##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 20-F

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

OR

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

For the fiscal year ended March 31, 2005

OR

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

For the transition period from             to

Commission file number 1-7628

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HONDA GIKEN KOGYO KABUSHIKI KAISHA

(Exact name of Registrant as specified in its charter)

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HONDA MOTOR CO.,
LTD.

(Translation of Registrants name into English)

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JAPAN

(Jurisdiction of incorporation
or organization)

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

(Address of principal executive offices)

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

|                    |  |                                                                                                                               |  |                            
|------------------- |  | ----------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------
|Title of each class |  | Name of each exchange on which registered                                                                                    
|(1)                 |  | Common Stock*                                                                                                                 |  | The New York Stock Exchange
|(2)                 |  | American Depositary Shares evidenced by American Depositary Receipts, each representing one-half of one share of Common Stock |  | The 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, 2005                                                                                             
|(1)                 |  | Common Stock                                                                                                                  |  | 924,870,427
|(2)                 |  | American Depositary Shares evidenced by American Depositary Receipts, each representing one-half of one share of Common Stock |  | 36,507,098 

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 which financial statement item the registrant has elected to follow. Item 17  x    Item 18 ̈

|* | Not for trading purposes, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents

|                                                              |  |   
|------------------------------------------------------------- |  | --
|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                            |  | 5 
|A. History and Development of the Company                     |  | 5 
|B. Business Overview                                          |  | 6 
|C. Organizational Structure                                   |  | 18
|D. Property, Plants and Equipment                             |  | 20
|                                                              | 
|Item 5. Operating and Financial Review and Prospects          |  | 21
|A. Operating Results                                          |  | 21
|B. Liquidity and Capital Resources                            |  | 40
|C. Research and Development                                   |  | 42
|D. Trend information                                          |  | 44
|E. Off-Balance sheet Arrangements                             |  | 44
|F. Tabular Disclosure of Contractual Obligations              |  | 45
|                                                              | 
|Item 6. Directors, Senior Management and Employees            |  | 45
|A. Directors and Senior Management                            |  | 45
|B. Compensation                                               |  | 57
|C. Board practices                                            |  | 58
|D. Employees                                                  |  | 58
|E. Share ownership                                            |  | 59
|                                                              | 
|Item 7. Major shareholders and Related Party Transactions     |  | 59
|A. Major shareholders                                         |  | 59
|B. Related party transactions                                 |  | 59
|C. Interests of Experts and Counsel                           |  | 60
|                                                              | 
|Item 8. Financial Information                                 |  | 60
|A. Consolidated Statements and Other Financial Information    |  | 60
|B. Significant Changes                                        |  | 61
|                                                              | 
|Item 9. The Offer and Listing                                 |  | 61
|A. The Offer and Listing                                      |  | 61
|B. Plan of Distribution                                       |  | 62
|C. Markets                                                    |  | 62
|D. Selling Shareholders                                       |  | 62
|E. Dilution                                                   |  | 62
|F. Expenses of the Issue                                      |  | 62
|                                                              | 
|Item 10. Additional Information                               |  | 63
|A. Share Capital                                              |  | 63
|B. Memorandum and Article of Association                      |  | 63
|C. Material Contracts                                         |  | 69
|D. Exchange Controls                                          |  | 69
|E. Taxation                                                   |  | 69



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##### Table of Contents

|                                                                                                                                                                           |  |   
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --
|F. Dividends and Paying Agents                                                                                                                                             |  | 73
|G. Statement by Experts                                                                                                                                                    |  | 73
|H. Documents on Display                                                                                                                                                    |  | 73
|I. Subsidiary Information                                                                                                                                                  |  | 73
|                                                                                                                                                                           | 
|Item 11. Quantitative and Qualitative Disclosure about Market Risk                                                                                                         |  | 74
|                                                                                                                                                                           | 
|Item 12. Description of Securities to be Registered                                                                                                                        |  | 77
|                                                                                                                                                                           | 
|PART II                                                                                                                                                                    |  |   
|                                                                                                                                                                           | 
|Item 13. Defaults, Dividend Arrearages and Delinquencies                                                                                                                   |  | 77
|                                                                                                                                                                           | 
|Item 14. Material Modifications to the Rights of Security Holders and Use Proceeds                                                                                         |  | 77
|                                                                                                                                                                           | 
|Item 15. Controls and Procedures                                                                                                                                           |  | 77
|                                                                                                                                                                           | 
|Item 16A. Audit Committee Financial Expert                                                                                                                                 |  | 77
|                                                                                                                                                                           | 
|Item 16B. Code of Ethics                                                                                                                                                   |  | 77
|                                                                                                                                                                           | 
|Item 16C. Principal Accountant Fees and Services                                                                                                                           |  | 77
|                                                                                                                                                                           | 
|Item 16D. Exemption from the Listing Standards for Audit Committees                                                                                                        |  | 78
|                                                                                                                                                                           | 
|Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers                                                                                           |  | 79
|                                                                                                                                                                           | 
|PART III                                                                                                                                                                   |  |   
|                                                                                                                                                                           | 
|Item 17. Financial Statements                                                                                                                                              |  | 80
|                                                                                                                                                                           | 
|Item 18. Financial Statements                                                                                                                                              |  | 80
|                                                                                                                                                                           | 
|Item 19. Exhibits                                                                                                                                                          |  | 80
|                                                                                                                                                                           | 
|Annex A.     Unaudited consolidated balance sheets and unaudited consolidated cash flow statements divided into non-financial services businesses and finance subsidiaries |  | 81



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##### Table of Contents

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, 2005 have been derived from our consolidated financial statements that were prepared in accordance with U.S. generally accepted accounting
principles (U.S. GAAP), except that the consolidated financial statements do not include segment information required under U.S. GAAP.



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



|                                                              |  |                                             |           |                        |   |           |  |      |           |      |   |           |  |   |           |  |   |       
|------------------------------------------------------------- |  | ------------------------------------------- | --------- | ---------------------- | - | --------- |  | ---- | --------- | ---- | - | --------- |  | - | --------- |  | - | ------
|                                                              |  | Fiscal years ended March 31, Yen (millions) |           | U.S. dollars(millions)
|                                                              |  | 2001                                        |           | 2002                   |   | 2003      |  | 2004 |           | 2005 |   | 2005     
|Income statement data:                                        |  |                                             |           |                        |   |           |  |      |           |      |   |           |  |   |           |  |   |       
|Net sales and other operating revenue                         |  | ¥                                           | 6,463,830 |                        | ¥ | 7,362,438 |  | ¥    | 7,971,499 |      | ¥ | 8,162,600 |  | ¥ | 8,650,105 |  | $ | 80,549
|Operating income                                              |  |                                             | 401,438   |                        |   | 661,202   |  |      | 724,527   |      |   | 600,144   |  |   | 630,920   |  |   | 5,875 
|Income before income taxes and equity in income of affiliates |  |                                             | 384,976   |                        |   | 551,342   |  |      | 609,755   |      |   | 641,927   |  |   | 656,805   |  |   | 6,116 
|Net income                                                    |  |                                             | 232,241   |                        |   | 362,707   |  |      | 426,662   |      |   | 464,338   |  |   | 486,197   |  |   | 4,527 
|Research and development                                      |  |                                             | 352,829   |                        |   | 395,176   |  |      | 436,863   |      |   | 448,967   |  |   | 467,754   |  |   | 4,356 
|Depreciation                                                  |  |                                             | 170,342   |                        |   | 194,944   |  |      | 220,874   |      |   | 213,445   |  |   | 225,752   |  |   | 2,102 
|Capital expenditures                                          |  |                                             | 285,687   |                        |   | 303,424   |  |      | 316,991   |      |   | 287,741   |  |   | 373,980   |  |   | 3,482 
|                                                              |  |                                             |           |                        |   |          
|Balance sheet data:                                           |  |                                             |           |                        |   |           |  |      |           |      |   |           |  |   |           |  |   |       
|Total assets                                                  |  | ¥                                           | 5,667,409 |                        | ¥ | 6,940,795 |  | ¥    | 7,681,291 |      | ¥ | 8,328,768 |  | ¥ | 9,316,970 |  | $ | 86,758
|Long-term debt                                                |  |                                             | 368,173   |                        |   | 716,614   |  |      | 1,140,182 |      |   | 1,394,612 |  |   | 1,559,500 |  |   | 14,522
|Stockholders equity                                          |  |                                             | 2,230,291 |                        |   | 2,573,941 |  |      | 2,629,720 |      |   | 2,874,400 |  |   | 3,289,294 |  |   | 30,629
|Common stock                                                  |  |                                             | 86,067    |                        |   | 86,067    |  |      | 86,067    |      |   | 86,067    |  |   | 86,067    |  |   | 801   



Weighted average number of shares
outstanding



|                                                     |  |                       |  |         |  |         |  |         |  |        
|---------------------------------------------------- |  | --------------------- |  | ------- |  | ------- |  | ------- |  | -------
|                                                     |  | (Thousands of shares)
|                                                     |  | 2001                  |  | 2002    |  | 2003    |  | 2004    |  | 2005   
|Weighted average number of common shares outstanding |  | 974,414               |  | 974,408 |  | 970,952 |  | 953,638 |  | 933,767



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|                            |  |       |        |       |   |        |  |      |        |      |   |        |  |   |        |  |   |     
|--------------------------- |  | ----- | ------ | ----- | - | ------ |  | ---- | ------ | ---- | - | ------ |  | - | ------ |  | - | ----
|Net income per common share |  |       |        |       |   |        |  |      |        |      |   |        |  |   |        |  |   |     
|                            |  | (Yen) |        | (US$)
|                            |  | 2001  |        | 2002  |   | 2003   |  | 2004 |        | 2005 |   | 2005  
|Basic                       |  | ¥     | 238.34 |       | ¥ | 372.23 |  | ¥    | 439.43 |      | ¥ | 486.91 |  | ¥ | 520.68 |  | $ | 4.85
|Diluted                     |  |       | 238.34 |       |   | 372.23 |  |      | 439.43 |      |   | 486.91 |  |   | 520.68 |  |   | 4.85



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



Cash dividends declared during the period per common share:



|    |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      
|--- |  | ---- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|    |  | 2001 |       | 2002 |   | 2003  |  | 2004 |       | 2005
|Yen |  | ¥    | 23.00 |      | ¥ | 25.00 |  | ¥    | 31.00 |      | ¥ | 35.00 |  | ¥ | 51.00
|US$ |  | $    | 0.19  |      | $ | 0.19  |  | $    | 0.26  |      | $ | 0.33  |  | $ | 0.47 



Additionally, a
year-end dividend of ¥37 ($0.34) per common share aggregating ¥34.2 billion ($319 million) relating to fiscal 2005 was determined by our board of directors in April 2005 and approved by our shareholders in June 2005. This dividend was paid
in June 2005.



As described in Note (1) (s) to our consolidated
financial statements, certain reclassifications have been made to the prior years consolidated financial statements to conform to the presentation used for the fiscal year ended March 31, 2005.



Exchange Rates



In this Annual Report, yen amounts have been translated into U.S. dollars
for the convenience of readers. Unless otherwise noted, the rate used for these translations was ¥107.39 =$1.00, which represents the approximate exchange rate quoted on the Tokyo Foreign Exchange Market on March 31, 2005. No representation is
made that yen amounts could have been, or could be, converted into U.S. dollars at that rate or any other rate on this or any other data or at all.



