 are as follows:


	Yen (millions)
	2012		2013
Trade accounts and notes receivable	¥	10,119	¥	12,422
Inventories		3,289		11,154
Property, plant and equipment		22,102		26,169
Finance subsidiaries-receivables		570,655		724,399

Certain loans are secured by trade accounts and notes receivable, inventories and property, plant and equipment presented above and subject to collateralization upon request, and their interest rates range from

F-30

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

0.37% to 13.96% per annum at March 31, 2013 and weighted average interest rates on total outstanding long-term debt at March 31, 2012 and 2013 were 2.10% and 1.82%, respectively. Asset backed notes are secured by finance subsidiaries-receivables, and their weighted average interest rates at March 31, 2012 and 2013 were 1.18% and 0.89%, respectively. Medium-term notes are unsecured, and their interest rates range from 0.49% to 5.51% at March 31, 2012 and from 0.38% to 5.03% at March 31, 2013.

The following schedule shows the maturities of long-term debt for each of the five years following March 31, 2013 and thereafter:


Years ending March 31	Yen (millions)
2014	¥	945,046

2015		967,704
2016		679,173
2017		536,391
2018		329,334
After five years		198,243

		2,710,845

Total	¥	3,655,891

Certain of the Company’s subsidiaries have entered into currency swap and interest rate swap agreements for hedging currency and interest rate exposures resulting from the issuance of long-term debt. Fair value of contracts related to currency swaps and interest rate swaps is included in other assets and other current assets and/or liabilities in the consolidated balance sheets, as appropriate (notes 16 and 17).

At March 31, 2013, Honda had unused line of credit facilities amounting to ¥2,279,547 million, of which ¥518,334 million related to commercial paper programs and ¥1,761,213 million related to medium-term notes programs. Honda is authorized to obtain financing at prevailing interest rates under these programs.

At March 31, 2013, the Company and its finance subsidiaries also had committed lines of unused credit amounting to ¥814,061 million. Within these lines, the unused committed lines supporting the commercial paper programs are ¥805,610 million. Borrowings under those committed lines of credit generally are available at the prime interest rate.

As is customary in Japan, both short-term and long-term bank loans are made under general agreements which provide that security and guarantees for present and future indebtedness will be given upon request of the bank, and that the bank shall have the right to offset cash deposits against obligations that have become due or, in the event of default, against all obligations due to the bank. Certain debenture trust agreements provide that Honda must give additional security upon request of the trustee.

F-31

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(10) Other Liabilities

Other liabilities at March 31, 2012 and 2013 consist of the following:


	Yen (millions)
	2012		2013
Accrued liabilities for product warranty, excluding current portion	¥	89,738	¥	104,584
Pension and other postretirement benefits*		591,486		622,462
Deferred income taxes		526,299		615,879
Other		247,414		287,160

	¥	1,454,937	¥	1,630,085

*	The amount at March 31, 2012 has been corrected from the amount previously disclosed, see note 1(w).

(11) Income Taxes

Total income tax expense (benefit) for each of the years in the three-year period ended March 31, 2013 are allocated as follows:


	Yen (millions)
	2011			2012			2013
Income from continuing operations	¥	206,827		¥	135,735		¥	178,976
Other comprehensive income (loss) (note 15)		(4,869	)		(20,701	)		252

	¥	201,958		¥	115,034		¥	179,228

Income (loss) before income taxes and equity in income of affiliates by Japanese and foreign source for each of the years in the three-year period ended March 31, 2013 consisted of the following:


	Yen (millions)
	2011		2012			2013
Income (loss) before income taxes
Japanese	¥	115,740	¥	(125,787	)	¥	50,450
Foreign		514,808		383,190			438,441

	¥	630,548	¥	257,403		¥	488,891

F-32

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Income tax expense (benefit) for each of the years in the three-year period ended March 31, 2013 consisted of the following:


	Yen (millions)
	2011			2012			2013
Income taxes
Current
Japanese	¥	(52,701	)	¥	8,136		¥	(3,666	)
Foreign		129,348			77,938			129,390

	¥	76,647		¥	86,074		¥	125,724

Deferred
Japanese	¥	22,324		¥	(26,071	)	¥	21,977
Foreign		107,856			75,732			31,275

	¥	130,180		¥	49,661		¥	53,252

Total
Japanese	¥	(30,377	)	¥	(17,935	)	¥	18,311
Foreign		237,204			153,670			160,665

	¥	206,827		¥	135,735		¥	178,976

The statutory income tax rate in Japan for the years ended March 31, 2011, 2012 and 2013 was 40.0%, 40.0% and 37.9%, respectively. The foreign subsidiaries are subject to taxes based on income at rates ranging from 16.0% to 38.0%.

The effective income tax rate for Honda for each of the years in the three-year period ended March 31, 2013 differs from the Japanese statutory income tax rate for the following reasons:


	2011			2012			2013
Statutory income tax rate		40.0	%		40.0	%		37.9	%
Recognition of valuation allowance		2.3			7.2			2.2
Difference in statutory tax rates of foreign subsidiaries		(6.2	)		(12.2	)		(6.7	)
Reversal of valuation allowance		(0.7	)		(1.8	)		(1.5	)
Research and development credit		(0.3	)		(0.6	)		(0.7	)
Dividend and royalty income from subsidiaries and affiliates, net of foreign tax credit		6.1			9.8			4.4
Undistributed earnings of subsidiaries and affiliates		2.8			2.7			1.8
Other adjustments relating to prior years		—			0.4			(1.5	)
Adjustments for unrecognized tax benefits		(10.3	)		(1.1	)		0.2
Adjustments for the change in income tax laws*		—			8.3			0.5
Other		(0.9	)		0.0			0.0

Effective tax rate		32.8	%		52.7	%		36.6	%

On November 30, 2011, the National Diet of Japan approved the laws for amendments to previous income tax laws. Upon the change in the laws, the statutory income tax rate in Japan for the year ended March 31, 2013 was changed to 37.9%. The tax rate will be changed to 35.1% for fiscal years beginning on or after April 1, 2015. Thus, the Company and its Japanese subsidiaries re-measured deferred tax assets and liabilities as of the enactment date based on the new tax rates to be applied in the fiscal years in which temporary differences are

F-33

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

expected to be recovered or settled. As a result, net deferred tax assets decreased ¥16,072 million, and income tax expenses increased ¥16,072 million, as of the enactment date of the laws. This impact is included in Adjustments for the change in income tax laws for the year ended March 31, 2012. The impact for the year ended March 31, 2013 is not material.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at March 31, 2012 and 2013 are presented below:


	Yen (millions)
	2012			2013
Deferred tax assets:
Inventories	¥	28,371		¥	28,122
Allowance for dealers and customers		79,075			87,224
Accrued bonus		28,408			32,380
Property, plant and equipment		54,330			65,397
Operating loss carryforwards		145,140			138,559
Pension and other postretirement benefits*		217,531			229,102
Other		161,107			166,894

Total gross deferred tax assets		713,962			747,678
Less valuation allowance		69,092			81,007

Net deferred tax assets		644,870			666,671

Deferred tax liabilities:
Inventories		(11,044	)		(16,575	)
Prepaid pension expenses		(19,586	)		(12,274	)
Property, plant and equipment, excluding lease transactions		(65,774	)		(80,103	)
Direct financing lease transactions		(17,942	)		(23,580	)
Operating lease transactions		(525,865	)		(623,535	)
Undistributed earnings of subsidiaries and affiliates		(91,241	)		(89,126	)
Net unrealized gains on available-for-sale securities		(21,218	)		(27,042	)
Other		(42,673	)		(51,727	)

Total gross deferred tax liabilities		(795,343	)		(923,962	)

Net deferred tax asset (liability)	¥	(150,473	)	¥	(257,291	)

Deferred income tax assets and liabilities at March 31, 2012 and 2013 are reflected in the consolidated balance sheets under the following captions:


	Yen (millions)
	2012			2013
Current assets-Deferred income taxes	¥	188,755		¥	234,075
Other assets*		188,586			127,248
Other current liabilities		(1,515	)		(2,735	)
Other liabilities		(526,299	)		(615,879	)

Net deferred tax asset (liability)	¥	(150,473	)	¥	(257,291	)

*	The amount at March 31, 2012 has been corrected from the amount previously disclosed, see note 1(w).

F-34

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income over the periods in which those temporary differences become deductible and operating loss carryforwards utilized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods for which the deferred tax assets are deductible, management believes it is more likely than not that Honda will realize the benefits of these deductible differences and operating loss carryforwards, net of the existing valuation allowances at March 31, 2012 and 2013. The amount of the deferred tax asset considered realizable, however, could be significantly reduced in the near term if estimates of future taxable income during the carryforward period are reduced due to further changes in the economic environment surrounding Honda, effects by market conditions, effects of currency fluctuations or other factors. For the years ended March 31, 2011, 2012 and 2013, the changes in the valuation allowance for deferred tax assets are as follows:


	Yen (millions)
	2011			2012			2013
Balance at beginning of year	¥	53,410		¥	65,479		¥	69,092
Additions		14,265			18,665			10,741
Deductions		(4,118	)		(4,651	)		(7,347	)
Effect of exchange rate changes and others		1,922			(10,401	)		8,521

Balance at end of year	¥	65,479		¥	69,092		¥	81,007

The valuation allowance primarily relates to deferred tax assets associated with net operating loss and tax credit carryforwards.

At March 31, 2013, Honda has operating loss and tax credit carryforwards for income tax purposes of ¥408,716 million and ¥13,292 million, respectively, which are available to offset future taxable income and income taxes, if any. Periods available to offset future taxable income and income taxes vary in each tax jurisdiction and range from one year to an indefinite period as follows:


	Yen (millions)
Operating loss carryforwards:
Within 1 year	¥	1,456
1 to 5 years		3,431
5 to 20 years		316,602
Indefinite periods		87,227

	¥	408,716


	Yen (millions)
Tax credit carryforwards:
Within 1 year	¥	79
1 to 5 years		717
5 to 20 years		11,793
Indefinite periods		703

	¥	13,292

F-35

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

At March 31, 2012 and 2013, Honda did not recognize deferred tax liabilities of ¥99,483 million and ¥140,691 million, respectively, for certain portions of the undistributed earnings of the Company’s foreign subsidiaries and foreign corporate joint ventures because such portions were considered indefinitely reinvested. Deferred tax liabilities will be recognized when Honda expects that will realize those undistributed earnings in a taxable manner, such as through receipt of dividends or sale of the investment. At March 31, 2012 and 2013, the undistributed earnings not subject to deferred tax liabilities were ¥3,858,508 million and ¥4,133,175 million, respectively.

Honda’s unrecognized tax benefits totaled ¥46,265 million, ¥43,627 million and ¥39,151 million at March 31, 2011, 2012 and 2013, respectively. Of these amounts, the amounts that would impact Honda’s effective income tax rate, if recognized, are ¥41,264 million, ¥32,460 million and ¥37,012 million in fiscal years 2011, 2012 and 2013, respectively.

Recognized interest and penalties, net included in income tax expense for the years ended March 31, 2011, 2012 and 2013 were ¥6,050 million benefit, ¥513 million benefit and ¥764 million loss, respectively. Honda had recorded approximately ¥2,121 million and ¥3,292 million for accrued interest and accrued penalties at March 31, 2012 and 2013, respectively. Reconciliations of the beginning and ending amount of unrecognized tax benefits for the years ended March 31 are as follows:


	Yen (millions)
	2011			2012			2013
Balance at beginning of year	¥	109,473		¥	46,265		¥	43,627
Additions for tax positions related to the current year		12,338			2,910			—
Additions for tax positions of prior years		7,280			4,538			687
Reductions for tax positions of prior years*		(71,519	)		(1,217	)		(7,855	)
Settlements*		(9,191	)		(1,688	)		—
Reductions for statute of limitations		(8	)		(6,894	)		—
Effect of exchange rate changes		(2,108	)		(287	)		2,692

Balance at end of year	¥	46,265		¥	43,627		¥	39,151

*	Due to mutual negotiated agreements regarding transfer pricing matters of overseas transactions between the Company and foreign affiliates, the Company has decreased a portion of unrecognized tax benefits during the year ended March 31, 2011.

Tax liabilities associated with uncertain tax positions are primarily classified as other noncurrent liabilities, as Honda does not expect to pay cash or settle these positions within the next twelve months.

Honda has open tax years primarily from 2005 to 2013 with various significant tax jurisdictions including Japan (fiscal years 2007-2013), the United States (fiscal years 2005-2013), Canada, the United Kingdom, Germany, France, Belgium, Thailand, India, Brazil and Australia.

Honda is subject to income tax examinations in many tax jurisdictions. Tax examinations can involve complex issues and the resolution of issues may span multiple years, particularly if subject to negotiation or litigation. Although Honda believes its estimates of the total unrecognized tax benefits are reasonable, uncertainties regarding the final determination of income tax audit settlements and any related litigation could affect the amount of total unrecognized tax benefits in future periods.

F-36

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

It is difficult to estimate the timing and range of possible change related to uncertain tax positions, as finalizing audits with the relevant income tax authorities may involve formal administrative and legal proceedings. Accordingly, it is not possible to reasonably estimate the expected changes to the total unrecognized tax benefits over the next twelve months, although any settlements or statute expirations may result in a significant increase or decrease in the total unrecognized tax benefits, including those positions related to tax examinations being currently conducted.

(12) Dividends and Legal Reserves

The Company Law of Japan provides that earnings in an amount equal to 10% of dividends of retained earnings shall be appropriated as a capital surplus or a legal reserve on the date of distribution of retained earnings until an aggregated amount of capital surplus and legal reserve equals 25% of stated capital. Certain foreign subsidiaries are also required to appropriate their earnings to legal reserves under the laws of their respective countries.

Dividends and appropriations to the legal reserves charged to retained earnings during the years in the three-year period ended March 31, 2013 represent dividends paid out during those years and the related appropriations to the legal reserves. Dividends per share were ¥51, ¥60 and ¥72 for the years ended March 31, 2011, 2012 and 2013, respectively. The accompanying consolidated financial statements do not include any provision for the dividend of ¥19 per share aggregating to ¥34,243 million proposed and resolved in the general shareholders’ meeting held on June 19, 2013.

(13) Pension and Other Postretirement Benefits

The Company and its subsidiaries have various pension plans covering substantially all of their employees in Japan and certain employees in foreign countries. Benefits under the plans are primarily based on the combination of years of service and compensation. The funding policy is to make periodic contributions as required by applicable regulations. Plan assets consist primarily of domestic and foreign equity and debt securities.

F-37

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Obligations and funded status

Reconciliations of beginning and ending balances of the pension benefit obligations and the fair value of the plan assets are as follows:


	Yen (millions)
	Japanese plans						Foreign plans
	2012			2013			2012			2013
Change in benefit obligations:
Benefit obligations at beginning of year	¥	(1,191,254	)	¥	(1,193,566	)	¥	(446,159	)	¥	(536,064	)
Service cost		(33,454	)		(31,124	)		(19,506	)		(24,826	)
Interest cost		(23,481	)		(23,871	)		(24,130	)		(26,107	)
Plan participants’ contributions		—			—			(22	)		(26	)
Actuarial gain (loss)		7,449			(82,834	)		(66,872	)		(33,210	)
Benefits paid		47,174			48,179			11,585			11,177
Amendment		—			—			2,579			—
Foreign currency translation		—			—			6,461			(76,099	)

Benefit obligations at end of year		(1,193,566	)		(1,283,216	)		(536,064	)		(685,155	)

Change in plan assets:
Fair value of plan assets at beginning of year		748,345			801,701			395,565			422,500
Actual return on plan assets		29,364			94,446			22,651			45,124
Employer contributions		71,166			70,550			21,503			23,795
Plan participants’ contributions		—			—			22			26
Benefits paid		(47,174	)		(48,179	)		(11,585	)		(11,177	)
Foreign currency translation		—			—			(5,656	)		62,896

Fair value of plan assets at end of year		801,701			918,518			422,500			543,164

Funded status	¥	(391,865	)	¥	(364,698	)	¥	(113,564	)	¥	(141,991	)

Amounts recognized in the consolidated balance sheets consist of:
Noncurrent assets	¥	1,268		¥	1,480		¥	—		¥	—
Current liabilities		(305	)		(364	)		(86	)		(38	)
Noncurrent liabilities		(392,828	)		(365,814	)		(113,478	)		(141,953	)

Total	¥	(391,865	)	¥	(364,698	)	¥	(113,564	)	¥	(141,991	)

Amounts recognized in accumulated other comprehensive income (loss) consist of:
Actuarial loss (gain)	¥	403,010		¥	394,998		¥	201,199		¥	206,941
Net transition obligation		—			—			110			77
Prior service cost (benefit)		(137,975	)		(121,671	)		(2,151	)		(1,905	)

Total	¥	265,035		¥	273,327		¥	199,158		¥	205,113

Pension plans with accumulated benefit obligations in excess of plan assets:
Projected benefit obligations	¥	(1,174,686	)	¥	(1,262,263	)	¥	(464,641	)	¥	(493,040	)
Accumulated benefit obligations		(1,105,707	)		(1,180,781	)		(420,920	)		(453,165	)
Fair value of plan assets		782,949			897,066			363,068			367,949

F-38

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The accumulated benefit obligations for all Japanese defined benefit plans at March 31, 2012 and 2013 were ¥1,121,200 million and ¥1,197,913 million, respectively. The accumulated benefit obligations for all foreign defined benefit plans at March 31, 2012 and 2013 were ¥472,765 million and ¥610,517 million, respectively.

* The amounts for Japanese plans as of and for the year ended March 31, 2012 have been corrected from the amounts previously disclosed, see note 1(w).

Components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss)

Pension expense and other amounts recognized in other comprehensive income (loss) for each of the years in the three-year period ended March 31, 2013 include the following:


	Yen (millions)
	2011			2012			2013
Japanese plans:
Pension cost
Service cost-benefits earned during the year	¥	35,209		¥	33,454		¥	31,124
Interest cost on projected benefit obligations		23,159			23,481			23,871
Expected return on plan assets		(22,972	)		(23,645	)		(24,048	)
Amortization of actuarial loss (gain)		21,871			20,373			18,149
Amortization of prior service cost (benefit)		(16,304	)		(16,304	)		(16,304	)

	¥	40,963		¥	37,359		¥	32,792

Other amounts recognized in other comprehensive income (loss)
Actuarial loss (gain)	¥	(50	)	¥	(13,305	)	¥	10,137
Amortization of actuarial loss (gain)		(21,871	)		(20,373	)		(18,149	)
Amortization of prior service cost (benefit)		16,304			16,304			16,304

		(5,617	)		(17,374	)		8,292

Total recognized in pension cost and other comprehensive income (loss)	¥	35,346		¥	19,985		¥	41,084

Foreign plans:
Pension cost
Service cost-benefits earned during the year	¥	18,113		¥	19,506		¥	24,826
Interest cost on projected benefit obligations		24,165			24,130			26,107
Expected return on plan assets		(27,332	)		(26,796	)		(30,254	)
Amortization of actuarial loss (gain)		5,422			5,829			10,724
Amortization of net transition obligation		31			30			33
Amortization of prior service cost (benefit)		5			6			(205	)
Other		382			3			17

	¥	20,786		¥	22,708		¥	31,248

Other amounts recognized in other comprehensive income (loss)
Actuarial loss (gain)	¥	8,560		¥	71,160		¥	16,466
Amortization of actuarial loss (gain)		(5,422	)		(5,829	)		(10,724	)
Amortization of net transition obligation		(31	)		(30	)		(33	)
Prior service cost (benefit)		—			(2,677	)		41
Amortization of prior service cost (benefit)		(5	)		(6	)		205

		3,102			62,618			5,955

Total recognized in pension cost and other comprehensive income (loss)	¥	23,888		¥	85,326		¥	37,203

F-39

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The following table presents the estimated amounts that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year.


	Yen (millions)
	Japanese plans			Foreign plans
Amortization of actuarial loss (gain)	¥	17,220		¥	13,571
Amortization of net transition obligation		—			42
Amortization of prior service cost (benefit)		(16,304	)		(259	)

Assumptions

Weighted-average assumptions used to determine benefit obligation at March 31, 2012 and 2013 were as follows:


	2012			2013
Japanese plans:
Discount rate		2.0	%		1.5	%
Rate of salary increase		2.1	%		2.2	%
Foreign plans:
Discount rate		4.6 ~ 5.2	%		4.5 ~ 4.7	%
Rate of salary increase		1.5 ~ 4.4	%		2.5 ~ 4.1	%

Weighted-average assumptions used to determine net periodic benefit cost for each of the years in the three-year period ended March 31, 2013 were as follows:


	2011			2012			2013
Japanese plans:
Discount rate		2.0	%		2.0	%		2.0	%
Rate of salary increase		2.3	%		2.2	%		2.1	%
Expected long-term rate of return		3.0	%		3.0	%		3.0	%
Foreign plans:
Discount rate		5.6 ~ 6.5	%		5.5 ~ 6.0	%		4.6 ~ 5.2	%
Rate of salary increase		1.5 ~ 5.3	%		1.5 ~ 4.6	%		1.5 ~ 4.4	%
Expected long-term rate of return		6.5 ~ 8.0	%		6.5 ~ 7.5	%		6.2 ~ 7.7	%

Honda determines the expected long-term rate of return based on its investment policies. Honda considers the eligible investment assets under its investment policies, historical experience, expected long-term rate of return under the investment environment, and the long-term target allocations of the various asset categories.