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 June 30 2005, the noon buying rate was ¥110.91 =$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   
|2001                         |  | 111.64  |  | 125.54     |  | 125.54 |  | 104.19
|2002                         |  | 125.64  |  | 132.70     |  | 134.77 |  | 115.89
|2003                         |  | 121.10  |  | 118.07     |  | 133.40 |  | 115.71
|2004                         |  | 112.75  |  | 104.18     |  | 120.55 |  | 104.18
|2005                         |  | 107.28  |  | 107.22     |  | 114.30 |  | 102.26
|2006 (through June 30, 2005) |  | 107.84  |  | 110.91     |  | 110.91 |  | 104.41
|Jan-2005                     |  |         |  |            |  | 104.93 |  | 102.26
|Feb-2005                     |  |         |  |            |  | 105.84 |  | 103.70
|Mar-2005                     |  |         |  |            |  | 107.49 |  | 103.87
|Apr-2005                     |  |         |  |            |  | 108.67 |  | 104.64
|May-2005                     |  |         |  |            |  | 108.17 |  | 104.41
|June-2005                    |  |         |  |            |  | 110.91 |  | 106.64



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##### Table of Contents

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.



Honda may be adversely affected by market
conditions



Honda conducts its operation in Japan and
throughout the world, including North America, Europe and Asia.



A continued economic slowdown, recession or sustained loss of consumer confidence in these markets, which may be caused by rising fuel prices 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 automobiles, motorcycles and power products can be volatile



Prices for automobiles, motorcycles and power products in certain markets have, at times, experienced sharp changes over short periods of time.



This volatility is caused by many factors, including fierce competition, which is increasing, short-term fluctuations in
demand from underlying economic conditions, changes in import regulations, shortages of certain supplies and sales incentives by Honda or other manufacturers or dealers. There can be no assurance that such price volatility will not continue or
intensify 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 or worldwide, leading, potentially, to further increased price pressure. Price volatility in any or all of Hondas markets could adversely affect Hondas results of operations in a particular period.



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 sells its products 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, balance sheet and cash flow, as well as Hondas competitiveness, which will over time affect its results.



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



3



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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 risk,
Honda uses derivative financial instruments in order to reduce the substantial effects of currency fluctuations and interest rate exposure on our cash flow 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 also is 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.



The automobile, motorcycle and power product industries are subject to extensive
environmental and other governmental regulation



Regulations regarding vehicle emission levels, fuel economy, noise and safety, 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. 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 breach of some or a large group of Hondas intellectual property rights, would have an adverse effect on
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 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 risks
relating to residual value, credit risk and cost of capital. Competition for customers and/or these risks may affect Hondas results of operations in the future.



Honda relies on various suppliers for the provision of certain raw materials and components



Honda purchases raw materials, and certain components and parts, from
numerous external suppliers, and relies on some key suppliers for some items and the raw materials 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 supply 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.



4



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##### Table of Contents

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, natural disasters, epidemics and labor strikes



Honda conducts its businesses worldwide, and its operations may variously be subject to wars, use of force by foreign countries, terrorism, multinational conflicts, natural disasters, epidemics, labor strikes and
other events beyond our control which may delay or disrupt Hondas local operations in the affected regions, including the acquisition of raw materials and parts, the manufacture, sales and distribution of products and the provision of
services. Delays or disruptions in one region may in turn affect our global operations. If such delay or disruption occurs and continues for a long period of time, Hondas business, financial condition or results of operations may be adversely
affected.



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, the United States and elsewhere, including 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 the United States, 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; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the effects of economic stagnation or recession in Hondas principal markets and exchange rate fluctuations on the Hondas results of operations.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



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.



5



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##### Table of Contents

Honda develops, produces, and manufactures a variety of motor products, ranging from small
general-purpose engines to specialty sports cars that incorporate Hondas highly efficient internal combustion engine technology. Approximately 19.0 million Honda engines were sold worldwide during the fiscal year ended March 31, 2005.



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



Principal Capital Investments



In the fiscal years ended March 31, 2003, 2004 and 2005, Hondas capital expenditures were ¥316.9 billion, ¥287.7 billion and ¥373.9 billion, respectively. For further details of Hondas capital expenditures during
fiscal 2005, see Property, Plants and Equipment included as Item 4.D of this Annual Report.



B. Business overview



Motorcycle Business



The following table sets out unit sales for Hondas
motorcycle business, including motorcycles, all-terrain vehicles (ATVs) and personal watercraft, and revenue from its motorcycle business during the fiscal years ended March 31, 2001, 2002, 2003, 2004 and 2005:



|                                               |  |                              |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |        |  
|---------------------------------------------- |  | ---------------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ------ | -
|                                               |  | Fiscal years ended March 31, |      
|                                               |  | 2001                         |       |   | 2002 |   |       | 2003 |  |   | 2004  |   |  | 2005 |      
|Units (in thousands)                           |  |                              | 5,118 |   |      |   | 6,095 |      |  |   | 8,080 |   |  |      | 9,206 |   |  |   | 10,482 |  
|Revenue in billions of Japanese yen            |  | ¥                            | 805   |   |      | ¥ | 947   |      |  | ¥ | 978   |   |  | ¥    | 996   |   |  | ¥ | 1,097  |  
|Revenue as a Percentage of total sales revenue |  |                              | 12    | % |      |   | 13    | %    |  |   | 12    | % |  |      | 12    | % |  |   | 13     | %

---

|Note: | All information regarding business segments has been prepared in accordance with a Ministerial Ordinance under the Securities and Exchange Law of Japan, which requires certain
information to be disclosed, including business segment information.
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | See Operating and Financial Review and Prospects included as Item 5 of this Annual Report.
| | --------------------------------------------------------------------------------------------



Honda produces a wide range of motorcycles, ranging from the 50cc class to the 1800cc class in cylinder displacement.
Hondas motorcycles use gasoline engines developed by Honda that are air- or water-cooled, two or 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 is the largest manufacturer of motorcycles in the world in terms of annual units of production.



Hondas motorcycles are produced at two sites in Japan: Hamamatsu and Kumamoto. In fiscal 2005, the annual production output of these sites was
563,244 units. Hondas motorcycles are also produced by subsidiaries in the United States, Italy, Spain, Brazil, Thailand, Vietnam, Philippine and India. Annual output in those countries in fiscal 2005 was approximately 388,000, 132,000,
37,000, 909,000, 2,256,000, 516,000, 234,000 and 546,000 units, respectively. Certain motorcycle components are manufactured in Japan and shipped to foreign plants for assembly. Each plant also buys locally made parts or manufactures parts using
Hondas intellectual property and technical guidance.



6



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##### Table of Contents

Automobile Business



The following table sets out Hondas unit sales of automobiles and revenue from its automobile business during the fiscal years ended March 31, 2001,
2002, 2003, 2004 and 2005:



|                                               |  |                              |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|---------------------------------------------- |  | ---------------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ----- | -
|                                               |  | Fiscal years ended March 31, |      
|                                               |  | 2001                         |       |   | 2002 |   |       | 2003 |  |   | 2004  |   |  | 2005 |      
|Units (in thousands)                           |  |                              | 2,580 |   |      |   | 2,666 |      |  |   | 2,888 |   |  |      | 2,983 |   |  |   | 3,242 |  
|Revenue in billions of Japanese yen            |  | ¥                            | 5,231 |   |      | ¥ | 5,929 |      |  | ¥ | 6,440 |   |  | ¥    | 6,592 |   |  | ¥ | 6,963 |  
|Revenue as a percentage of total sales revenue |  |                              | 81    | % |      |   | 81    | %    |  |   | 81    | % |  |      | 81    | % |  |   | 80    | %

---

|Note: | All information regarding business segments has been prepared in accordance with a Ministerial Ordinance under the Securities and Exchange Law of Japan, which requires certain
information to be disclosed, including business segment information.
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | See Operating and Financial Review and Prospects included as Item 5 of this Annual Report.
| | --------------------------------------------------------------------------------------------



Hondas principal automobile products includes the following vehicle models:



Passenger cars:



Legend, Accord, Civic, City, Fit Saloon, Acura RL,
Acura TL, Acura TSX



Multi-wagons,
Minivans, Sport Utility Vehicle, Sports coupe:



Elysion, Odyssey, Step Wagon, Edix, FR-V, Stream, Fit, Jazz, Pilot, Element, CR-V, Acura MDX, Acura RSX



Mini-vehicles:



Life, Thats, Vamos, Acty



Automobiles are produced by Honda at two sites in Japan: the Saitama factory and the Suzuka factory. Our major production sites overseas are located in
Ohio (U.S.A.), Alabama (U.S.A.), Alliston (Canada), Swindon (U.K.) and Ayutthaya (Thailand).



The manufacture of the Life, Vamos and Vamos-Hobio, Acty-Truck and Acty-Van, is undertaken by Yachiyo Industry Co., Ltd., one of our affiliates.



Financial Services Business



The following table sets out Hondas revenue from Financial Services
during the fiscal years ended March 31, 2001, 2002, 2003, 2004 and 2005:



|                                               |  |                              |     |   |      |   |     |      |  |   |      |   |  |      |     |   |  |   |     |  
|---------------------------------------------- |  | ---------------------------- | --- | - | ---- | - | --- | ---- |  | - | ---- | - |  | ---- | --- | - |  | - | --- | -
|                                               |  | Fiscal years ended March 31, |    
|                                               |  | 2001                         |     |   | 2002 |   |     | 2003 |  |   | 2004 |   |  | 2005 |    
|Revenue in billions of Japanese yen            |  | ¥                            | 169 |   |      | ¥ | 201 |      |  | ¥ | 237  |   |  | ¥    | 242 |   |  | ¥ | 255 |  
|Revenue as a percentage of total sales revenue |  |                              | 3   | % |      |   | 2   | %    |  |   | 3    | % |  |      | 3   | % |  |   | 3   | %

---

|Note: | All information regarding business segments has been prepared in accordance with a Ministerial Ordinance under the Securities and Exchange Law of Japan, which requires certain
information to be disclosed, including business segment information.
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | See Operating and Financial Review and Prospects included as Item 5 of this Annual Report.
| | --------------------------------------------------------------------------------------------



In our financial services business, Honda offer a variety of financial services to our customers and dealers through
financial subsidiaries in Japan and abroad, with the aim of providing sales support for our products.



7



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##### Table of Contents

Power Product and Other Businesses



The following table sets out Hondas revenue from Power Product and Other Businesses during the fiscal years ended
March 31, 2001, 2002, 2003, 2004 and 2005:



|                                               |  |                              |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|---------------------------------------------- |  | ---------------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ----- | -
|                                               |  | Fiscal years ended March 31, |      
|                                               |  | 2001                         |       |   | 2002 |   |       | 2003 |  |   | 2004  |   |  | 2005 |      
|Units (in thousands)                           |  |                              | 3,884 |   |      |   | 3,926 |      |  |   | 4,584 |   |  |      | 5,047 |   |  |   | 5,300 |  
|Revenue in billions of Japanese yen            |  | ¥                            | 257   |   |      | ¥ | 282   |      |  | ¥ | 315   |   |  | ¥    | 331   |   |  | ¥ | 332   |  
|Revenue as a percentage of total sales revenue |  |                              | 4     | % |      |   | 4     | %    |  |   | 4     | % |  |      | 4     | % |  |   | 4     | %

---

|Note: | All information regarding business segments has been prepared in accordance with a Ministerial Ordinance under the Securities and Exchange Law of Japan, which requires certain
information to be disclosed, including business segment information.
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | See Operating and Financial Review and Prospects included as Item 5 of this Annual Report.
| | --------------------------------------------------------------------------------------------



Honda manufactures a variety of power products including power tillers, portable generators, general-purpose engines, grass
cutters, outboard engines, water pumps, snow throwers, power carriers, power sprayers, lawn mowers and lawn tractors (riding lawn mowers).



Marketing and Distribution



Most of Hondas products are distributed under trademarks of Honda in Japan and/or in overseas markets. Major trademarks include HONDA,
ACURA, LEGEND, INSPIRE, ACCORD, CIVIC, CITY, FIT SALOON, FIT ARIA, ACURA RL, ACURA TL, ACURA TSX, ELYSION, ODYSSEY, STEP WGN, EDIX, FR-V,
STREAM, MOBILIO, FIT, JAZZ, PILOT, RIDGELINE, ELEMENT, CR-V, HR-V, MDX, NSX, S2000, INSIGHT, INTEGRA, ACURA RSX, LIFE,
THATS, VAMOS, ACTY, GOLDWING, WAVE, and CUB.