Measurement date

Honda uses the balance sheet date as the measurement date for its plans.

Plan assets

Honda’s investment policies for the Japanese and foreign pension plan assets are designed to maximize total medium-to-long term returns that are available to provide future payments of pension benefits to eligible participants under accepted risks. Plan assets are invested in well-diversified Japanese and foreign individual equity and debt securities using the target asset allocations, consistent with accepted tolerance for risks. Honda

F-40

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

sets target asset allocations for each asset category with future anticipated performance over medium-to-long term periods based on the expected returns, long-term risks and historical returns. Target asset allocations are adjusted as necessary when there are significant changes in the expected long-term returns of plan assets or the investment environment.

The following tables present the fair value of the Japanese pension plan assets by asset category as of March 31, 2012 and 2013.


	Yen (millions)
As of March 31, 2012	Level 1		Level 2			Level 3		Total
Cash and cash equivalents	¥	28,306	¥	—		¥	—	¥	28,306
Equity securities		231,011		346			180		231,537
Corporate bonds		5,349		1,425			—		6,774
Government, agency and local bonds		199,068		72,801			100		271,969
Group annuity insurance:
General accounts		—		15,891			—		15,891
Separate accounts		—		12,330			—		12,330
Pooled funds:
Hedge funds		—		—			63,271		63,271
Commingled and other mutual funds		627		176,503			—		177,130
Derivative instruments		352		(5,859	)		—		(5,507	)

Total	¥	464,713	¥	273,437		¥	63,551	¥	801,701


	Yen (millions)
As of March 31, 2013	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	¥	25,534	¥	—	¥	—	¥	25,534
Equity securities		312,764		263		—		313,027
Corporate bonds		4,320		5,477		18		9,815
Government, agency and local bonds		93,450		217,964		163		311,577
Group annuity insurance:
General accounts		—		21,042		—		21,042
Separate accounts		—		10,773		—		10,773
Pooled funds:
Hedge funds		—		—		85,391		85,391
Commingled and other mutual funds		2,033		135,619		1,213		138,865
Derivative instruments		81		2,413		—		2,494

Total	¥	438,182	¥	393,551	¥	86,785	¥	918,518

*	Information about the three hierarchy levels is described in note 16.

F-41

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The following tables present reconciliations during the years ended March 31, 2012 and 2013 for Level 3 Japanese pension plan assets.


	Yen (millions)
	Equity securities			Corporate bonds			Government, agency and local bonds			Pooled funds						Total
For the year ended March 31, 2012	Equity securities			Corporate bonds			Government, agency and local bonds			Hedge funds			Commingled and other mutual funds			Total
Balance at beginning of year	¥	260		¥	1,022		¥	—		¥	55,464		¥	686		¥	57,432
Actual return on plan assets:
Relating to assets still held at the reporting date		(13	)		—			(1	)		1,350			—			1,336
Relating to assets sold during the period		10			(2	)		—			(596	)		(3	)		(591	)
Purchases, sales and settlements, net		(77	)		(995	)		101			7,053			(683	)		5,399
Transfers in and/or out of Level 3		—			(25	)		—			—			—			(25	)

Balance at end of year	¥	180		¥	—		¥	100		¥	63,271		¥	—		¥	63,551


	Yen (millions)
	Equity securities			Corporate bonds			Government, agency and local bonds			Pooled funds						Total
For the year ended March 31, 2013	Equity securities			Corporate bonds			Government, agency and local bonds			Hedge funds			Commingled and other mutual funds			Total
Balance at beginning of year	¥	180		¥	—		¥	100		¥	63,271		¥	—		¥	63,551
Actual return on plan assets:
Relating to assets still held at the reporting date		—			—			22			10,484			13			10,519
Relating to assets sold during the period		60			—			1			804			—			865
Purchases, sales and settlements, net		(240	)		18			40			10,832			1,200			11,850
Transfers in and/or out of Level 3		—			—			—			—			—			—

Balance at end of year	¥	—		¥	18		¥	163		¥	85,391		¥	1,213		¥	86,785

The major valuation methodologies for Japanese pension plan assets are as follows:

Equity securities are mainly marketable securities and fair value is estimated using quoted market prices. Fair value measurement for equity securities is mainly classified as Level 1. At March 31, 2012 and 2013, this class includes approximately 13% and 10% of Japanese equity securities, 41% and 43% of United States equity securities and 46% and 47% of other foreign equity securities, respectively.

Fair value measurement for corporate, government, agency and local bonds, for which fair value is estimated using quoted market prices, is classified as Level 1. Fair value measurement for the assets of which fair value is estimated based on market observable inputs such as market interest rates and conditions of issuances is classified as Level 2. At March 31, 2012 and 2013, this class includes approximately 29% and 23% of Japanese bonds, 24% and 24% of United States bonds and 47% and 53% of other foreign bonds, respectively.

F-42

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

General accounts of group annuity insurance are assets invested by life insurance companies to meet fixed guaranteed rates of return for policyholders, and that life insurance companies bear the investment risk on such assets. Fair value of general accounts is estimated based on inputs such as contractual interest rates. Fair value measurement for general accounts is classified as Level 2. Separate accounts of group annuity insurance mainly consist of marketable equity securities and corporate, government, agency and local bonds traded in active markets. Honda estimates the fair value of the separate accounts based on their net asset values and Honda’s ownership percentage. Fair value measurement for separate accounts is classified as Level 2.

Hedge funds invest in various assets at the discretion of fund managers and their fair value is estimated based on prices using net asset value provided by the fund managers or third parties which include unobservable inputs in valuation. Fair value measurement for hedge funds is classified as Level 3. Hedge funds are diversely invested in various funds in order to avoid excessive concentration on investment portfolio. Commingled and other mutual funds are pooled funds which have underlying assets mainly consisting of marketable equity securities and corporate, government, agency and local bonds traded in active markets. Honda estimates the fair value of commingled and other mutual funds based on their net asset values and Honda’s ownership percentage. Fair value measurement for commingled and other mutual funds is mainly classified as Level 2.

Derivative instruments mainly consist of foreign exchange instruments and fair value of derivative instruments is estimated based on market observable inputs such as foreign exchange rates. Fair value measurement for derivative instruments is mainly classified as Level 2. At March 31, 2012 and 2013, on a gross basis, asset position is ¥4,672 million and ¥6,623 million and liability position is ¥10,179 million and ¥4,129 million, respectively.

The following tables present the fair value of the foreign pension plan assets by asset category as of March 31, 2012 and 2013.


	Yen (millions)
As of March 31, 2012	Level 1		Level 2		Level 3			Total
Cash and cash equivalents	¥	3,130	¥	—	¥	—		¥	3,130
Short-term investments		125		10,491		—			10,616
Equity securities		130,929		221		—			131,150
Corporate bonds		—		46,207		—			46,207
Government, agency and local bonds		3,013		39,185		—			42,198
Pooled funds:
Real estate funds		—		—		15,190			15,190
Private equity funds		—		—		10,030			10,030
Hedge funds		—		—		19,726			19,726
Commingled and other mutual funds		—		137,310		1,840			139,150
Derivative instruments		—		101		(28	)		73
Asset backed securities		—		5,030		—			5,030

Total	¥	137,197	¥	238,545	¥	46,758		¥	422,500

F-43

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)


	Yen (millions)
As of March 31, 2013	Level 1		Level 2		Level 3			Total
Cash and cash equivalents	¥	6,178	¥	—	¥	—		¥	6,178
Short-term investments		742		10,787		—			11,529
Equity securities		157,704		—		—			157,704
Corporate bonds		—		51,660		282			51,942
Government, agency and local bonds		2,868		42,416		373			45,657
Pooled funds:
Real estate funds		—		—		26,995			26,995
Private equity funds		—		—		22,946			22,946
Hedge funds		—		—		28,695			28,695
Commingled and other mutual funds		309		176,534		10,788			187,631
Derivative instruments		—		130		(73	)		57
Asset backed securities		—		3,830		—			3,830

Total	¥	167,801	¥	285,357	¥	90,006		¥	543,164

*	Information about the three hierarchy levels is described in note 16.

The following tables present reconciliations during the years ended March 31, 2012 and 2013 for Level 3 foreign pension plan assets.


	Yen (millions)
							Pooled funds
For the year ended March 31, 2012	Corporate bonds			Government, agency and local bonds			Real estate funds			Private equity funds			Hedge funds			Commingled and other mutual funds			Derivative instruments			Asset backed securities			Total
Balance at beginning of year	¥	47		¥	100		¥	11,698		¥	7,952		¥	7,148		¥	1,354		¥	1		¥	94		¥	28,394
Actual return on plan assets:
Relating to assets still held at the reporting date		—			—			925			198			527			16			(2	)		—			1,664
Relating to assets sold during the period		—			1			1			193			(145	)		—			—			(2	)		48
Purchases, sales and settlements, net		(40	)		(29	)		2,610			1,769			11,798			475			(27	)		(88	)		16,468
Transfers in and/or out of Level 3		(4	)		(68	)		—			—			—			—			—			—			(72	)
Foreign currency translation		(3	)		(4	)		(44	)		(82	)		398			(5	)		—			(4	)		256

Balance at end of year	¥	—		¥	—		¥	15,190		¥	10,030		¥	19,726		¥	1,840		¥	(28	)	¥	—		¥	46,758

F-44

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)


	Yen (millions)
						Pooled funds
For the year ended March 31, 2013	Corporate bonds			Government, agency and local bonds		Real estate funds			Private equity funds		Hedge funds		Commingled and other mutual funds		Derivative instruments			Total
Balance at beginning of year	¥	—		¥	—	¥	15,190		¥	10,030	¥	19,726	¥	1,840	¥	(28	)	¥	46,758
Actual return on plan assets:
Relating to assets still held at the reporting date		(2	)		7		1,010			898		1,537		606		2			4,058
Relating to assets sold during the period		11			7		(2	)		291		3		—		7			317
Purchases, sales and settlements, net		70			95		7,935			9,056		3,869		7,438		(45	)		28,418
Transfers in and/or out of Level 3		171			219		—			—		—		—		—			390
Foreign currency translation		32			45		2,862			2,671		3,560		904		(9	)		10,065

Balance at end of year	¥	282		¥	373	¥	26,995		¥	22,946	¥	28,695	¥	10,788	¥	(73	)	¥	90,006

The major valuation methodologies for foreign pension plan assets are as follows:

Fair value of short-term investments is mainly estimated based on market observable inputs. Fair value measurement for short-term investments is mainly classified as Level 2.

Equity securities are mainly marketable securities and their fair value is estimated using quoted market prices. Fair value measurement for equity securities is mainly classified as Level 1. At March 31, 2012 and 2013, this class includes approximately 6% and 6% of Japanese equity securities, 54% and 56% of United States equity securities and 40% and 38% of other foreign equity securities, respectively.