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 10,400 outlets, including approximately 1,000 PROS authorized dealerships. PROS dealerships sell substantially all of Hondas Japanese motorcycle models.



Hondas distribution channels for automobiles in Japan consist of three
dealer networks: PRIMO Shops, CLIO Shops and VERNO Shops, which sell different models of Honda automobiles. At present, 868 retail dealers operate 1,504 PRIMO Shops and sell the Civic, Life,
Thats, Vamos, and Acty. Hondas 82 retail dealers operate 510 CLIO Shops and sell the Legend and Accord series. 76 retail dealers operate 401 VERNO Shops and sell the MDX,
Element, CR-V, HR-V, NSX, S2000 and Integra. In addition, Inspire, Fit Aria, Elysion, Odyssey, Step Wagon, Edix, Stream, Spike, Mobilio,
Fit, Insight, and Partner are sold through all three dealer networks.



Power products are distributed in Japan primarily through Hondas nine sales offices to approximately 1,520 retail dealers throughout Japan, including affiliates of Honda. A number of small engines are also sold
to other manufacturers for use in their products.



The
independent retail dealers who sell Hondas products in Japan receive payment from customers by one of four payment methods: cash, bank loans, installment payments or financing by credit companies.



Service and parts related operations in Japan



Sales of spare parts and after sales services are mainly provided through
retail dealers. Lectures on service technology are provided for dealers regularly by Hondas Automobile Sales Operations (Japan).



8



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##### Table of Contents

Overseas sales



Approximately 96% of Hondas overseas sales are made through its principal foreign sales subsidiaries, which distribute
Hondas products to local wholesalers and retail dealers.



In the United States, which is the largest market for Honda automobiles, Honda markets its products through a sales network of approximately 1,278 independent local dealers for automobiles, approximately 1,250 for motorcycles and
approximately 5,600 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 264 dealerships at the end of fiscal 2005. The Acura network offers the RL,TL, TSX,MDX,NSX,RSXandEL (Canada only) models.



With regard to exports from North America, Honda is currently exporting such
North American-built models as the Accord, Civic, TL, Odyssey, Pilot, Element, and MDX to other markets. In fiscal 2005, Honda exported approximately 24,255 units from North America to 38 countries
throughout the world.



In Europe, Hondas products are
distributed in the United Kingdom, Germany, France, Belgium, the Netherlands, Spain, Switzerland, Austria, Italy and other European countries through approximately 1,600 independent local dealers for automobiles, approximately 1,850 for motorcycles
and approximately 4,650 for power products.



Honda Motor Co.,
Ltd. exports motorcycle components to 19 countries, including India, Thailand, Indonesia, the Peoples Republic of China 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.



Honda Motor Co., Ltd. exports automobile components to 13 countries, including the United States, Canada, the Peoples Republic of China, Thailand and Brazil, where automobiles are manufactured by itself, joint
venture firms and licensees. Some of the components used in the production of these vehicles are supplied locally.



Honda Motor Co., Ltd. also exports power product components to 8 countries, including the United States, Thailand, United Kingdom, France, India,
Indonesia and Australia, where power products are manufactured by itself, 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.



Net Sales by Product Group and Region



Breakdown of Net Sales and Other Operating Revenue by Category of
Activity



|                                   |  |                                             |           |      |   |           |  |   |          
|---------------------------------- |  | ------------------------------------------- | --------- | ---- | - | --------- |  | - | ---------
|                                   |  | Fiscal years ended March 31, Yen (millions)
|                                   |  | 2003                                        |           | 2004 |   | 2005     
|Motorcycle Business                |  | ¥                                           | 978,095   |      | ¥ | 996,290   |  | ¥ | 1,097,754
|Automobile Business                |  |                                             | 6,440,094 |      |   | 6,592,024 |  |   | 6,963,635
|Financial Services                 |  |                                             | 237,958   |      |   | 242,696   |  |   | 255,741  
|Power Product and Other Businesses |  |                                             | 315,352   |      |   | 331,590   |  |   | 332,975  
|                                   |  |                                             |           |      |   |           |  |   |          
|Total                              |  | ¥                                           | 7,971,499 |      | ¥ | 8,162,600 |  | ¥ | 8,650,105
|                                   |  |                                             |           |      |   |           |  |   |          



9



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##### Table of Contents

---

|Note: | All information regarding business segments has been prepared in accordance with a Ministerial Ordinance under the Securities and Exchange Law of Japan, which requires certain
information to be disclosed, including business segment information.
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | See Operating and Financial Review and Prospects included as Item 5 of this Annual Report.
| | --------------------------------------------------------------------------------------------



Breakdown of Net Sales and Other Operating Revenue by Geographical Markets



|              |  |                                             |           |      |   |           |  |   |          
|------------- |  | ------------------------------------------- | --------- | ---- | - | --------- |  | - | ---------
|              |  | Fiscal years ended March 31, Yen (millions)
|              |  | 2003                                        |           | 2004 |   | 2005     
|Japan         |  | ¥                                           | 1,748,706 |      | ¥ | 1,628,493 |  | ¥ | 1,699,205
|North America |  |                                             | 4,567,926 |      |   | 4,542,930 |  |   | 4,575,076
|Europe        |  |                                             | 661,961   |      |   | 770,110   |  |   | 870,795  
|Asia          |  |                                             | 645,526   |      |   | 801,611   |  |   | 977,011  
|Others        |  |                                             | 347,380   |      |   | 419,456   |  |   | 528,018  
|              |  |                                             |           |      |   |           |  |   |          
|Total         |  | ¥                                           | 7,971,499 |      | ¥ | 8,162,600 |  | ¥ | 8,650,105
|              |  |                                             |           |      |   |           |  |   |          

---

|Note: | All information regarding geographical segments has been prepared in accordance with a Ministerial Ordinance under the Securities and Exchange Law of Japan, which requires certain
information to be disclosed, including business segment information.
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | See Operating and Financial Review and Prospects included as Item 5 of this Annual Report.
| | --------------------------------------------------------------------------------------------



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 44% 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, 2005.



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 suppliers to be satisfactory. The Company does not believe any of
its domestic suppliers are substantially more dependent on foreign suppliers than are 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 generally not been material to our financial results.



Environmental and Safety Regulation



Outline of Environmental and Safety Regulation for Automobiles



1. Emissions



Japan



In 2005, for emissions limits The Central Environment Council in the Ministry of Environment created new long-term targets and comprehensive requirements
for gasoline vehicles and diesel vehicles effective from 2008.



10



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##### Table of Contents

The long term targets for gasoline vehicles remain unchanged from before except that now gasoline direct injection vehicles required the PM standard.
Long-term emissions targets for diesel vehicles have been lowered by more than 50% from the current level of NOx and PM.



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 Act, the
Environmental Protection Agency in February 2000 adopted further more stringent vehicle emissions regulations applicable to passenger cars and light-duty trucks produced from model year 2004. Moreover, the new standard provides for gradual decreases
in sulfur levels contained in fuel in the U.S. market.



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, aimed at establishing the strictest emission regulations in the world. In late 1998, CARB strengthened its regulatory standards through the introduction of new standards, known as the
California Low Emission Vehicle Program II (LEV II). These new standards treat most light trucks the same as passenger cars and require both types of vehicles to meet the new emissions standards of LEV II. In January 2001,
CARB approved modifications to the Zero-Emission Vehicles(ZEV) requirement under LEV II, permitting gasoline SULEVs (Super Ultra Low Emission Vehicle), hybrid vehicles (powered by gasoline engine and/or electric motor) and
compressed natural gas (CNG) vehicles to partially meet zero-emission requirements by satisfying certain additional requirements. The modified requirements also provide incentives for continued technology development.



In April 2004, CARB finalized its Zero-Emission Vehicles (ZEV)
requirements. Under these requirements, from the 2005 model year 6% of vehicles sold in California by a car manufacturer must be Partial Zero Emission Vehicles (PZEV), which include SULEVs with warranties covering through at least the
earlier of 15 years or 150,000 miles driven, 2% must be advanced technology PZEVs and 2% must be ZEVs. Required percentages will be gradually increased under the Zero-Emission Vehicle standards from the 2008 model year.



In 2005, New York state, Massachusetts state, Vermont state adopted
California ZEV regulation. ZEV mandate will be implemented in Model Year 2007. Main state proposed ZEV regulation for Model Year 2009 and beyond. Rhode Island state, Connecticut state and New Jersey state proposed ZEV regulation from Model Year
2008.



Europe



In 1999, the European Union adopted EURO3 and EURO4 as comprehensive
emissions regulations for passenger vehicles and heavy and light commercial vehicles. EURO3 was implemented in 2000 and EURO4 is to be implemented in 2005. In each EU country, standards, such as those providing for preferential automobile tax
treatment, have been established in respect of automobiles that comply with requirements prescribed in EURO4 and are offered for sale before its implementation. Honda has already introduced a considerable number of EURO4 models in advance of this
implementation.



In 2005, the European Union will create a new
emission standard (EURO5) and comprehensive requirements for gasoline vehicles and diesel vehicles effective from 2010. Emission limits for diesel vehicles will be lowered by more than the EURO4 level of NOx and PM.



Other Regions



China adopted Step3 and Step4 emission regulation for light-duty vehicles in
2005.



This regulation is nearly equivalent to EURO3 and EURO4.
Step3 will be implemented from 2007 and Step4 will be implemented from 2010.



11



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##### Table of Contents

South Korea adopted the enforcement regulation of the Special Act on Capital Region Air Quality
Improvement.



Accordingly, some manufacturers shall be required
to sell low emission vehicles which meet a more stringent emission standard than those meeting the national standard.



In addition to the above countries, several Asian countries adopted regulations which are nearly equivalent to the European regulation (e.g. EURO2 and
EURO3).



In Australia, EURO4-equivalent regulations will be
implemented from July 2008.



2. Fuel Economy / CO2



Japan



In 1998, an amendment was made to the Law Concerning Rationalization of Energy Usage that established in Japan a fuel
efficiency standard based on weight class. This standard was tightened in 2005 for diesel-fueled automobiles. For gasoline automobiles, tighter standards, to be implemented in 2010, have also been established.



In light of the CO2 reduction targets promulgated in the Kyoto protocol, the
Japanese government issued a fuel regulation for an interim ethanol blending limit (less than 5%) which became effective in 2003. The Japanese government intends to further increase this limit until the final target of 10% is achieved within a
decade.



In 2005, discussions about the POST 2010 standard
began among applicable ministries and industries.



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 Corporate Average Fuel Economy (CAFÉ) 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. The CAFE standard for passenger cars has been 27.5 miles per gallon since 1990, and for light trucks it has been 20.7 miles per gallon since 1996. Passenger cars are divided into the following two
categories, Domestic and Import, and credits earned in one category may not be applied to another.



Taking into consideration that the National Academy of Science (NAS) encouraged improving fuel economy in its Study Report issued in July 2001
and that both the U.S. Senate and the House of Representatives have had heated discussions on raising the CAFE standards, it appears that regulations requiring even greater fuel economy in the United States are likely.



In 2003, the National Highway Traffic Safety Administration
(NHTSA) issued a new standard for model year 2005-2007 light trucks. The new rule will raise the current standard of 20.7 miles per gallon by a total of 1.5 miles per gallon over the next three years, as follows: 21.0 miles per gallon
for model year 2005, 21.6 miles per gallon for model year 2006, and 22.2 miles per gallon for model year 2007. In December 2003, NHTSA proposed to amend the structure of application of the CAFE standards and requested comments from the public.



In December 2004, CARB adopted but did not finalize its Green
House Gas regulation (GHG). Under the GHG regulation, automobile manufactures have to improve fuel economy more than 50% from the current level by Model Year 2016.