Fair value measurement for corporate, government, agency and local bonds of which fair value is estimated using quoted market prices is classified as Level 1. Fair value measurement for the assets of which fair value is estimated based on market observable inputs such as market interest rates and conditions of issuances is classified as Level 2. Fair value measurement for the assets of which fair value is estimated based on unobservable inputs provided by third parties is classified as Level 3.

Real estate funds invest in real estate mainly in the United States and the United Kingdom and their fair value is estimated based on prices using net asset value provided by the investment managers which include unobservable inputs in valuation. Fair value measurement for real estate funds is classified as Level 3. Fair value of private equity funds is estimated based on unobservable inputs such as proprietary models and uncorroborated data from the limited partnerships. Fair value measurement for private equity funds is classified as Level 3. Hedge funds invest in various assets at the discretion of fund managers and their fair value is estimated based on prices using net asset value provided by the fund managers or third parties which include unobservable inputs in valuation. Fair value measurement for hedge funds is classified as Level 3. Hedge funds are diversely invested in various funds in order to avoid excessive concentration on investment portfolios. Commingled and other mutual funds are pooled funds which have underlying assets mainly consisting of marketable equity securities and corporate, government, agency and local bonds traded in active markets. Honda estimates the fair value of commingled and other mutual funds based on their net asset values and Honda’s ownership percentage. Fair value measurement for commingled and other mutual funds is mainly classified as Level 2.

F-45

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Fair value of asset-backed securities is mainly estimated based on market observable inputs provided by independent vendors. Fair value measurement for asset-backed securities is mainly classified as Level 2.

Cash flows

Contributions

Honda expects to contribute ¥70,217 million to its Japanese pension plans and ¥24,727 million to its foreign pension plans in the year ending March 31, 2014.

Estimated future benefit payment

The following table presents estimated future gross benefit payments:


Years ending March 31	Yen (millions)
	Japanese plans		Foreign plans
2014	¥	45,206	¥	11,470
2015		45,544		13,112
2016		47,122		14,716
2017		48,689		16,990
2018		51,731		19,618
2019-2023		290,155		147,434

Certain of the Company’s subsidiaries in North America provide health care and life insurance benefits to retired employees. Such benefits have no material effect on Honda’s financial position and results of operations.

Special termination benefits

Yachiyo Industry Co., Ltd., which is a domestic consolidated subsidiary, implemented a special early retirement support plan in connection with the discontinuation of construction of a new auto plant resulting from the revision of Honda’s completed automobile production strategy for the year ended March 31, 2012. Honda recognized the cost related to this plan when the eligible employees decided to utilize the plan and the amount could be reasonably estimated. The cost of ¥10,354 million is included in selling, general and administrative expenses in the consolidated statement of income for the year ended March 31, 2012.

(14) Supplemental Disclosures of Cash Flow Information


	Yen (millions)
	2011		2012		2013
Cash paid (provided), net during the year for:
Interest	¥	128,401	¥	97,788	¥	86,989
Income taxes		174,092		47,217		138,583

During the fiscal year ended March 31, 2011, the Company retired 23,400 thousand shares of its treasury stock at a cost of ¥80,417 million by offsetting unappropriated retained earnings of ¥80,417 million based on the resolution of board of directors.

F-46

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(15) Accumulated Other Comprehensive Income (Loss)

The components and related changes in accumulated other comprehensive income (loss) for each of the years in the three-year period ended March 31, 2013 are as follows:


	Yen (millions)
	2011			2012			2013
Adjustments from foreign currency translation:
Balance at beginning of year	¥	(977,488	)	¥	(1,268,233	)	¥	(1,385,045	)
Current-period other comprehensive income (loss)		(290,745	)		(116,812	)		415,462

Balance at end of year		(1,268,233	)		(1,385,045	)		(969,583	)

Net unrealized gains (losses) on available-for-sale securities:
Balance at beginning of year		29,724			30,299			36,198
Current-period other comprehensive income (loss)		575			5,899			7,933

Balance at end of year		30,299			36,198			44,131

Net unrealized gains (losses) on derivative instruments:
Balance at beginning of year		(324	)		(156	)		(185	)
Current-period other comprehensive income (loss)		168			(29	)		(52	)

Balance at end of year		(156	)		(185	)		(237	)

Pension and other postretirement benefits adjustments*
Balance at beginning of year		(260,074	)		(257,290	)		(297,046	)
Current-period other comprehensive income (loss)		2,784			(39,756	)		(14,057	)

Balance at end of year		(257,290	)		(297,046	)		(311,103	)

Total accumulated other comprehensive income (loss):
Balance at beginning of year		(1,208,162	)		(1,495,380	)		(1,646,078	)
Current-period other comprehensive income (loss)		(287,218	)		(150,698	)		409,286

Balance at end of year	¥	(1,495,380	)	¥	(1,646,078	)	¥	(1,236,792	)

F-47

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The tax effects allocated to each component of other comprehensive income (loss) and reclassification adjustments are as follows:


	Yen (millions)
	Before-tax			Tax (expense) or benefit (note 11)			Net-of-tax
2011:
Adjustments from foreign currency translation	¥	(298,902	)	¥	1,361		¥	(297,541	)
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) arising during the year		166			312			478
Reclassification adjustments for losses (gains) realized in net income		116			(46	)		70

Net unrealized gains (losses)		282			266			548

Unrealized gains (losses) on derivative instruments
Unrealized holding gains (losses) arising during the year		1,359			(545	)		814
Reclassification adjustments for losses (gains) realized in net income		(1,077	)		431			(646	)

Net unrealized gains (losses)		282			(114	)		168

Pension and other postretirement benefits adjustments*
(Increase) decrease in net unrealized losses on pension and other postretirement benefits		(12,622	)		7,426			(5,196	)
Amortization of unrealized (gain) loss on pension and other postretirement benefits		11,809			(4,070	)		7,739

Net unrealized gains (losses)		(813	)		3,356			2,543

Other comprehensive income (loss)	¥	(299,151	)	¥	4,869		¥	(294,282	)


2012:
Adjustments from foreign currency translation	¥	(119,910	)	¥	1,775		¥	(118,135	)
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) arising during the year		9,438			(3,087	)		6,351
Reclassification adjustments for losses (gains) realized in net income		(706	)		167			(539	)

Net unrealized gains (losses)		8,732			(2,920	)		5,812

Unrealized gains (losses) on derivative instruments
Unrealized holding gains (losses) arising during the year		(115	)		39			(76	)
Reclassification adjustments for losses (gains) realized in net income		78			(31	)		47

Net unrealized gains (losses)		(37	)		8			(29	)

Pension and other postretirement benefits adjustments*
(Increase) decrease in net unrealized losses on pension and other postretirement benefits		(72,225	)		25,682			(46,543	)
Amortization of unrealized (gain) loss on pension and other postretirement benefits		10,734			(3,844	)		6,890

Net unrealized gains (losses)		(61,491	)		21,838			(39,653	)

Other comprehensive income (loss)	¥	(172,706	)	¥	20,701		¥	(152,005	)


2013:
Adjustments from foreign currency translation	¥	433,640		¥	(2,828	)	¥	430,812
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) arising during the year		12,336			(4,368	)		7,968
Reclassification adjustments for losses (gains) realized in net income		24			(8	)		16

Net unrealized gains (losses)		12,360			(4,376	)		7,984

Unrealized gains (losses) on derivative instruments
Unrealized holding gains (losses) arising during the year		(1,281	)		484			(797	)
Reclassification adjustments for losses (gains) realized in net income		1,197			(452	)		745

Net unrealized gains (losses)		(84	)		32			(52	)

Pension and other postretirement benefits adjustments*
(Increase) decrease in net unrealized losses on pension and other postretirement benefits		(36,611	)		12,077			(24,534	)
Amortization of unrealized (gain) loss on pension and other postretirement benefits		14,394			(5,157	)		9,237

Net unrealized gains (losses)		(22,217	)		6,920			(15,297	)

Other comprehensive income (loss)	¥	423,699		¥	(252	)	¥	423,447

*	The primary components of other comprehensive income (loss) for Pension and other postretirement benefits adjustments are actuarial gains or losses and prior service benefits or costs (note 13).

F-48

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(16) Fair Value Measurements

In accordance with the FASB Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures”, Honda uses a three-level hierarchy when measuring fair value. The following is a description of the three hierarchy levels:

Level 1

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date

Level 2

Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly

Level 3

Unobservable inputs for the assets or liabilities

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest input that is significant to the fair value measurement in its entirety.

The following tables present the assets and liabilities measured at fair value on a recurring basis as of March 31, 2012 and 2013.


	Yen (millions)
As of March 31, 2012	Level 1		Level 2			Level 3		Gross fair value			Netting adjustment			Net amount
Assets:
Derivative instruments
Foreign exchange instruments (notes 1(q) and 17)	¥	—	¥	33,566		¥	—	¥	33,566		¥	—		¥	—
Interest rate instruments (notes 1(q) and 17)		—		31,834			—		31,834			—			—

Total derivative instruments		—		65,400			—		65,400			(21,988	)		43,412

Available-for-sale securities
Marketable equity securities		100,829		—			—		100,829			—			100,829
Auction rate securities		—		—			6,651		6,651			—			6,651

Total available-for-sale securities		100,829		—			6,651		107,480			—			107,480

Total	¥	100,829	¥	65,400		¥	6,651	¥	172,880		¥	(21,988	)	¥	150,892


Liabilities:
Derivative instruments
Foreign exchange instruments (notes 1(q) and 17)	¥	—	¥	(30,820	)	¥	—	¥	(30,820	)	¥	—		¥	—
Interest rate instruments (notes 1(q) and 17)		—		(20,099	)		—		(20,099	)		—			—

Total derivative instruments		—		(50,919	)		—		(50,919	)		21,988			(28,931	)

Total	¥	—	¥	(50,919	)	¥	—	¥	(50,919	)	¥	21,988		¥	(28,931	)

F-49

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)


	Yen (millions)
As of March 31, 2013	Level 1		Level 2			Level 3		Gross fair value			Netting adjustment			Net amount
Assets:
Derivative instruments
Foreign exchange instruments (notes 1(q) and 17)	¥	—	¥	6,538		¥	—	¥	6,538		¥	—		¥	—
Interest rate instruments (notes 1(q) and 17)		—		32,152			—		32,152			—			—

Total derivative instruments		—		38,690			—		38,690			(18,071	)		20,619

Available-for-sale securities
Marketable equity securities		117,110		—			—		117,110			—			117,110
Auction rate securities		—		—			6,928		6,928			—			6,928
Others		584		4,226			—		4,810			—			4,810

Total available-for-sale securities		117,694		4,226			6,928		128,848			—			128,848

Total	¥	117,694	¥	42,916		¥	6,928	¥	167,538		¥	(18,071	)	¥	149,467

Liabilities:
Derivative instruments
Foreign exchange instruments (notes 1(q) and 17)	¥	—	¥	(78,934	)	¥	—	¥	(78,934	)	¥	—		¥	—
Interest rate instruments (notes 1(q) and 17)		—		(14,639	)		—		(14,639	)		—			—

Total derivative instruments		—		(93,573	)		—		(93,573	)		18,071			(75,502	)

Total	¥	—	¥	(93,573	)	¥	—	¥	(93,573	)	¥	18,071		¥	(75,502	)

Derivative asset and liability positions are presented net by counterparty on the consolidated balance sheets when valid master netting agreement exists and the other conditions set out in ASC 210-20 “Balance Sheet-Offsetting” are met.