Many other states proposed GHG regulations in 2005.



12



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##### Table of Contents

Europe



In early 1999, the European Union reached a voluntary agreement with the European Automotive Manufacturers Association for the establishment of an
average emissions target of 140 grams of carbon dioxide per kilometer for new cars offered for sale in the EU in 2008. The Japan Automobile Manufacturers Association (JAMA) and the Korean Automobile Manufacturers Association also reached
a similar voluntary agreement with the European Union targeting implementation in 2009. In 2003, in an interim review, the emissions reduction efforts made by these associations were reviewed and the possibility of setting a more stringent target of
above 140 grams is now being discussed. In 2003, JAMA achieved the midterm target (165-175 grams). JAMA achieved additional reduction of carbon dioxide in 2004 as compared to 2003.



The EU also recommends use of biomass fuel blends.



Other Regions



China adopted a fuel consumption regulation for passenger vehicles in 2004. Step 1 of this regulation will be implemented from 2005 and Step 2 will be
implemented from 2008.



South Korea adopted a regulation,
Corporate Average Fuel Economy, for passenger vehicles in 2005. Domestic vehicles shall meet the requirement from 2006 and imported vehicles shall meet the requirement from 2010.



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



Japan



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



Europe



In September 2000, the European Union approved a directive requiring its member states to promulgate regulations implementing the following by April 21,
2002:



| |  |  | Manufacturers must be financially responsible for taking back end-of-life vehicles offered forsale after July 1, 2002 and for their dismantling and recycling. Beginning on January
1, 2007, all vehicles offered for sale in the European Union before July 1, 2002 must also be included;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Manufacturers must not use specified hazardous materials in vehicles offered for sale in the European Union after July 2003; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | 95% of vehicle parts sold in the European Union as of a specified date, which will be designated in a future directive, must be re-usable and recoverable.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



4. Safety



Japan



Japanese safety regulations currently require manufacturers to equip their vehicles with safety features sufficient to assure passenger safety for both
head-on collisions (based on the full wrap test) and side impact collisions (based on the European test of passenger protection) occurring at speeds of up to 50 kilometers per hour. The introduction of European offset tests and laws
based on the International Harmonization Research Activity (IHRA) testing method are currently being considered.



In March 2005, the Ministry of Land, Infrastructure and Transport issued the worlds first Seat Belt Reminders standard. The drivers seat in
passenger vehicles will be equipped with a seat belt reminder, from September 1, 2005 for new models and from September 1, 2008 for all vehicles.



13



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##### Table of Contents

The United States



The Transportation Recall Enhancement, Accountability and Documentation Act (TREAD Act) was enacted in the
United States on November 1, 2000. The TREAD Act required the NHTSA to upgrade federal motor vehicle safety standards relating to tires based on a vehicle test that takes into account the rollover propensity of vehicles. The TREAD Act also required
the NHTSA to reinforce the existing recall system and current safety standards. Items to be reinforced in the recall system included reporting obligations to the NHTSA in respect of recalls in foreign countries (overseas recall reporting
requirements), for which regulations took effect in November 2002, and regulatory reporting of various manufacturers information to specify defects at earlier stages (early warning reporting requirements), for which regulations took effect in
July 2003. Safety standards under the TREAD Act included an assessment method for active rollover (finalized in October 2003), a testing method for child restraining equipment (finalized in October 2003) and tire standards (finalized in June 2003).
Furthermore, NHTSA reissued a final rule of tire pressure monitoring system standard in April 2005 based on the Act, which was finalized in June 2002 but vacated in November 2003 by a court decision. The Act also substantially increased the
NHTSAs authority to impose civil penalties for noncompliance with regulatory requirements and specified possible criminal penalties for violations of the Federal Fraud and False Statements Act.



In 2000, the National Highway Traffic Safety Administration issued various
motor vehicle safety standards, including a final rule specifying performance requirements for advanced airbag systems. The rule imposed a new test method with stringent new injury criteria and set forth a phase-in compliance schedule mandating that
all vehicles produced by a manufacturer meet the new safety standard by 2005.



In 2003, NHTSA also issued various motor vehicle safety standards, including a final rule specifying enhanced fuel system integrity requirements. For example, the rule changes the test method for rear crash impacts
from a full-lap 50km/h test to an offset 80km/h test, and sets forth a phase-in compliance schedule mandating that 40% of all vehicles produced by a manufacturer meet the new safety standard by 2006, 70% by 2007, and 100% by 2008.



In December 2003, vehicle manufacturers, including us, presented to the
public a statement on crash vehicle compatibility, ENHANCING VEHICLE-TO-VEHICLE CRASH COMPATIBILITY: A Set of Commitments for Progress by Automobile Manufacturers. This report describes the recommended performance criteria and research
plans developed by an international group of safety experts for enhancing vehicle-to-vehicle crash compatibility in front-to-front and front-to-side crashes. By September 1, 2007, the goal is for at least 50% of all vehicles offered in the U.S. by
participating manufacturers to meet the front-to-side performance criteria, and by September 2009, for 100% of the vehicles of participating manufacturers to meet the criteria. For the front-to-front criteria, the goal is for 100% of the vehicles of
participating manufacturers to meet the criteria by September 2009, with no interim goals set. We are a participating manufacturer and intend to meet these voluntary standards.



In May 2004, NHTSA issued a proposed rule to upgrade side impact protection standards. The rule imposes a requirement to
provide head protection and adopt a small adult female dummy in side crashes for the first time. Manufacturers must meet an additional performance test involving a 32-km/h vehicle side impact into a rigid pole at an approach angle of 75 degrees for
20% of all vehicles produced by a manufacturer by 2009, 50% by 2010, and 100% by 2011. New dummies will be used from September 1, 2009 for the existing moving deformable barrier test and new pole test.



In December 2004, NHTSA issued an upgraded rule for head restraints to reduce
whiplash injuries in rear-end collisions. The new standard will require head restraints to be higher and positioned closer to the head. All passenger vehicles manufactured on or after September 1, 2008 will be covered under the upgraded standard.



In December 2004, NHTSA issued a standard to require
Lap/Shoulder Safety Belts for rear center seats in passenger vehicles. Manufacturers must comply with it for 50% of all vehicles produced by 2005, 80% by 2006, and 100% by 2007.



14



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##### Table of Contents

Europe



The European Commission and automobile industry associations have reached a negotiated agreement on pedestrian protection requirements. As a first step
toward implementation of new requirements pursuant to this agreement, work has been done toward a prohibition on automobile manufacturers supplying rigid bull bars since January 1, 2002 and improvement of the rate of anti-lock brake systems
installed since July 1, 2004.



The European Commission issued a
regulation and technical prescription for pedestrian protection. The regulation required M1 (Passenger vehicles up to 9 passengers) and N1 (Light commercial vehicles with gross vehicle weight up to 3.5t) vehicles to meet standards for the protection
of pedestrians in the event of a collision with the front of a motor vehicle.



The regulation consists of Phase 1, to be effective October 1, 2005 for new types of vehicles and December 31, 2012 for all vehicles, and Phase 2, to be effective September 1, 2010 for new types of vehicles and
September 1, 2015 for all vehicles.



In early 2004, The
European Commission issued a revised regulation relating to indirect vision to reduce blind spots on motor vehicles of which side and rear areas are not visible to the driver via side or rear-view mirrors. The regulation is effective
January 29, 2006 for new types of vehicles and January 29, 2010 for all vehicles.



Additionally, the European Commission has established a project called eSafety aimed at cutting road fatalities in half by 2010. The project focuses on road accident prevention. To achieve this target,
such issues as the introduction of new features on automobiles are being discussed.



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 and the EU. 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. Introduction of a pedestrian protection safety assessment NCAP was implemented in Japan from
mid 2003. The assessment results were released in April 2004.



In the United States, NHTSA issued a final protocol for new rollover resistance assessments, using combined static and dynamic assessment methods. This protocol was issued in October 2003 under the TREAD Act, and the results of the
assessments were released in January 2004.



A passive safety
performance evaluation NCAP has been implemented worldwide. However, in Europe, an environmental NCAP (ECO-TEST) featuring performance for emission and CO2 and commissioned by FIA (the International Automobile Federation), has also been implemented,
effective in April 2003.



Outline of Environmental and Safety Regulation for
Motorcycles



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 EURO1 regulations. The Central Environment Council in the Ministry of Environment is expected to soon issue a
final report on targets for fiscal year 2006. The target level is expected to be similar to those under the EURO3 standards.



15



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The United States



Emissions regulations regarding off-road motorcycles and ATVs will be 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 new regulations include fuel permeation requirements rather than traditional evaporative emission
standards.



Europe



The EU maintains emissions regulations (EURO2) for motorcycles, as well as
the Motor Cycle (& Moped)-Whole Vehicle Type Approval, a uniform certification system for two or three-wheeled motor vehicles.



The EURO3 regulations, which will be the most stringent standard for motorcycles, will be implemented in 2006.



Other Regions



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



In Thailand, a
fifth stage of emissions control, which is generally equivalent to or stricter than EURO-2, has been implemented.



In Indonesia, EURO2-equivalent regulations were introduced in the beginning of this year.



In China, EURO2-equivalent regulations were introduced in 2004.



In Brazil, EURO2-equivalent regulations have been in effect from the
beginning of this year. EURO3-equivalent regulations will be implemented from the beginning of 2009.



In India, regulations based on Indian authorities own test method are in effect and enhanced regulations were enacted in 2005.



Outline of Environmental and Safety Regulation for Power Products



Emissions



The United States



The U.S. federal government enacted new engine emissions regulations applicable to model year 1997 small non-road engines. These regulations are also
applicable to engines in use from model year 2001. With respect to marine engines, emissions regulations for outboard engines and personal watercraft were implemented for model year 1998 products and will continue to be gradually strengthened every
year until model year 2006, under current plans.



In 1995 the
State of California enacted new engine emissions regulations for small non-road engines. California is now gradually shifting its focus on emissions regulations for engines in use manufactured in model year 2000 and beyond. California has introduced
tighter tail-pipe emissions standards and add requirements for evaporative emissions from small non-road engines from model year 2005. With respect to marine engines, California enacted emissions regulations for model year 2001 outboard engines and
personal watercraft that are equivalent to the U.S. federal governments model year 2006 regulations, and strengthened these regulations in model year 2004. California plans to further strengthen the regulations for these products in model year
2008.



The state of New York will introduce emission
regulations generally equivalent to the State of California regulations for Personal Water Crafts from model year 2006.



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Canada



The Canadian federal government has introduced emissions regulations generally equivalent to U.S. EPA regulations for small non-road engines from model
year 2006, with some exceptions, such as the EPA production line testing requirements and quarterly reporting requirements which will not be enacted in Canada.



Europe



Emissions regulations regarding diesel non-road mobile machinery have been in place in the European Union. The EU has introduced regulations controlling
gasoline engines from 2004 based on the contents of the current EPA regulations in the United States and will introduce emissions regulations targeting outboard engines and personal watercraft from 2005. In addition, with respect to marine engines,
emissions regulations have been implemented since 1993 in Bodensee, which is located between Switzerland, Germany and Austria.



Preparing for the Future



The global economy, driven primarily by the U.S. and Asian economies, is expected to grow steadily, but the pace of growth is anticipated to slow down.
Also, the global management environment still lacks transparency because of global political and economic uncertainty, fluctuations in oil and materials prices, and currency movements. In Japan, the economic recovery has become more moderate, and
weak consumer spending is anticipated to continue. As a result, competition in the Japanese market is expected to intensify.



It is under these circumstances that Honda will strengthen its corporate structure quickly and flexibly to meet the requirements of its customers and
society and the changes in its business environment. Honda recognizes that further enhancing the following specific areas is essential to its success:



Research and Development



Along with efforts to develop even more effective safety and environmental technologies, Honda aims to enhance the creativity in its advanced technology
and products and will create and swiftly introduce new value-added products that meet specific needs in various markets around the world.



Honda will also continue efforts in the research of future technologies, including the advancement of advanced humanoid robots and compact business jets
and their engines.



Production Efficiency



Honda will establish efficient and flexible production systems and expand
production capacity at its global production bases, with the aim of increasing its capability of supplying high-quality products.



Sales Efficiency



Honda will continue to make efforts to expand its product lines through the innovative use of IT and to upgrade its sales and service structure, in order
to further satisfy our customers.



Product
Quality



Responding to increasing consumer
demand, Honda will upgrade its quality control through enhancing the functions of and coordination among the development, purchasing, production, sales and service departments.



17



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Safety Technologies



Honda will develop safety technologies for accident prediction and prevention, technologies to reduce injuries to passengers
and pedestrians from car accidents, and technologies for reducing aggresivity, as well as expand its line-up of products incorporating such technologies. Honda intends to enhance its contribution to traffic safety in motorized societies, including
Asian countries. Honda also intends to remain active in a variety of traffic safety programs, including advanced driving and motorcycling training schemes provided by local dealerships.



The Environment



Honda will step up its efforts to create better clean, fuel-efficient engine technologies and to improve further recyclability throughout its product
lines. Honda will also advance alternative fuel technologies, including fuel cells. In addition, Honda will continue its efforts to minimize environmental impacts, as measured by the *Life Cycle Assessment, in all of its business fields, including
logistics and sales. In its production activities, Honda will promote environmental preservation issues under its Green Factory concept.



*Life Cycle Assessment: A comprehensive system for quantifying the impact Hondas products have on the environment at the different stages in their life cycles, from
material procurement and energy consumption to waste disposal.



Continuing to Increase Societys Trust in and Understanding toward Honda



In addition to continuing to provide products incorporating Hondas advanced safety and environmental technologies, Honda will continue striving to earn even more trust and understanding from society by, among
other things, undertaking activities for corporate governance, compliance, and risk management and contributing to society.



Through these Company-wide activities, we will strive to materialize Hondas visions of value creation, globalization, and
commitment to the future, with the aim of sharing the joy with Hondas customers, thus becoming a company valued by society.



C. Organizational Structure



As
of March 31, 2005, the Company had 129 Japanese subsidiaries and 190 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 ofIncorporation |  | Function                                                                      |  | PercentageOwnershipand VotingInterest
|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                                
|Yutaka Giken Co., Ltd.           |  | Japan                   |  | Manufacturing                                                                 |  | 69.7                                 
|Honda Foundry Co., Ltd.          |  | Japan                   |  | Manufacturing                                                                 |  | 82.1                                 
|Honda Lock Mfg. Co., Ltd.        |  | Japan                   |  | Manufacturing                                                                 |  | 100.0                                
|Asama Giken Co., Ltd.            |  | Japan                   |  | Manufacturing                                                                 |  | 77.5                                 
|Honda Motorcycle Japan Co., Ltd. |  | Japan                   |  | Sales                                                                         |  | 100.0                                
|Honda Finance Co., Ltd.          |  | Japan                   |  | Finance                                                                       |  | 100.0                                
|Suzuka Circuitland Co., Ltd.     |  | Japan                   |  | Others (Leisure)                                                              |  | 86.2                                 
|Honda Trading Corporation        |  | Japan                   |  | Others (Trading)                                                              |  | 100.0                                
|American Honda Motor Co., Inc.   |  | U.S.A.                  |  | Sales                                                                         |  | 100.0                                
|Honda North America, Inc.        |  | U.S.A.                  |  | Coordination of operation of Subsidiaries                                     |  | 100.0                                



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|                                                    |  |                         |  |                                                                               |  |                                      
|--------------------------------------------------- |  | ----------------------- |  | ----------------------------------------------------------------------------- |  | -------------------------------------
|Company                                             |  | Country ofIncorporation |  | Function                                                                      |  | PercentageOwnershipand VotingInterest
|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 Transmission Mfg. of America, Inc.            |  | U.S.A.                  |  | Manufacturing                                                                 |  | 100.0                                
|Celina Aluminum Precision Technology Inc.           |  | U.S.A.                  |  | Manufacturing                                                                 |  | 100.0                                
|Honda Power Equipment Mfg., Inc.                    |  | U.S.A.                  |  | Manufacturing                                                                 |  | 100.0                                
|Honda R&D Americas, Inc.                            |  | U.S.A.                  |  | Research & Development                                                        |  | 100.0                                
|Cardington Yutaka Technologies Inc.                 |  | U.S.A.                  |  | Manufacturing                                                                 |  | 100.0                                
|Honda of South Carolina Mfg., Inc.                  |  | U.S.A.                  |  | Manufacturing                                                                 |  | 100.0                                
|Honda Trading America Corporation                   |  | U.S.A.                  |  | Others (Trading)                                                              |  | 100.0                                
|Honda Engineering North America, Inc.               |  | U.S.A.                  |  | Manufacturing and Sales of equipment and development of production technology |  | 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 Europe NV                                     |  | Belgium                 |  | Sales                                                                         |  | 100.0                                
|Honda Motor Europe Limited                          |  | U.K.                    |  | Coordination of operation of subsidiaries 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 Motor Europe (South) S.A.                     |  | France                  |  | Sales                                                                         |  | 100.0                                
|Honda Europe Power Equipment, S.A.                  |  | France                  |  | Manufacturing and Sales                                                       |  | 100.0                                
|Honda Motor Europe (North) Gmbh                     |  | Germany                 |  | Sales                                                                         |  | 100.0                                
|Honda Bank Gmbh                                     |  | Germany                 |  | Finance                                                                       |  | 100.0                                
|Honda R&D Europe (Deutschland) Gmbh                 |  | Germany                 |  | Research & Development                                                        |  | 100.0                                
|Honda Italia Industriale S.p.A.                     |  | Italy                   |  | Manufacturing and Sales                                                       |  | 100.0                                
|Montesa Honda S.A.                                  |  | Spain                   |  | Manufacturing and Sales                                                       |  | 88.1                                 
|Honda Motor (China) Investment Corporation, Limited |  | China                   |  | Holding Company                                                               |  | 100.0                                
|Honda Automobile (China) Co., Ltd.                  |  | China                   |  | Manufacturing                                                                 |  | 65.0                                 
|Honda Motorcycle and Scooter India Private Limited  |  | India                   |  | Manufacturing and Sales                                                       |  | 100.0                                
|Honda Siel Cars India Limited                       |  | India                   |  | Manufacturing and Sales                                                       |  | 99.9                                 
|P.T. Honda Precision Parts Manufacturing            |  | Indonesia               |  | Manufacturing                                                                 |  | 100.0                                
|P.T. Honda Prospect Motor                           |  | Indonesia               |  | Manufacturing and Sales                                                       |  | 51.0                                 
|Honda Malaysia SDN. BHD.                            |  | Malaysia                |  | Manufacturing and Sales                                                       |  | 51.0                                 
|Honda Atlas Cars (Pakistan) Limited                 |  | Pakistan                |  | Manufacturing and Sales                                                       |  | 51.0                                 
|Honda Philippines, Inc.                             |  | Philippines             |  | Manufacturing and Sales                                                       |  | 99.6                                 
|Honda Cars Philippines, Inc.                        |  | Philippines             |  | Manufacturing and Sales                                                       |  | 54.2                                 
|Honda Taiwan Co., Ltd.                              |  | Taiwan                  |  | Manufacturing and Sales                                                       |  | 100.0                                
|Asian Honda Motor Co., Ltd.                         |  | Thailand                |  | Coordination of operation of subsidiaries and Sales                           |  | 100.0                                
|Honda Leasing (Thailand) Company Limited            |  | Thailand                |  | Finance                                                                       |  | 100.0                                
|Honda Automobile (Thailand) Co., Ltd.               |  | Thailand                |  | Manufacturing and Sales                                                       |  | 91.4                                 
|Thai Honda Manufacturing Co., Ltd.                  |  | Thailand                |  | Manufacturing                                                                 |  | 60.0                                 
|Honda Vietnam Co., Ltd.                             |  | Vietnam                 |  | Manufacturing and Sales                                                       |  | 70.0                                 
|Honda South America Ltda.                           |  | Brazil                  |  | Coordination of operation of subsidiaries and Holding company                 |  | 100.0                                



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|                                    |  |                         |  |                         |  |                                      
|----------------------------------- |  | ----------------------- |  | ----------------------- |  | -------------------------------------
|Company                             |  | Country ofIncorporation |  | Function                |  | PercentageOwnershipand VotingInterest
|Honda Automoveis do Brasil Ltda.    |  | Brazil                  |  | Manufacturing and Sales |  | 100.0                                
|Moto Honda da Amazonia Ltda.        |  | Brazil                  |  | Manufacturing and Sales |  | 100.0                                
|Honda Componentes da Amazonia Ltda. |  | Brazil                  |  | Manufacturing           |  | 100.0                                
|Honda Turkiye A.S.                  |  | Turkey                  |  | Manufacturing and Sales |  | 100.0                                
|Honda Australia Pty. Ltd.           |  | Australia               |  | Sales                   |  | 100.0                                
|Honda New Zealand Limited           |  | New Zealand             |  | Sales                   |  | 100.0                                



D. Property, Plants and Equipment



Hondas manufacturing operations are principally conducted in 30 separate factories, four of which are located in Japan. The following table sets out information, as of March 31, 2005, with respect to Hondas principal
manufacturing facilities, all of which are owned by Honda:



|                                         |  |                    |  |                                                  
|---------------------------------------- |  | ------------------ |  | -------------------------------------------------
|Location                                 |  | Number ofEmployees |  | Principal Products Manufactured                  
|Sayama, Saitama, Japan                   |  | 5,419              |  | Automobiles                                      
|Hamamatsu, Shizuoka, Japan               |  | 3,444              |  | Motorcycles, power products and transmissions    
|Suzuka, Mie, Japan                       |  | 7,095              |  | Automobiles                                      
|Ohzu-machi, Kikuchi-gun, Kumamoto, Japan |  | 2,835              |  | Motorcycles, power products and engines          
|Marysville, Ohio, U.S.A.                 |  | 7,106              |  | Motorcycles, automobiles and all-terrain vehicles
|Anna, Ohio, U.S.A.                       |  | 2,785              |  | Engines                                          
|East Liberty, Ohio, U.S.A.               |  | 2,641              |  | Automobiles                                      
|Lincoln, Alabama, U.S.A.                 |  | 4,541              |  | Automobiles                                      
|Swepsonville, North Carolina, U.S.A.     |  | 573                |  | Power products                                   
|Timmonsville, South Carolina, U.S.A.     |  | 1,563              |  | All-terrain vehicles                             
|Alliston, Ontario, Canada                |  | 4,616              |  | Automobiles                                      
|El Salto, Mexico                         |  | 1,331              |  | Motorcycles and automobiles                      
|Swindon, Wiltshire, U.K.                 |  | 3,955              |  | Automobiles and engines                          
|Ormes, France                            |  | 181                |  | Power products                                   
|Atessa, Italy                            |  | 694                |  | Motorcycles, power products and engines          
|Barcelona, Spain                         |  | 285                |  | Motorcycles                                      
|Greater Noida, India                     |  | 962                |  | Automobiles                                      
|Gurgaon, India                           |  | 2,365              |  | Motorcycles                                      
|Karawang, Indonesia                      |  | 1,029              |  | Automobiles                                      
|Alor Gajah, Malaysia                     |  | 1,020              |  | Automobiles                                      
|Lahore, Pakistan                         |  | 386                |  | Automobiles                                      
|Manila, Philippines                      |  | 526                |  | Motorcycles and power products                   
|Laguna, Philippines                      |  | 666                |  | Automobiles                                      
|Pingtung, Taiwan                         |  | 793                |  | Automobiles                                      
|Ayutthaya, Thailand                      |  | 2,151              |  | Automobiles                                      
|Bangkok, Thailand                        |  | 2,537              |  | Motorcycles and power products                   
|Vinhphuc, Vietnam                        |  | 894                |  | Motorcycles                                      
|Sumare, Brazil                           |  | 1,297              |  | Automobiles                                      
|Manaus, Brazil                           |  | 5,678              |  | Motorcycles and power products                   
|Gebze, Turkey                            |  | 485                |  | 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.