F-50

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The following tables present reconciliations during the years ended March 31, 2012 and 2013 for all Level 3 assets and liabilities measured at fair value on a recurring basis.


	Yen (millions)
For the year ended March 31, 2012	Interest rate instruments (notes 1(q) and 17)			Auction rate securities			Total
Balance at beginning of year	¥	(1	)	¥	6,948		¥	6,947
Total realized/unrealized gains or losses
Included in earnings		—			—			—
Included in other comprehensive income (loss)		—			(114	)		(114	)
Purchases, issuances, settlements and sales
Purchases		—			1,784			1,784
Issuances		—			—			—
Settlements		1			—			1
Sales		—			(1,879	)		(1,879	)
Foreign currency translation		—			(88	)		(88	)

Balance at end of year	¥	—		¥	6,651		¥	6,651

The amounts of total gains or losses for the period attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date
Included in earnings	¥	—		¥	—		¥	—
Included in other comprehensive income (loss)		—			(114	)		(114	)


	Yen (millions)
For the year ended March 31, 2013	Auction rate securities
Balance at beginning of year	¥	6,651
Total realized/unrealized gains or losses
Included in earnings		—
Included in other comprehensive income (loss)		115
Purchases, issuances, settlements and sales
Purchases		—
Issuances		—
Settlements		—
Sales		(691	)
Foreign currency translation		853

Balance at end of year	¥	6,928

The amounts of total gains or losses for the period attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date
Included in earnings	¥	—
Included in other comprehensive income (loss)		115

Total realized/unrealized gains or losses related to interest rate instruments, including those held at the reporting date, are included in other income (expenses) – other, net, in the consolidated statements of income.

F-51

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The valuation methodologies for the assets and liabilities measured at fair value on a recurring basis are as follows:

Foreign exchange and interest rate instruments (notes 1(q) and 17)

The fair values of foreign currency forward exchange contracts and foreign currency option contracts are estimated by using market observable inputs such as spot exchange rates, discount rates and implied volatility. Fair value measurements for foreign currency forward exchange contracts and foreign currency option contracts are classified as Level 2. The fair values of currency swap agreements and interest rate swap agreements are estimated by discounting future cash flows using market observable inputs such as LIBOR rates, swap rates, and foreign exchange rates. Fair value measurements for these currency swap agreements and interest rate swap agreements are classified as Level 2.

The credit risk of Honda and its counterparties are considered in the valuation of foreign exchange and interest rate instruments.

Marketable equity securities

The fair value of marketable equity securities is estimated by using quoted market prices. Fair value measurement for marketable equity securities is classified as Level 1.

Auction rate securities

The subsidiary’s auction rate securities holdings were AAA rated and are insured by qualified guarantee agencies, and reinsured by the Secretary of Education and United States Government, and are guaranteed about 95% by the United States Government. To estimate fair value of auction rate securities, Honda uses a third-party-developed valuation model which obtains a wide array of market observable inputs, as well as unobservable inputs including probability of passing or failing auction at each auction. Fair value measurement for auction rate securities is classified as Level 3.

Honda did not have significant assets and liabilities measured at fair value on a nonrecurring basis as of and for the year ended March 31, 2012. For the year ended March 31, 2013, Honda measured certain investments in affiliates which have quoted market values at fair value on a nonrecurring basis due to the recognition of impairment loss (note 6). The fair value of the investments was ¥68,778 million and estimated by using quoted market prices. Fair value measurement for the investments is classified as Level 1.

Honda has not elected the fair value option for the fiscal years ended March 31, 2012 and 2013.

The estimated fair values of significant financial instruments at March 31, 2012 and 2013 are as follows:


	Yen (millions)
	2012						2013
	Carrying amount			Estimated fair value			Carrying amount			Estimated fair value
Finance subsidiaries-receivables*¹	¥	3,607,127		¥	3,653,850		¥	4,278,460		¥	4,326,333
Held-to-maturity securities*²		26,693			26,757			16,511			16,556
Debt		(4,111,244	)		(4,176,361	)		(4,894,188	)		(4,966,318	)

*1	The carrying amounts of finance subsidiaries-receivables at March 31, 2012 and 2013 in the table exclude ¥357,308 million and ¥425,870 million, respectively, of direct financing leases, net, classified as finance

F-52

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

subsidiaries-receivables in the consolidated balance sheets. The carrying amounts of finance subsidiaries-receivables at March 31, 2012 and 2013 in the table also include ¥518,321 million and ¥673,193 million of finance receivables classified as trade accounts and notes receivable and other assets in the consolidated balance sheets, respectively.

*2	The carrying amounts and the estimated fair value related to held-to-maturity securities at March 31, 2012 have been revised from the amounts previously disclosed.

The estimated fair values have been determined using relevant market information and appropriate valuation methodologies. However, these estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. The effect of using different assumptions and/or estimation methodologies may be significant to the estimated fair values.

The methodologies and assumptions used to estimate the fair values of financial instruments are as follows:

Cash and cash equivalents, trade receivables and trade payables

The carrying amounts approximate fair values because of the short maturity of these instruments.

Finance subsidiaries-receivables

The fair values of retail receivables and commercial loans are estimated by discounting future cash flows using the current rates for these instruments of similar remaining maturities. Given the short maturities of wholesale flooring receivables, the carrying amount of these receivables approximates fair value. Fair value measurements for retail receivables and commercial loans are mainly classified as Level 3.

Held-to-maturity securities

The fair value of Government bonds is estimated by using quoted market prices. Fair value measurement of those Government bonds is classified as Level 1. The fair value of U.S. government agency debt securities is estimated based on proprietary pricing models provided by specialists and/or market makers and the models obtain a wide array of market observable inputs such as credit ratings and discount rates. Fair value measurement for these securities is classified as Level 2.

Debt

The fair values of bonds are estimated by using quoted market prices. Fair value measurement of those bonds is mainly classified as Level 1. The fair values of short-term loans and long-term loans are estimated by discounting future cash flows using interest rates currently available for loans of similar terms and remaining maturities. Fair value measurements for these loans are mainly classified as Level 2.

(17) Risk Management Activities and Derivative Financial Instruments

Honda uses derivative financial instruments in the normal course of business to reduce their exposure to fluctuations in foreign exchange rates and interest rates (notes 1(q) and 16). Currency swap agreements are used to manage currency risk exposure on foreign currency denominated debt. Foreign currency forward exchange contracts and purchased option contracts are used to hedge currency risk of sale commitments denominated in foreign currencies (principally U.S. dollars). Foreign currency written option contracts are entered into in combination with purchased option contracts to offset premium amounts to be paid for purchased option contracts. Interest rate swap agreements are mainly used to manage interest rate risk exposure and to convert

F-53

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

floating rate financing, such as commercial paper, to (normally three-five years) fixed rate financing in order to match financing costs with income from finance receivables. These instruments involve, to varying degrees, elements of credit, exchange rate and interest rate risks in excess of the amount recognized in the consolidated balance sheets.

The aforementioned instruments contain an element of risk in the event the counterparties are unable to meet the terms of the agreements. However, Honda minimizes the risk exposure by limiting the counterparties to major international banks and financial institutions meeting established credit guidelines. Management of Honda does not expect any counterparty to default on its obligations and, therefore, does not expect to incur any losses due to counterparty default. Honda currently does not require or place collateral for these financial instruments with any counterparties.

Contract amounts outstanding for foreign currency forward exchange contracts, foreign currency option contracts and currency swap agreements and the notional principal amounts of interest rate swap agreements at March 31, 2012 and 2013 are as follows:

Derivatives designated as hedging instruments:


	Yen (millions)
	2012		2013
Foreign currency forward exchange contracts	¥	16,191	¥	23,324

Foreign exchange instruments	¥	16,191	¥	23,324

Derivatives not designated as hedging instruments:


	Yen (millions)
	2012		2013
Foreign currency forward exchange contracts	¥	607,458	¥	724,435
Foreign currency option contracts		79,090		4,145
Currency swap agreements		450,093		337,254

Foreign exchange instruments	¥	1,136,641	¥	1,065,834

Interest rate swap agreements	¥	3,823,639	¥	4,063,289

Interest rate instruments	¥	3,823,639	¥	4,063,289

Cash flow hedge

The Company applies hedge accounting for certain foreign currency forward exchange contracts related to forecasted foreign currency transactions between the Company and its subsidiaries. Changes in the fair value of derivative financial instruments designated as cash flow hedges are recognized in other comprehensive income (loss). The amounts are reclassified into earnings in the same period when forecasted hedged transactions affect earnings. The amounts recognized in accumulated other comprehensive income (loss) at March 31, 2012 and 2013 were ¥185 million loss and ¥237 million loss, respectively. All amounts recorded in accumulated other comprehensive income (loss) at year end are expected to be recognized in earnings within the next twelve months.

F-54

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The period that hedges the changes in cash flows related to the risk of foreign currency rate is at most around two months. There are no derivative financial instruments where hedge accounting has been discontinued due to the forecasted transaction no longer being probable. The Company excludes financial instruments’ time value component from the assessment of hedge effectiveness. There is no portion of hedging instruments that has been assessed ineffective.

Derivative financial instruments not designated as accounting hedges

Changes in the fair value of derivative financial instruments not designated as accounting hedges are recognized in earnings in the period of the change.

The estimated fair values of derivative instruments at March 31, 2012 and 2013 are as follows.