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We believe our production facilities and other properties, including the principal manufacturing
facilities above, are suitable and adequate for the development, manufacture and sales of Hondas products and parts.



As of March 31, 2005, the Companys property, with a net book value of approximately ¥12.8 billion, was subject to specific mortgages securing
indebtedness.



Capital Expenditures



Manufacturing-related capital expenditures in fiscal
2005 were applied to the expansion of manufacturing facilities, streamlining efforts, and the replacement of older equipment. Other expenditures included funds used to augment sales and R&D facilities.



Total capital expenditures for the year amounted to ¥373.9 billion, up
¥86.2 billion from the previous year. Spending by business segment is shown below.



|                                   |  |                              |         |      |   |        
|---------------------------------- |  | ---------------------------- | ------- | ---- | - | -------
|                                   |  | Fiscal years ended March 31,
|                                   |  | 2004                         |         | 2005
|                                   |  | Yen (millions)              
|Motorcycle Business                |  | ¥                            | 35,041  |      | ¥ | 41,845 
|Automobile Business                |  |                              | 240,416 |      |   | 317,271
|Financial Services                 |  |                              | 430     |      |   | 1,941  
|Power Product and Other Businesses |  |                              | 11,854  |      |   | 12,923 
|Total                              |  | ¥                            | 287,741 |      | ¥ | 373,980



In the motorcycle
business, we made capital expenditures of ¥41.8 billion in the fiscal year ended March 31, 2005. Funds were allocated to the introduction of new models, as well as the improvement and modernization of production facilities.



In the automobile business, we made capital expenditures of ¥317.2
billion associated with introducing new models, improving and modernizing our production facilities and improving of production efficiency in the fiscal year ended March 31, 2005.



In the financial services segment, capital expenditures amounted to ¥1.9 billion in the fiscal year ended March 31,
2005. Capital expenditures in power products and other businesses in the fiscal year ended March 31, 2005, totaling ¥12.9 billion, were deployed to upgrade and modernize manufacturing facilities for power products and renovate facilities related
to motor sports.



In July 2004, the Company completed
construction of the Honda Wako Building in the old Wako facility site. The new building subsequently became the Companys regional domestic sales headquarters. Other key operations were also transferred there, including the Companys power
product and parts related operations, company-wide production strategy formulation and support functions, and core functions of the IT Division. Capital expenditures associated with this facility were distributed among the relevant business
segments.



In April 2004, the Company discontinued production
of automobiles at its facility in Takanezawa, Tochigi Prefecture. In the following month, automobile production was transferred to the Suzuka Factory. The Takanezawa facility will be used to support rollouts of new models, as well as for testing and
development activities.



Item 5. Operating and Financial Review and Prospects



A. Operating Results



Executive Summary



The fiscal year
2005, ended March 31, 2005, was the final year of Hondas mid-term business plan. During the year, in our bid to make 20 million customers happyone of the stated goals of the planwe embraced various challenges in our
respective markets. As a result, we reported significant growth in all business segments, achieving virtually all of our targets.



21



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##### Table of Contents

Business conditions during the three-year period covered by the plan were very challenging. In the
motorcycle segment, competition intensified in each region amid ongoing market expansion, especially in Asia. In the automobile segment, industrywide consolidation, which has occurred frequently since the late 1990s, tapered off. Nevertheless,
competition grew more fierce as automakers staked their survival on bold new initiatives. In the United States, overall demand remained high, at over 16 million units, and the market saw a shift in demand from passenger cars to light trucks. In
China and elsewhere in Asia, the passenger car market grew sharply. In the power products segment, customer needs continued to diversify due to increasing environmental awareness as well as other factors.



In the motorcycle segment, demand continued to expand in Asia, where
motorcycles are a popular mode of transportation. By offering attractive products at competitive prices, Honda significantly increased unit sales, greatly boosting its motorcycle business, which is the origin of Hondas business. We also
introduced new sports bikesincorporating advanced technologies developed through racing activitiesto the European, North American and Japanese markets. In these ways, we strove to deliver products that meet the needs of customers around
the world.



During the year, we continued working actively in
the interests of safety and the environment. For example, we completed the transformation of all motorcycles into four-stroke models*1. We also equipped small-displacement models with programmed fuel injection (PGM-FI)*2,
thus making emissions even cleaner. In addition, we equipped more models with our original Hydraulic Combined Braking System with ABS*3.



In the automobile segment, we
increased sales in the U.S. market by introducing new models in the light truck segment. In China and elsewhere in Asia, the automobile market continued to expand, and we achieved remarkable growth thanks to the high profile of the Honda brand. In
Europe, where demand for diesel-powered vehicles is increasing, we unveiled models equipped with Hondas original diesel engines. In Japan, meanwhile, overall demand remained low. We responded by strengthening the appeal of our products,
strengthening our sales system to ensure customer satisfaction and strengthening our profitability. Through these initiatives in various regions, we steadily solidified our automobile business.



We worked hard to enhance the environmental and safety aspects of our
automobiles. In addition to further improving fuel economy in all vehicles, we challenged to make the emissions of our vehicles even cleaner. We also expanded our lineup of hybrid models, and in Japan and the United States we began leasing the
FCX, a fuel cell vehicle incorporating our original next-generation fuel cell stack, which we developed in-house. In the United States and Canada, we promoted our Safety for Everyone*4campaign.



In the power products segment, we supplied a variety of items that benefit customers around the world. These included general-purpose engines, generators,
pumps, brush cutters, outboard engines and lawnmowersall designed from the perspectives of safety and the environment. At the same time, we sought to expand our business through a variety of activities. We also developed and promoted a
compact, cogeneration unit*5for household use incorporating a natural gas-powered engine.



By embracing challenges in these ways across our various regions, we achieved
solid growth in all of our businesses. In fiscal 2005, the final year of our mid-term business plan, we sold 10.48 million motorcycles, up 4.39 million units (72.0%). We also sold 3.24 million automobiles, up 576,000 units (21.6%), and 5.3 million
power product units, up 1.37 million units (35.0%).



Net sales
in fiscal 2005 reached ¥8,650.1 billion, up 17.5% from the previous year. Net income jumped 34.0%, to ¥486.1 billion, due partly to a significant increase in income from earnings of affiliates accounted for under the equity method. In short,
Hondas financial results have improved dramatically over the past three years.



22



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##### Table of Contents

Notes



|*1 | This does not include CRseries racing bikes or special-purpose bikes (Gyro series).
|-- | -----------------------------------------------------------------------------------



|*2 | PGM-FI is an original Honda system designed to enhance fuel efficiency and lower emissions. It employs various sensors to monitor engine operating status and a
computer to calculate the optimal amounts of fuel required. The system then delivers those amounts to the engine cylinders. Honda adapted its PGM-FI system, originally developed for automobiles, to motorcycles by reducing the number of parts to make
it more compact and less expensive.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|*3 | The Hydraulic Combined Braking System with ABS is an original Honda development. It integrates a hydraulic combined braking system, which links both front and rear
wheels when the left brake lever is engaged, with an anti-lock braking system (ABS), which prevents the front and rear wheels from locking when the brake is engaged too forcefully.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|*4 | Honda is committed to providing comprehensive safety solutions with its Safety for Everyone initiative. By the end of calendar 2006, all automobiles will
have side curtain airbag systems, side airbag systems for front seating positions and ABS as standard equipment (except for a small number of specialty vehicles), and all light trucks, including all sport-utility vehicles (SUVs) and minivans, will
be equipped with Vehicle Stability Assist (VSA) and rollover sensors for side curtain airbag deployment. The VSA system enhances handling stability and predictability. In addition, Hondas Advanced Compatibility Engineering (ACE) body structure will be phased in to all models through the end of the decade as new
vehicle platforms are redesigned. Further, Honda has applied pedestrian safety technology features to reduce the potential of serious injury to pedestrians. [NOTE: in the U.S. we express Safety for Everyone as including ACE and pedestrian
safety.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|*5 | Honda has combined its original electromagnetic inverter technologies with the worlds smallest(i)natural gas engine (GE160V) in an efficient layout to create a small, lightweight generation unit. Due to its compactness, the unit can be installed
in the home and boasts an overall energy efficiency of 85%. It also emits approximately 30% less carbon dioxide than conventional natural gas-powered generators or hot-water heating units using natural gas.(ii)
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (i) | A Honda development, the reciprocal gas engine
| | --- | ----------------------------------------------



| | (ii) | Data from Honda test results. Data compares electric power from natural gas-powered generation with hot-water heating units that use natural gas (as of October 2004).
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



Overview



|                                                              |  |                                      |           |                        |   |           |  |      |           |      |   |           |  |   |           |  |   |       
|------------------------------------------------------------- |  | ------------------------------------ | --------- | ---------------------- | - | --------- |  | ---- | --------- | ---- | - | --------- |  | - | --------- |  | - | ------
|                                                              |  | Years ended March 31, Yen (millions) |           | U.S. dollars(millions)
|                                                              |  | 2001                                 |           | 2002                   |   | 2003      |  | 2004 |           | 2005 |   | 2005     
|Income statement data:                                        |  |                                      |           |                        |   |           |  |      |           |      |   |           |  |   |           |  |   |       
|Net sales and other operating revenue                         |  | ¥                                    | 6,463,830 |                        | ¥ | 7,362,438 |  | ¥    | 7,971,499 |      | ¥ | 8,162,600 |  | ¥ | 8,650,105 |  | $ | 80,549
|Operating income                                              |  |                                      | 401,438   |                        |   | 661,202   |  |      | 724,527   |      |   | 600,144   |  |   | 630,920   |  |   | 5,875 
|Income before income taxes and equity in income of affiliates |  |                                      | 384,976   |                        |   | 551,342   |  |      | 609,755   |      |   | 641,927   |  |   | 656,805   |  |   | 6,116 
|Equity in income of affiliates                                |  |                                      | 25,704    |                        |   | 42,515    |  |      | 61,972    |      |   | 75,151    |  |   | 96,057    |  |   | 894   
|Net income                                                    |  |                                      | 232,241   |                        |   | 362,707   |  |      | 426,662   |      |   | 464,338   |  |   | 486,197   |  |   | 4,527 
|Research and development                                      |  |                                      | 352,829   |                        |   | 395,176   |  |      | 436,863   |      |   | 448,967   |  |   | 467,754   |  |   | 4,356 
|Depreciation                                                  |  |                                      | 170,342   |                        |   | 194,944   |  |      | 220,874   |      |   | 213,445   |  |   | 225,752   |  |   | 2,102 
|Capital expenditures                                          |  |                                      | 285,687   |                        |   | 303,424   |  |      | 316,991   |      |   | 287,741   |  |   | 373,980   |  |   | 3,482 



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Hondas consolidated net sales and other operating revenue for fiscal 2005, ended March 31, 2005,
amounted to ¥8,650.1 billion, up 6.0% from the previous fiscal year.



Operating income amounted to ¥630.9 billion, which was an increase of 5.1% from the previous fiscal year. This increase was primarily due to the positive impact of increased profit from higher revenues and ongoing
cost reductions, which offset negative effects of the depreciation of the U.S. dollar and of the increases in SG&A and R&D expenses.



MOTORCYCLE BUSINESS



Japan



In Japan, where the market remained sluggish, unit sales were down 6.2%, to 378,000 units. Sales of mini-sized motorcycles (126cc250cc) were up, supported by strong sales of scooters, as did sales of small-sized
motorcycles (over 250cc), which benefited from healthy sales of sports bikes. However, sales of 50cc and smaller models and second-class motor-driven cycles (51cc125cc) declined.



With respect to mini- and small-sized motorcycles, in July 2004 we unveiled our fourth Chinese-made model, the Dio
Chester, following the success of the Today, Spacy 100 and Dio scooters. We also commenced sales of two entry-level sports bikes, the XR50Motard and XR100 Motard.



Also in the mini-sized category, we enjoyed strong sales of the Forza,
which underwent a full model change in April 2004, and other models. In June 2004, we launched the PS250, a comfortable scooter with a fresh individualized style. This was followed in March 2005 by the release of the Forza Z ABS,
equipped with Hydraulic Combined Braking System with ABS (*1). In the same month, we also introduced the XR230 onto the Japanese market. The XR230 is a dual-purpose bike offering superb ease of handling that is suited for both on-road
and off-road use.



In the small-sized motorcycles category,
sales were strong for the CBR1000RR. This model, introduced in April 2004, features advanced technology inherited from Hondas racing bikes. In March 2005, we launched the XR400 Motard, modeled on the Super Motard (*2)
sports bike.



In these ways, we worked to expand our lineup of
attractive sports bikes and scooters that continue to perform strongly in the domestic market.



North America



In North
America, unit sales of motorcycles, ATVs and PWC edged down 2.0%, to 643,000 units.



In the mini-sized motorcycle category, we recorded healthy sales of on-road models, including the Shadow Spirit750, as well as of the CRF250X and CRF250R off-road bikes. In February 2005, we
launched the CRF450X, an off-road model based on our premier CRF450R motocross machine. However, a decline in sales of models for children led to a 3.9% decline in unit sales of mini-sized models, to 346,000 units.



We recorded healthy sales of ATVs, including the TRX450R, launched in
September 2004, and the FourTrax Reconand TRX400EX, both of which underwent a full model change in September 2004. Another strong performer was the FourTrax Foreman, which underwent a full model change in November 2004. As a
result, unit sales of ATVs and PWC for the year edged up 0.3%, to 297,000 units.



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##### Table of Contents

Europe



In Europe, unit sales rose 13.0%, to 338,000 units.



In that region, we recorded robust sales of core products including the CBR1000RR, CBF600 and the CBR125R. We also launched the
Zoomer scooter, the first model in the 50cc market to be equipped with Hondas original PGM-FI (*3), which delivers superior environmental performance. In February 2005, we released SH125 and SH150 models equipped with
PGM-FI, and these models have carved out a solid following among our customers. In the following month, we launched the FMX650, a stylish sports bike. Overall, support from our wide customer base for our upgraded model lineup
contributed to Hondas healthy sales record.



Asia



In Asia, demand for motorcycles as a convenient mode of transportation has
continued to grow. Total unit sales of motorcycles made by Honda and its subsidiaries, as well as of motorcycle parts sold to affiliates accounted for under the equity method in the region, jumped 16.7%, to 8,192,000 units. Honda is working hard to
expand local businesses in the region through its active promotion of local parts procurement used in overseas production. This strategy has resulted in a sharp increase in 100% locally procured models made by our affiliates in India and China that
are not included in Hondas unit sales. Production and unit sales of 100% locally procured Honda-brand motorcycles in Asia rose significantly from the preceding term, to around 1.0 million units.



In India, we enjoyed healthy sales of core models, including Splendor,
Passion and CD Dawn, made by our affiliate, Hero Honda Motors Ltd. (HHML). In March 2005, we launched the Super Splendor, an improved version of the best-selling Splendormodel, with added power and fuel
efficiency. Honda Motorcycle & Scooter India (Private) Ltd. (HMSI), a subsidiary, recorded strong sales of core scooter models, the Activa and Eterno. In October 2004, HMSI released its first motorcycle, the Unicorn, a model
with a newly developed 150cc engine that delivers excellent power and fuel economy. In India, combined unit sales of finished vehicles by Honda and its subsidiaries, as well as sales of component parts sets for motorcycle production by affiliates
accounted for under the equity method, rose 21.2%, to 2,799,000 units. These figures exclude the approximately 300,000 units of 100% locally procured vehicles manufactured and sold by affiliates accounted for under the equity method.



In Indonesia, P.T. Astra Honda Motors (AHJ), an equity-method affiliate,
posted healthy sales of its Supra series, centering on the core Supra Fitmodel. In August 2004, AHJ added the Karisma-X to its lineup, targeting the younger generation and women. Strong sales of the popular Karisma
series pushed total units for finished vehicles by Honda and its subsidiaries, as well as sales of component parts sets for motorcycle production by affiliates accounted for under the equity method, by 42.2%, to 2,265,000 units.



In Thailand, unit sales rose 13.9%, to 1,489,000 units. This increase was due
to robust sales of the Sonic, following a full model change, as well as solid demand for the core models, the Wave100 and Wave125.



In China, Sundiro Honda Motorcycle Co., Ltd., an affiliate accounted for under the equity method reported healthy sales of the Wave and other core
models. Sundiro augmented its lineup in September 2004 with the addition of two environmentally friendly 125cc models, the Xin-Gainian family bike and the e-cai, featuring a sporty design. Wuyang-Honda Motors (Guangzhou) Co., Ltd.,
another equity-method affiliate, recorded strong sales of the SCR100, a scooter with excellent environmental and safety features.



Total sales in China of 100% locally procured Honda vehicles grew significantly during the year. Consequently, finished vehicles manufactured by Honda and
its consolidated subsidiaries, and sales of motorcycle production parts by equity-method affiliates, declined by 461,000 units, to 433,000. This figure excludes the approximately 700,000 units of 100% locally procured Honda vehicles that were
produced and sold by equity-method affiliates.



Other regions



In other regionscovering Latin America, the Middle
East and Africa and Oceaniaunit sales grew 12.0%, to 931,000 units.



We posted solid sales in Brazil following the full model change in the previous fiscal year of the coreCG150 model, which resulted in enhanced fuel economy.



In the Middle East and Africa, we enjoyed robust sales of the Chinese-made
CGL125 and the Indian-made Activa.



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Notes



|*1: | The Hydraulic Combined Braking System with ABS is an original Honda development. It integrates a hydraulic combined braking system, which links both front and rear wheels when the
left brake lever is engaged, with an anti-lock braking system (ABS), which prevents the front and rear wheels from locking when the brake is engaged too forcefully.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Note: Although this system is designed to support the braking action, both the front- and rear-wheel brakes should still be applied simultaneously.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------



|*2: | Super Motard is an off-road sports bike equipped with small-diameter wheels and on-road tires, making it more nimble for riding on city streets and dirt roads.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



|*3: | PGM-FI (programmed fuel injection) is an original Honda system designed to enhance fuel efficiency and lower emissions. It employs various sensors to monitor engine operating status
and a computer to calculate the optimal amounts of fuel required. The system then delivers those amounts to the engine cylinders. Honda adapted its PGM-FI system, originally developed for automobiles, to motorcycles by reducing the number of parts
to make it more compact and less expensive.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



AUTOMOBILE
BUSINESS



Japan



Total domestic automobile demand in calendar year 2004 remained largely
unchanged, at approximately 5.85 million units. For Honda, however, despite the introduction of two new models, the Elysion and Edix, total unit sales in fiscal year 2005 edged down 0.6%, to 712,000 units, due mainly to a decline in
sales of the Fit and Life.



In May 2004, we
launched Elysion, a new eight-passenger minivan offering a luxurious sense of space and comfort for all occupants. This was followed in July by the release of Edix, a distinctive new minivan featuring six independent seats in two rows
of three, creating a variety of seating arrangements to enhance in-vehicle communication. In October 2004, we introduced the all-new Legend, Hondas flagship luxury performance sedan, featuring a number of advanced technologies,
including a 300-horsepower engine and the worlds first Super Handling All-Wheel Drive (SH-AWD) system (*1).



In addition to products offering new levels of value, we are applying information technology to improve marketing, sales and service. In these ways, Honda
is committed to maximizing the satisfaction of its approximately 8.8 million customers.



North America



In calendar year 2004,
automobile demand in the United States remained high, totaling 16.91 million units.



In the passenger car segment, the Acura TL and Acura TSX posted healthy sales increases. At the same time, demand for light truck models in North America has continued to increase. In addition to the
CR-V, we reported strong sales of the Pilot, now also manufactured on the second production line of the Alabama Plant, which began operation in April 2004. As a result, overall unit sales in North America increased 1.1%, to 1,575,000
units, despite a downturn in the Canadian market.



In September
2004, the Odyssey underwent a full model change, giving it more flexible seating, as well as excellent safety performance and the highest fuel economy in its class. This was followed in October by the release of the new Acura RL, and
in December by the launch of the Accord Hybrid sedan, combining a V6 engine with Hondas Variable Cylinder Management (VCM) system (*2) and Integrated Motor Assist (IMA) system (*3). In March 2005, we launched the next-generation
Ridgeline truck, the first sold in all 50 states to be compliant with Californias ULEV emission standards (*4). Developed in the United States, the Ridgeline comes with ample interior space and plenty of cargo room. In these
ways, we boosted sales in both the light truck and passenger car markets with the introduction of appealing new models.



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Europe



In Europe, overall automobile demand remained almost unchanged in calendar year 2004, at 17.57 million units. Nevertheless, Hondas unit sales in
fiscal 2005 jumped 15.6%, to 267,000 units. This was due mainly to an increase in sales of the new Accord, equipped with the Honda-made i-CTDi diesel engine (*5), released in late 2003, as well as continued healthy sales of the
Jazz.



We unveiled two new models during fiscal 2005,
further enhancing Hondas competitiveness in the difficult European market. In November 2004, we launched the FR-V, and in January 2005 we released the CR-V equipped with a Honda-developed diesel engine. The new CR-V
complements the Accord to address growing demand for diesel-powered automobiles in the region.



Asia



Our automobile
business in Asia expanded considerably in fiscal 2005. Total unit sales of automobiles and automobile parts sold by Honda and its subsidiaries and affiliates surged 50.1%, to 512,000 units.



In China, where the passenger car market has continued to expand, however,
the effect of money-tightening measures taken by the central government in April 2004 resulted in only a moderate increase in demand for passenger cars during calendar year 2004, to around 2.5 million units. Guangzhou Honda, an affiliate of Honda,
recorded healthy sales of its popular Accord and Fit Saloon models. It augmented its lineup in September 2004 with a new Fit and in March 2005 with the launch of the all-new Odyssey. Another affiliate, Dongfeng Honda,
began production and sales of the CR-V in April 2004. Such enhancement of our offerings resulted in a huge 74.2% jump in unit sales in China, to 263,000 units, including sales of finished cars from Honda and its subsidiaries, plus sales of
component part sets for car production to equity-method affiliates.



Demand continued to expand in other Asian markets, with substantial sales increases for the Jazzin Indonesia and the City in India. Sales also rose in Malaysia, Pakistan and Taiwan. For the ASEAN region, unit sales jumped
31.1%, to 249,000 units.



Other regions



Unit sales in other regions grew 28.5%, to 176,000 units, due mainly to
increased sales in South America, Oceania and the Middle East.



In Brazil, sales of the locally produced Fit and Civic increased. In Australia and the Middle East, too, we enjoyed healthy sales of the Accord and other models.