As of March 31, 2012

Derivatives designated as hedging instruments:


	Yen (millions)
	Gross fair value						Balance sheet location
	Asset derivatives			Liability derivatives			Other current assets			Other assets		Other current liabilities
Foreign exchange instruments	¥	—		¥	(753)		¥	—		¥	—	¥	(753)
Derivatives not designated as hedging instruments:
	Yen (millions)
	Gross fair value						Balance sheet location
	Asset derivatives			Liability derivatives			Other current assets			Other assets		Other current liabilities
Foreign exchange instruments	¥	33,566		¥	(30,067	)	¥	22,692		¥	2,316	¥	(21,509	)
Interest rate instruments		31,834			(20,099	)		(943	)		19,347		(6,669	)

Total	¥	65,400		¥	(50,166	)	¥	21,749		¥	21,663	¥	(28,178	)

Netting adjustment		(21,988	)		21,988

Net amount	¥	43,412		¥	(28,178	)

As of March 31, 2013 Derivatives designated as hedging instruments:
	Yen (millions)
	Gross fair value						Balance sheet location
	Asset derivatives			Liability derivatives			Other current assets			Other assets		Other current liabilities
Foreign exchange instruments	¥	—		¥	(211)		¥	—		¥	—	¥	(211)

F-55

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)


Derivatives not designated as hedging instruments:
	Yen (millions)
	Gross fair value						Balance sheet location
	Asset derivatives			Liability derivatives			Other current assets			Other assets			Other current liabilities
Foreign exchange instruments	¥	6,538		¥	(78,723	)	¥	(1,534	)	¥	(314	)	¥	(70,337	)
Interest rate instruments		32,152			(14,639	)		3,907			18,560			(4,954	)

Total	¥	38,690		¥	(93,362	)	¥	2,373		¥	18,246		¥	(75,291	)

Netting adjustment		(18,071	)		18,071

Net amount	¥	20,619		¥	(75,291	)

The pre-tax effects of derivative instruments on the Company’s results of operations for each of the years in the three-year period ended March 31, 2013 are as follows:

For the year ended March 31, 2011

Derivatives designated as hedging instruments

Cash flow hedge:

Yen (millions)

Gain (Loss)
recognized in other
comprehensive
income (loss)
(effective portion)

Gain (Loss) reclassified from
accumulated other comprehensive
income (loss) into earnings
(effective portion)

Gain (Loss) recognized in
earnings (financial
instruments’ time value
component excluded from
the assessment of hedge effectiveness)

Amount

Location

Amount

Location

Amount

Foreign exchange instruments:

1,359

Other income
(expenses) – Other, net

1,077

Other income
(expenses) – Other, net

128

Derivatives not designated as hedging instruments


	Yen (millions)
	Gain (Loss) recognized in earnings
	Location	Amount
Foreign exchange instruments	Other income (expenses) – Other, net	¥	75,591
Interest rate instruments	Other income (expenses) – Other, net		(15,938	)

Total		¥	59,653

F-56

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

For the year ended March 31, 2012

Derivatives designated as hedging instruments

Cash flow hedge:

Yen (millions)

Gain (Loss)
recognized in other
comprehensive
income (loss)
(effective portion)

Gain (Loss) reclassified from
accumulated other comprehensive
income (loss) into earnings
(effective portion)

Gain (Loss) recognized in
earnings (financial
instruments’ time value
component excluded from
the assessment of hedge effectiveness)

Amount

Location

Amount

Location

Amount

Foreign exchange instruments:

(115)

Other income
(expenses) – Other, net

(78)

Other income
(expenses) – Other, net

(455)

Derivatives not designated as hedging instruments


	Yen (millions)
	Gain (Loss) recognized in earnings
	Location	Amount
Foreign exchange instruments	Other income (expenses) – Other, net	¥	(3,709	)
Interest rate instruments	Other income (expenses) – Other, net		(1,421	)

Total		¥	(5,130	)

For the year ended March 31, 2013

Derivatives designated as hedging instruments

Cash flow hedge:

Yen (millions)

Gain (Loss)
recognized in other
comprehensive
income (loss)
(effective portion)

Gain (Loss) reclassified from
accumulated other comprehensive
income (loss) into earnings
(effective portion)

Gain (Loss) recognized in
earnings (financial
instruments’ time value
component excluded from
the assessment of hedge effectiveness)

Amount

Location

Amount

Location

Amount

Foreign exchange instruments:

(1,281)

Other income
(expenses) – Other, net

(1,197)

Other income
(expenses) – Other, net

(589)

Derivatives not designated as hedging instruments


	Yen (millions)
	Gain (Loss) recognized in earnings
	Location	Amount
Foreign exchange instruments	Other income (expenses) – Other, net	¥	(111,004	)
Interest rate instruments	Other income (expenses) – Other, net		3,212

Total		¥	(107,792	)

F-57

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

The gains and losses are included in other income (expenses) – other, net on a net basis with related items, such as foreign currency translation (note 1(p)).

(18) Commitments and Contingent Liabilities

At March 31, 2013, Honda had commitments for purchases of property, plant and equipment and other commitments of approximately ¥105,285 million.

Honda has entered into various guarantee and indemnification agreements. At March 31, 2012 and 2013, Honda has guaranteed ¥28,165 million and ¥26,475 million of bank loans of employees for their housing costs, respectively. If an employee defaults on his/her loan payments, Honda is required to perform under the guarantee. The undiscounted maximum amount of Honda’s obligation to make future payments in the event of defaults is ¥28,165 million and ¥26,475 million, respectively, at March 31, 2012 and 2013. At March 31, 2013, no amount has been accrued for any estimated losses under the obligations, as it is probable that the employees will be able to make all scheduled payments.

Honda warrants its products for specific periods of time. Product warranties vary depending upon the nature of the product, the geographic location of its sale and other factors.

The changes in provisions for those product warranties for each of the years in the two-year period ended March 31, 2013 are as follows:


	Yen (millions)
	2012			2013
Balance at beginning of year	¥	213,943		¥	170,562
Warranty claims paid during the period		(82,547	)		(64,942	)
Liabilities accrued for warranties issued during the period		60,004			97,108
Changes in liabilities for pre-existing warranties during the period		(17,697	)		(8,583	)
Foreign currency translation		(3,141	)		13,888

Balance at end of year	¥	170,562		¥	208,033

With respect to product liability, personal injury claims or lawsuits, Honda believes that any judgment that may be recovered by any plaintiff for general and special damages and court costs will be adequately covered by Honda’s insurance and accrued liabilities. Punitive damages are claimed in certain of these lawsuits. Honda is also subject to potential liability under other various lawsuits and claims. Honda recognizes an accrued liability for loss contingencies when it is probable that an obligation has been incurred and the amount of loss can be reasonably estimated. Honda reviews these pending lawsuits and claims periodically and adjusts the amounts recorded for these contingent liabilities, if necessary, by considering the nature of lawsuits and claims, the progress of the case and the opinions of legal counsel. After consultation with legal counsel, and taking into account all known factors pertaining to existing lawsuits and claims, Honda believes that the ultimate outcome of such lawsuits and pending claims should not result in liability to Honda that would be likely to have an adverse material effect on its consolidated financial position, results of operations or cash flows.

(19) Leases

Honda is the lessee under several operating leases, primarily for office and other facilities, and certain office equipment.

F-58

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Future minimum lease payments under noncancelable operating leases that have initial or remaining lease terms in excess of one year at March 31, 2013 are as follows:


Years ending March 31	Yen (millions)
2014	¥	19,020
2015		14,064
2016		10,887
2017		10,966
2018		8,888
After five years		41,225

Total minimum lease payments	¥	105,050

Rental expenses under operating leases were ¥38,641 million, ¥34,079 million and ¥32,728 million, for the years ended March 31, 2011, 2012 and 2013, respectively.

F-59

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

(20) Allowances for Trade Receivable, Finance Subsidiaries-receivables and Other Assets

The allowances for trade receivable, finance subsidiaries-receivables and other assets for the years ended March 31, 2011, 2012 and 2013 are set forth in the following table:


	Yen (millions)
			Additions		Deductions
	Balance at beginning of year		Charged to costs and expenses		Bad debts written off		Foreign currency translation			Balance at end of year
March 31, 2011:
Trade accounts and notes receivable
Allowance for doubtful accounts	¥	8,555	¥	3,625	¥	3,849	¥	(427	)	¥	7,904

Finance subsidiaries-receivables
Allowance for credit losses	¥	35,823	¥	10,146	¥	18,302	¥	(2,777	)	¥	24,890
Allowance for losses on lease residual values		9,253		3,159		4,611		(576	)		7,225

	¥	45,076	¥	13,305	¥	22,913	¥	(3,353	)	¥	32,115

Other assets
Allowance for doubtful accounts	¥	9,319	¥	15,839	¥	1,734	¥	(149	)	¥	23,275

March 31, 2012:
Trade accounts and notes receivable
Allowance for doubtful accounts	¥	7,904	¥	3,773	¥	3,858	¥	(526	)	¥	7,293

Finance subsidiaries-receivables
Allowance for credit losses	¥	24,890	¥	11,625	¥	15,484	¥	(415	)	¥	20,616
Allowance for losses on lease residual values		7,225		1,407		2,954		(312	)		5,366

	¥	32,115	¥	13,032	¥	18,438	¥	(727	)	¥	25,982

Other assets
Allowance for doubtful accounts	¥	23,275	¥	1,293	¥	1,311	¥	(221	)	¥	23,036

March 31, 2013:
Trade accounts and notes receivable
Allowance for doubtful accounts	¥	7,293	¥	2,810	¥	2,721	¥	503		¥	7,885

Finance subsidiaries-receivables
Allowance for credit losses	¥	20,616	¥	9,234	¥	13,198	¥	1,176		¥	17,828
Allowance for losses on lease residual values		5,366		825		3,178		341			3,354

	¥	25,982	¥	10,059	¥	16,376	¥	1,517		¥	21,182

Other assets
Allowance for doubtful accounts	¥	23,036	¥	687	¥	1,063	¥	94		¥	22,754

(21) Segment Information

Honda has four reportable segments: Motorcycle business, Automobile business, Financial services business and Power product and other businesses, which are based on Honda’s organizational structure and characteristics of products and services. Operating segments are defined as components of Honda’s about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The accounting policies used for these reportable segments are consistent with the accounting policies used in Honda’s consolidated financial statements.

F-60

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Principal products and services, and functions of each segment are as follows:


Segment	Principal products and services	Functions
Motorcycle Business	Motorcycles, all-terrain vehicles (ATVs) and relevant parts	Research & Development Manufacturing Sales and related services
Automobile Business	Automobiles and relevant parts	Research & Development Manufacturing Sales and related services
Financial Services Business	Financial, insurance services	Retail loan and lease related to Honda products Others
Power Product and Other Businesses	Power products and relevant parts, and others	Research & Development Manufacturing Sales and related services Others

Segment Information

As of and for the year ended March 31, 2011


	Yen (millions)
	Motorcycle Business		Automobile Business		Financial Services Business		Power Product and Other Businesses			Segment Total		Reconciling Items			Other Adjustments			Consolidated
Net sales and other operating revenue:
External customers	¥	1,288,194	¥	6,794,098	¥	561,896	¥	292,679		¥	8,936,867	¥	—		¥	—		¥	8,936,867
Intersegment		—		8,218		11,562		15,132			34,912		(34,912	)		—			—

Total	¥	1,288,194	¥	6,802,316	¥	573,458	¥	307,811		¥	8,971,779	¥	(34,912	)	¥	—		¥	8,936,867
Cost of sales, SG&A and R&D expenses		1,149,600		6,537,766		387,179		313,336			8,387,881		(34,912	)		14,123			8,367,092

Segment income (loss)	¥	138,594	¥	264,550	¥	186,279	¥	(5,525	)	¥	583,898	¥	—		¥	(14,123	)	¥	569,775

Equity in income of affiliates	¥	40,471	¥	100,018	¥	—	¥	(733	)	¥	139,756	¥	—		¥	—		¥	139,756
Assets	¥	934,472	¥	4,888,818	¥	5,572,152	¥	290,980		¥	11,686,422	¥	(108,708	)	¥	—		¥	11,577,714
Investments in affiliates	¥	76,280	¥	341,955	¥	—	¥	16,756		¥	434,991	¥	—		¥	—		¥	434,991
Depreciation and amortization	¥	44,525	¥	317,939	¥	213,805	¥	13,146		¥	589,415	¥	—		¥	—		¥	589,415
Capital expenditures	¥	37,084	¥	273,502	¥	800,491	¥	13,963		¥	1,125,040	¥	—		¥	—		¥	1,125,040
Damaged and impairment losses on long-lived assets	¥	59	¥	16,774	¥	835	¥	—		¥	17,668	¥	—		¥	—		¥	17,668
Provision for credit and lease residual losses on finance subsidiaries-receivables	¥	—	¥	—	¥	13,305	¥	—		¥	13,305	¥	—		¥	—		¥	13,305

F-61

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

As of and for the year ended March 31, 2012


	Yen (millions)
	Motorcycle Business		Automobile Business			Financial Services Business		Power Product and Other Businesses			Segment Total		Reconciling Items			Other Adjustments		Consolidated
Net sales and other operating revenue:
External customers	¥	1,348,828	¥	5,805,975		¥	516,148	¥	277,144		¥	7,948,095	¥	—		¥	—	¥	7,948,095
Intersegment		—		16,767			10,428		12,590			39,785		(39,785	)		—		—

Total	¥	1,348,828	¥	5,822,742		¥	526,576	¥	289,734		¥	7,987,880	¥	(39,785	)	¥	—	¥	7,948,095
Cost of sales, SG&A and R&D expenses		1,206,226		5,899,948			356,570		293,772			7,756,516		(39,785	)		—		7,716,731

Segment income (loss)	¥	142,602	¥	(77,206	)	¥	170,006	¥	(4,038	)	¥	231,364	¥	—		¥	—	¥	231,364

Equity in income of affiliates	¥	31,185	¥	68,521		¥	—	¥	700		¥	100,406	¥	—		¥	—	¥	100,406
Assets	¥	1,006,684	¥	4,955,791		¥	5,644,380	¥	305,235		¥	11,912,090	¥	(124,491	)	¥	—	¥	11,787,599
Investments in affiliates	¥	70,275	¥	343,429		¥	—	¥	17,079		¥	430,783	¥	—		¥	—	¥	430,783
Depreciation and amortization	¥	43,564	¥	289,845		¥	211,325	¥	10,133		¥	554,867	¥	—		¥	—	¥	554,867
Capital expenditures	¥	62,075	¥	349,605		¥	686,495	¥	10,005		¥	1,108,180	¥	—		¥	—	¥	1,108,180
Damaged and impairment losses on long-lived assets	¥	—	¥	8,260		¥	1,514	¥	2,330		¥	12,104	¥	—		¥	—	¥	12,104
Provision for credit and lease residual losses on finance subsidiaries-receivables	¥	—	¥	—		¥	13,032	¥	—		¥	13,032	¥	—		¥	—	¥	13,032

As of and for the year ended March 31, 2013


	Yen (millions)
	Motorcycle Business		Automobile Business		Financial Services Business		Power Product and Other Businesses			Segment Total		Reconciling Items			Other Adjustments		Consolidated
Net sales and other operating revenue:
External customers	¥	1,339,549	¥	7,709,216	¥	548,506	¥	280,676		¥	9,877,947	¥	—		¥	—	¥	9,877,947
Intersegment		—		14,374		11,750		10,994			37,118		(37,118	)		—		—

Total	¥	1,339,549	¥	7,723,590	¥	560,256	¥	291,670		¥	9,915,065	¥	(37,118	)	¥	—	¥	9,877,947
Cost of sales, SG&A and R&D expenses		1,229,316		7,437,599		402,098		301,242			9,370,255		(37,118	)		—		9,333,137

Segment income (loss)	¥	110,233	¥	285,991	¥	158,158	¥	(9,572	)	¥	544,810	¥	—		¥	—	¥	544,810

Equity in income of affiliates	¥	25,606	¥	56,361	¥	—	¥	756		¥	82,723	¥	—		¥	—	¥	82,723
Assets	¥	1,095,357	¥	5,759,126	¥	6,765,322	¥	309,149		¥	13,928,954	¥	(293,597	)	¥	—	¥	13,635,357
Investments in affiliates	¥	85,039	¥	352,317	¥	—	¥	20,020		¥	457,376	¥	—		¥	—	¥	457,376
Depreciation and amortization	¥	34,665	¥	290,522	¥	256,166	¥	9,116		¥	590,469	¥	—		¥	—	¥	590,469
Capital expenditures	¥	73,513	¥	540,625	¥	794,869	¥	14,519		¥	1,423,526	¥	—		¥	—	¥	1,423,526
Damaged and impairment losses on long-lived assets	¥	—	¥	—	¥	4,773	¥	—		¥	4,773	¥	—		¥	—	¥	4,773
Provision for credit and lease residual losses on finance subsidiaries-receivables	¥	—	¥	—	¥	10,059	¥	—		¥	10,059	¥	—		¥	—	¥	10,059

Explanatory notes:

Segment income (loss) of each segment is measured in a consistent manner with consolidated operating income, which is income before income taxes and equity in income of affiliates before other income (expenses), except Other Adjustments, which are out-of-period adjustments. Expenses not directly associated with specific segments are allocated based on the

F-62

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

most reasonable measures applicable. Out-of-period adjustments were the losses resulted from inventory management trading activities at a domestic subsidiary. This domestic subsidiary temporarily purchased sea food products from seafood companies with the promise that they would buy back such products after certain period, in order to bridge the gap between the purchasing period (the fishing season) and the sales period for sea food products. The Company recognized the related cumulative losses at the beginning of the fiscal year ended March 31, 2011 in selling, general and administrative expenses in the consolidated statement of income for the year ended March 31, 2011. The amount of out-of-period adjustments are not reported to or used by the chief operating decision maker in deciding how to allocate resources and in assessing the Company’s operating performance. Therefore, the adjustments were not included in Power product and other businesses but as Other Adjustments for the year ended March 31, 2011.

Assets of each segment are defined as total assets, including derivative financial instruments, investments in affiliates, and deferred tax assets. Segment assets are based on those directly associated with each segment and those not directly associated with specific segments are allocated based on the most reasonable measures applicable except for the corporate assets described below.

3.	Intersegment sales and revenues are generally made at values that approximate arm’s-length prices.

Unallocated corporate assets, included in reconciling items, amounted to ¥453,116 million as of March 31, 2011, ¥399,732 million as of March 31, 2012 and ¥293,583 million as of March 31, 2013, respectively, which consist primarily of cash and cash equivalents, available-for-sale securities and held-to-maturity securities held by the Company. Reconciling items also include elimination of intersegment transactions.

5.	Depreciation and amortization of Financial services business include ¥212,143 million for the year ended March 31, 2011, ¥209,762 million for the year ended March 31, 2012 and ¥254,933 million for the year ended March 31, 2013, respectively, of depreciation of property on operating leases.

6.	Capital expenditures of Financial services business includes ¥798,420 million for the year ended March 31, 2011, ¥683,767 million for the year ended March 31, 2012 and ¥793,118 million for the year ended March 31, 2013, respectively, of purchases of operating lease assets.

Previously, Honda used principally the declining-balance method for calculating the depreciation of property, plant and equipment. Effective April 1, 2012, Honda changed to the straight line method of depreciation. As a result of the change in depreciation method, depreciation expense for the year ended March 31, 2013 decreased by approximately ¥6,358 million in Motorcycle business, ¥48,568 million in Automobile business, ¥77 million in Financial services business and ¥1,297 million in Power product and other businesses, respectively. It resulted in an increase of segment income, see note 1(k).

8.	For the year ended March 31, 2012 and 2013, impacts of the floods in Thailand are mainly included in Cost of sales, SG&A and R&D expenses of Automobile business, see note 1(v).

9.	The amounts of Assets as of March 31, 2011 and 2012 have been corrected from the amounts previously disclosed, see note 1(w).

10.	The amounts of Depreciation and amortization for the year ended March 31, 2011 and 2012 have been corrected from the amounts previously disclosed.

External Sales and Other Operating Revenue by Product or Service Groups


	Yen (millions)
	2011		2012		2013
Motorcycles and relevant parts	¥	1,225,098	¥	1,286,319	¥	1,274,890
All-terrain vehicles (ATVs) and relevant parts		63,096		62,509		64,659
Automobiles and relevant parts		6,794,098		5,805,975		7,709,216
Financial, insurance services		561,896		516,148		548,506
Power products and relevant parts		202,838		208,661		221,321
Others		89,841		68,483		59,355

Total	¥	8,936,867	¥	7,948,095	¥	9,877,947

F-63

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Geographical Information

As of and for the year ended March 31, 2011


	Yen (millions)
	Japan		United States		Other Countries		Total
Net sales and other operating revenue	¥	1,834,003	¥	3,504,765	¥	3,598,099	¥	8,936,867
Long-lived assets	¥	1,053,168	¥	1,766,814	¥	571,591	¥	3,391,573

As of and for the year ended March 31, 2012


	Yen (millions)
	Japan		United States		Other Countries		Total
Net sales and other operating revenue	¥	1,774,573	¥	3,099,810	¥	3,073,712	¥	7,948,095
Long-lived assets	¥	1,048,402	¥	1,889,567	¥	596,939	¥	3,534,908

As of and for the year ended March 31, 2013


	Yen (millions)
	Japan		United States		Other Countries		Total
Net sales and other operating revenue	¥	1,925,333	¥	4,063,727	¥	3,888,887	¥	9,877,947
Long-lived assets	¥	1,167,236	¥	2,380,885	¥	802,697	¥	4,350,818

The above information is based on the location of the Company and its subsidiaries.

Supplemental Geographical Information

In addition to the disclosure required by U.S.GAAP, Honda provides the following supplemental information in order to provide financial statements users with additional useful information:

Supplemental geographical information based on the location of the Company and its subsidiaries

As of and for the year ended March 31, 2011


	Yen (millions)
	Japan		North America		Europe			Asia		Other Regions		Total		Reconciling Items			Other Adjustments			Consolidated
Net sales and other operating revenue:
External customers	¥	1,834,003	¥	3,941,505	¥	618,426		¥	1,594,058	¥	948,875	¥	8,936,867	¥	—		¥	—		¥	8,936,867
Transfers between geographic areas		1,777,204		206,392		80,872			247,109		33,208		2,344,785		(2,344,785	)		—			—

Total	¥	3,611,207	¥	4,147,897	¥	699,298		¥	1,841,167	¥	982,083	¥	11,281,652	¥	(2,344,785	)	¥	—		¥	8,936,867
Cost of sales, SG&A and R&D expenses	¥	3,545,089	¥	3,846,975	¥	709,501		¥	1,690,530	¥	912,534	¥	10,704,629	¥	(2,351,660	)	¥	14,123		¥	8,367,092

Operating income (loss)	¥	66,118	¥	300,922	¥	(10,203	)	¥	150,637	¥	69,549	¥	577,023	¥	6,875		¥	(14,123	)	¥	569,775

Assets	¥	2,882,470	¥	6,209,145	¥	564,678		¥	1,049,113	¥	658,636	¥	11,364,042	¥	213,672		¥	—		¥	11,577,714
Long-lived assets	¥	1,053,168	¥	1,852,542	¥	106,633		¥	231,867	¥	147,363	¥	3,391,573	¥	—		¥	—		¥	3,391,573

F-64

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

As of and for the year ended March 31, 2012


	Yen (millions)
	Japan			North America		Europe			Asia		Other Regions		Total		Reconciling Items			Other Adjustments		Consolidated
Net sales and other operating revenue:
External customers	¥	1,774,573		¥	3,500,245	¥	519,329		¥	1,276,621	¥	877,327	¥	7,948,095	¥	—		¥	—	¥	7,948,095
Transfers between geographic areas		1,588,379			214,511		61,463			213,857		15,805		2,094,015		(2,094,015	)		—		—

Total	¥	3,362,952		¥	3,714,756	¥	580,792		¥	1,490,478	¥	893,132	¥	10,042,110	¥	(2,094,015	)	¥	—	¥	7,948,095
Cost of sales, SG&A and R&D expenses	¥	3,472,786		¥	3,491,463	¥	592,901		¥	1,413,608	¥	836,176	¥	9,806,934	¥	(2,090,203	)	¥	—	¥	7,716,731

Operating income (loss)	¥	(109,834	)	¥	223,293	¥	(12,109	)	¥	76,870	¥	56,956	¥	235,176	¥	(3,812	)	¥	—	¥	231,364

Assets	¥	3,112,901		¥	6,333,851	¥	568,790		¥	1,070,331	¥	611,818	¥	11,697,691	¥	89,908		¥	—	¥	11,787,599
Long-lived assets	¥	1,048,402		¥	1,970,631	¥	111,354		¥	274,182	¥	130,339	¥	3,534,908	¥	—		¥	—	¥	3,534,908

As of and for the year ended March 31, 2013


	Yen (millions)
	Japan		North America		Europe		Asia		Other Regions		Total		Reconciling Items			Other Adjustments		Consolidated
Net sales and other operating revenue:
External customers	¥	1,925,333	¥	4,612,361	¥	536,856	¥	1,926,434	¥	876,963	¥	9,877,947	¥	—		¥	—	¥	9,877,947
Transfers between geographic areas		1,968,179		244,741		105,254		379,213		19,504		2,716,891		(2,716,891	)		—		—

Total	¥	3,893,512	¥	4,857,102	¥	642,110	¥	2,305,647	¥	896,467	¥	12,594,838	¥	(2,716,891	)	¥	—	¥	9,877,947
Cost of sales, SG&A and R&D expenses	¥	3,715,084	¥	4,648,184	¥	641,650	¥	2,158,889	¥	860,773	¥	12,024,580	¥	(2,691,443	)	¥	—	¥	9,333,137

Operating income (loss)	¥	178,428	¥	208,918	¥	460	¥	146,758	¥	35,694	¥	570,258	¥	(25,448	)	¥	—	¥	544,810

Assets	¥	3,264,383	¥	7,645,540	¥	673,667	¥	1,523,192	¥	660,856	¥	13,767,638	¥	(132,281	)	¥	—	¥	13,635,357
Long-lived assets	¥	1,167,236	¥	2,481,097	¥	124,088	¥	434,827	¥	143,570	¥	4,350,818	¥	—		¥	—	¥	4,350,818

Explanatory notes:

1.	Major countries or regions in each geographic area:


North America		United States, Canada, Mexico
Europe		United Kingdom, Germany, France, Italy, Belgium
Asia		Thailand, Indonesia, China, India, Vietnam
Other Regions		Brazil, Australia

Operating income (loss) of each geographical region is measured in a consistent manner with consolidated operating income, which is income before income taxes and equity in income of affiliates before other income (expenses), except Other Adjustments, which are out-of-period adjustments. Out-of-period adjustments were the losses resulted from inventory management trading activities at a domestic subsidiary. This domestic subsidiary temporarily purchased sea food products from seafood companies with the promise that they would buy back such products after certain period, in order to bridge the gap between the purchasing period (the fishing season) and the sales period for sea food products. The Company recognized the related cumulative losses at the beginning of the fiscal year ended March 31, 2011 in selling, general and administrative expenses in the consolidated statement of income for the year ended March 31, 2011. The adjustments were not included in Japan but as Other Adjustments for the year ended March 31, 2011.

3.	Assets of each geographical region are defined as total assets, including derivative financial instruments, investments in affiliates, and deferred tax assets.

F-65

HONDA MOTOR CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

4.	Sales and revenues between geographic areas are generally made at values that approximate arm’s-length prices.

Previously, Honda used principally the declining-balance method for calculating the depreciation of property, plant and equipment. Effective April 1, 2012, Honda changed to the straight line method of depreciation. As a result of the change in depreciation method, depreciation expense for the year ended March 31, 2013 decreased by approximately ¥42,486 million in Japan, ¥9,602 million in North America, ¥1,068 million in Europe and ¥3,144 million in Asia, respectively. It resulted in an increase of operating income, see note 1(k).

7.	For the year ended March 31, 2012 and 2013, impacts of the floods in Thailand are included in Cost of sales, SG&A and R&D expenses of Asia, see note 1(v).

8.	The amounts of Assets as of March 31, 2011 and 2012 have been corrected from the amounts previously disclosed, see note 1(w).

(22) Selected Quarterly Financial Data (Unaudited)*

Quarterly financial data for the years ended March 31, 2011, 2012 and 2013 are set forth in the following table:


	Yen (millions)						Yen
	Net sales and other operating revenue		Operating Income (loss)		Net income (loss) attributable to Honda Motor Co., Ltd.		Basic net income (loss) attributable to Honda Motor Co., Ltd. per common share
Year ended March 31, 2011:
First quarter	¥	2,361,463	¥	234,443	¥	272,487	¥	150.27
Second quarter		2,251,911		163,473		135,929		75.24
Third quarter		2,110,414		125,653		81,118		45.01
Fourth quarter		2,213,079		46,206		44,554		24.72

	¥	8,936,867	¥	569,775	¥	534,088	¥	295.67

Year ended March 31, 2012:
First quarter	¥	1,714,596	¥	22,579	¥	31,797	¥	17.64
Second quarter		1,885,892		52,511		60,429		33.53
Third quarter		1,942,545		44,298		47,662		26.45
Fourth quarter		2,405,062		111,976		71,594		39.72

	¥	7,948,095	¥	231,364	¥	211,482	¥	117.34

Year ended March 31, 2013:
First quarter	¥	2,435,909	¥	176,013	¥	131,723	¥	73.09
Second quarter		2,271,286		100,867		82,233		45.63
Third quarter		2,425,792		131,941		77,441		42.97
Fourth quarter		2,744,960		135,989		75,752		42.03

	¥	9,877,947	¥	544,810	¥	367,149	¥	203.71

*	All quarterly financial data is unaudited and also has not been reviewed by the independent registered public accounting firm.

F-66

Signatures

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for the filing of Form 20-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.


HONDA GIKEN KOGYO KABUSHIKI KAISHA (HONDA MOTOR CO., LTD.)

By:		/s/ Takanobu Ito
		Takanobu Ito President, Chief Executive Officer and Representative Director

Date: June 25, 2013
Tokyo, Japan

INDEX OF EXHIBITS


	1.1			Articles of Incorporation of the registrant (English translation)

	1.2			Share Handling Regulations of the registrant (English translation)

	1.3			Regulations of Board of Directors of the registrant (English translation)

	1.4			Regulations of the Board of Corporate Auditors of the registrant (English translation)

	2.1			Specimen common stock certificates of the registrant (English translation) (1)

	2.2			Deposit Agreement dated as of December 19, 1962, as amended and restated as of October 1, 1982 (including changes from Amendment to Deposit Agreement dated as of April 1, 1989) among the registrant, Morgan Guaranty Trust Company of New York (now JP Morgan Chase Bank), as Depositary, and all owners and holders from time to time of American Depositary Receipts and European Depositary Receipts, including the form of American Depositary Receipt (2)

	2.3			Form of Amendment No. 2 to Deposit Agreement dated as of April, 1995, among the parties referred to in Exhibit 2.2 above (2)

	2.4			Form of Amendment No. 3 to Deposit Agreement dated as of January, 2002, among the parties referred to in Exhibit 2.2 above (3)

	2.5			Form of Amendment No. 4 to Deposit Agreement dated as of June, 2006, among the parties referred to in Exhibit 2.2 above (4)

	2.6			Form of Amendment No. 5 to Deposit Agreement dated as of June, 2007, among the parties referred to in Exhibit 2.2 above (5)

	8.1			List of Significant Subsidiaries (See “Organizational Structure” in Item 4.C of this Form 20-F)

	11.1			Code of Ethics (6)

	12.1			Certification of the principal executive officer required by 17 C.F.R. 240. 13a-14(a)

	12.2			Certification of the principal financial officer required by 17 C.F.R. 240. 13a-14(a)

	13.1			Certification of the chief executive officer required by 18 U.S.C. Section 1350

	13.2			Certification of the chief financial officer required by 18 U.S.C. Section 1350

	101.INS			XBRL Instance Document

	101.SCH			XBRL Taxonomy Extension Schema Document

	101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document

	101.DEF			XBRL Taxonomy Extension Definition Linkbase Document

	101.LAB			XBRL Taxonomy Extension Label Linkbase Document

	101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

(1)	Incorporated by reference to the registrant’s annual report on Form 20-F filed on September 27, 2001.

(2)	Incorporated by reference to the Registration Statement on Form F-6 (File No. 33-91842) filed on May 1, 1995.

(3)	Incorporated by reference to the Registration Statement on Form F-6 (File No. 333-14228) filed on December 20, 2001.

(4)	Incorporated by reference to the Registration Statement on Form F-6 (File No. 333-114874) filed on June 28, 2006.

(5)	Incorporated by reference to the Registration Statement on Form F-6 (File No. 333-143589) filed on June 8, 2007.

(6)	Incorporated by reference to the registrant’s annual report on Form 20-F filed on July 9, 2004.