Notes



|*1: | Super Handling All-Wheel Drive (SH-AWD) is the first system of its kind in the world to combine front-rear torque distribution control with independently regulated torque
distribution to the left and right rear wheels, while distributing the optimum amount of torque to all four wheels.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|*2: | With Hondas Variable Cylinder Management (VCM) system, all six cylinders are engaged when power is needed (such as startup and acceleration), but three cylinders on one side
become idle when the vehicle is cruising or slowing down. This results in improved fuel economy.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|*3: | With Integrated Motor Assist (IMA), an electric motor assists by supplying additional power required for startup and acceleration, while the gasoline engine serves as the main
source of power.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|*4: | An Ultra Low Emission Vehicle (ULEV) is a vehicle that meets Californias strict ULEV exhaust emission regulations.
|--- | -------------------------------------------------------------------------------------------------------------------



|*5: | The i-CTDi is a proprietary diesel engine developed by Honda that optimizes combustion through the adoption of a high-pressure fuel injection system, combined with a newly
developed emission treatment system. The i-CTDi is also compliant with Euro IV emission standards for 2005.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

POWER PRODUCT AND OTHER BUSINESSES



In fiscal 2005, unit sales of power products rose 5.0%, to 5.3 million units, due mainly to increased sales of
general-purpose engines in North America. Net sales from power products and other businesses, including sales between segments, edged up 0.3%, to ¥342.8 billion. Operating income soared 85.9%, to ¥19.3 billion, and the operating margin was
5.6%.



In Japan, unit sales of power products fell 9.4%, to
432,000 units, due largely to declines in sales of power generation equipment and a decrease in sales of the GX series of general-purpose engines supplied to pump manufacturers on an OEM (*1) basis.



In North America, unit sales grew 6.4%, to 2,514,000 units, due to solid
sales of power generation equipment, as well as strong sales of highly price-competitive, Thai-made GX general-purpose engines for use in high-pressure cleaning equipment.



Unit sales in Europe climbed 3.8%, to 1,309,000 units, bolstered by firm demand for Thai-made GX general-purpose
engines, as well as healthy sales of GC engines for use in lawn mowers.



In Asia, unit sales jumped 15.0%, to 712,000 units. This was due primarily to increased sales of GX engines reported by our Thai subsidiary and higher sales of production components to Jialing-Honda Motors, an
equity-method affiliate in China.



In other regions, unit sales
moved up 1.8%, to 333,000 units. In Brazil, we reported increased sales of GX engines manufactured in Brazil, which became more price-competitive as a result of further cuts in procurement costs. In Australia, we posted higher sales of the
HRU series of push lawn mowers, boasting superb fuel efficiency.



In July 2004, Honda rolled out the worlds first power generators capable of simultaneous output of different voltages. Equipped with sine-wave inverters, these were released as the EM45is and EM55is in Japan and the
EM5000is and EM7000is in North America.



In
September 2004, we launched the Honda-original, hybrid HSS970i snow plow in Japan and Europe. The HSS970i features a gasoline engine for removing snow and an electric motor for travel motion. We also began domestic sales of the
Salad FF500 compact mini-tiller, boasting improved performance and operating efficiency thanks to a high-powered engine. The Salad series continues to be well-received by Japanese customers.



In Japan, we launched the HRX537 push lawn mower, combining a myriad
of functions in a single unit and featuring excellent economy and environmental performance, in February 2005. In the United States, we unveiled the FG110 portable tiller, offering improvements in fuel economy and lightness. Back in Japan, we
worked hard to promote our compact, home-use cogeneration system (*2), which greatly reduces environmental impact compared with conventional systems.



Notes



|*1: | Original equipment manufacturing (OEM) refers to products and components supplied for sale under a third-party brand.
|--- | ---------------------------------------------------------------------------------------------------------------------



|*2: | Hondas compact, home-use cogeneration unit combines the worlds smallest natural gas engine (GE160V) with an efficiently laid-out, compact, lightweight cogeneration
system employing the Companys unique sine-wave inverter technology. The result is a compact cogeneration unit suitable for home use that boasts an overall energy efficiency of 85%. Use of the unit is expected to provide a reduction in carbon
dioxide emissions of around 30% compared with systems using thermal power generation or hot-water heating.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|*3: | With Hondas original electronic engine speed control technology, the electronic control units continuously monitors throttle opening and engine speed, electronically
regulating the throttle to maintain a constant engine speed, even under changing engine load conditions.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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As described in Note (1) (s) to our consolidated financial statements, certain reclassifications have
been made to the prior years consolidated financial statements to conform to the presentation used for the fiscal year ended March 31, 2005.



Application of Critical Accounting Policies



Critical accounting policies are those that require the application of our most difficult, subjective or complex judgments, often requiring us to make
estimates about the effect of matters that are inherently uncertain and 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. 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 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. Our warranty expense accruals are costs for general warranties on products we sell, product recalls and service actions outside the general warranties. We provide for estimated warranty expenses at the time products are sold
to customers or the time 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, 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. As the manufacturing suppliers typically warrant these
parts, expected receivables from warranties of these suppliers are deducted from our estimates of warranty expense accruals.



We believe that the accounting estimate related to warranty expense accruals is a critical accounting estimate because changes in it can
materially affect net income, and it requires us to estimate the frequency and amounts of future claims, which are inherently uncertain.



Our policy is to continuously monitor warranty expense accruals to determine their adequacy. 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.



Allowance for Credit Losses



Our finance subsidiaries provide wholesale financing to dealers and retail lending and direct financing leases to customers mainly in order to support
sales of our products, principally in North America. We classify the receivables derived from those services mainly as finance subsidiaries-receivables.



An allowance for credit losses is maintained to cover estimated losses on finance subsidiaries-receivables. To determine the overall allowance amount,
receivables are segmented into pools with common characteristics such as product and collateral types. For each of these pools, we estimate losses primarily based on our historic loss experiences, delinquency rates, recovery rates and scale and
composition of the portfolio, taking factors into consideration such as changing economic conditions and changes in operational policies and procedures.



We believe that the accounting estimate related to allowance for credit losses is a critical accounting estimate because it requires us to
make assumptions about inherently uncertain items such as future economic trends, quality of finance subsidiaries-receivables and other factors.



We review the adequacy of the allowance for credit losses, and the allowance for credit losses is maintained at an amount that we deem sufficient to cover
the estimated credit losses on our owned portfolio of finance receivables.



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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 2005 in our North America portfolio, the provision for fiscal 2005 and the allowance balance at the end of fiscal 2005 would have increased by approximately ¥5.5 and ¥3.2 billion,
respectively. Note that these sensitivities may be asymmetric, and are specific to the base condition in fiscal 2005.



Additional narrative of the Change in provision for credit loss as below



The following table shows information related to our credit loss experience in our North America portfolio:



|                                                 |  |                |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------ |  | -------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                 |  | Yen (billions) |        
|                                                 |  | 2003           |         |   | 2004 |   |         | 2005 | 
|Charge-offs (net of recoveries)                  |  | ¥              | 13.2    |   |      | ¥ | 16.2    |      |  | ¥ | 23.1    |  
|Provision for credit losses                      |  |                | 21.9    |   |      |   | 28.8    |      |  |   | 31.7    |  
|Allowance for credit losses                      |  |                | 16.6    |   |      |   | 23.7    |      |  |   | 29.2    |  
|Ending receivable balance                        |  |                | 3,051.0 |   |      |   | 3,301.5 |      |  |   | 3,772.9 |  
|Average receivable balance                       |  |                | 2,692.0 |   |      |   | 3,201.0 |      |  |   | 3,569.1 |  
|Charge-offs as a % of average receivable balance |  |                | 0.49    | % |      |   | 0.51    | %    |  |   | 0.65    | %
|Allowance as a % of ending receivable balance    |  |                | 0.55    | % |      |   | 0.72    | %    |  |   | 0.77    | %

---

|(*) | The allowance for credit losses and average receivable balance include allowance for credit losses and finance subsidiaries-receivables classified as trade receivables and other
assets in the consolidated balance sheets. Additional detailed information is provided at the (4) Finance subsidiaries-receivables and securitizations in the notes to the accompanying consolidated financial statements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Fiscal Year 2005 Compared with Fiscal Year
2004



Net charge-offs in the North American portfolio
increased by ¥6.9 billion, or 43%, primarily due to the significant growth in finance receivables during fiscal year 2003 and 2004. Historically, the majority of customer defaults occur when loans are between one to two years old. Therefore, we
experienced higher losses as the large number of new contracts booked in prior fiscal years became between one to two years old in fiscal year 2005.



Higher losses were also attributable to difficulties experienced in connection with the implementation of a new customer account servicing system for our
North American operations. The conversion process caused disruptions in servicing activities both during and after rollout of the new system. Disruptions were due to, among other things, periods of system downtime, periods devoted to user training,
and extremely high volumes of calls from customers inquiring about new statements or errors on statements received. As a result, collectors were not able to make their requisite collection calls. These and other implementation difficulties
contributed to higher delinquencies beginning in August, and resulted in higher charge-offs in the second and third quarters of fiscal year 2005. By the end of fiscal year 2005, delinquencies and charge-offs have started to return back to historical
levels experienced prior to the system conversion. Management expects that the initial period of difficulties involved with the system conversion has passed and the new system, as designed, will improve operating efficiency and enhance customer
service.



The provision for credit losses in our North American
portfolio increased by ¥2.9 billion, or 10%, which was due to the increase in charge-offs and the increase to the allowance balance.



The allowance for credit losses was increased by ¥5.5 billion, or 23%, primarily due to the continued growth in finance receivables.



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Fiscal Year 2004 Compared with Fiscal Year 2003



Net charge-offs in our North America portfolio increased by ¥3.0
billion, or 23%, primarily due to the increase in the size of our owned portfolio of finance receivables, continued economic weakness contributing to increased customer defaults, and continued weakness in used car markets reducing recoveries from
sales of repossessed vehicles. However, charge-offs as a percentage of average receivables remained consistent with the fiscal year 2003, increasing by only 0.02%. This can be attributed to the growth in receivables in the fiscal year 2004, which
reduced the percentage.



The provision for credit losses in our
North America portfolio increased by ¥6.8 billion, or 31%, due to increased charge-offs and the increase in the allowance balance.



The allowance in our North America portfolio was increased by ¥7.0 billion, or 42%, primarily due to an increase in Finance receivables, as well as an
increase in our estimate of probable credit losses in the portfolio. We expected charge-offs to increase due to recent growth in new loan contracts.



Historically, the majority of customer defaults occur when loans are between one-half to one year old. As a result of recent growth in new loan contracts,
charge-offs were estimated to increase accordingly in one-half to one year. Therefore, we estimated the allowance as a percentage of the amount of receivables as of March 31, 2004 to be 0.72%, which was 0.17% higher than for the fiscal year ended
March 31, 2003.



Allowance for Losses on Lease Residual Values



End-customers of vehicles leased under a direct financing
lease typically have an option to buy the leased vehicle from the car dealership (dealer) for the estimated residual value of the vehicle or to return the leased vehicle to the dealer at the end of the lease term. Likewise, dealers have the option
to return the vehicle to our finance subsidiaries or to buy the leased vehicle at the end of the lease term from our finance subsidiaries. The likelihood that the leased vehicle will be purchased varies depending on the difference between the actual
market value of the vehicle at the end of the lease and the residual value estimated at the time of inception of the lease. Our finance subsidiaries initially determine the residual value of the leased vehicle by using our estimation of future used
vehicle values, which take into consideration data gathered from third parties. Our finance subsidiaries recognize a loss in an amount which the fair market value of a returned vehicle is below the actual residual value when the leased vehicle is
returned to the finance subsidiary at the end of the lease term. Our finance subsidiaries purchase insurance to cover a portion of the estimated residual value at the end of the lease term of vehicles leased to customers under direct financing
leases. An allowance for expected losses on lease residual values is maintained to cover estimated losses on the uninsured portion of the vehicles residual values.



We project two important components of losses in determining our allowance for losses on lease residual values: 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 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. 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 believe that the accounting estimate related to allowance for losses on
lease residual values 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.



The allowance is maintained at an amount we deem adequate to cover estimated
losses on the uninsured portion of the vehicles lease residual values. Evaluating the adequacy of the allowance requires us to make assumptions of inherently uncertain factors, including changes in economic conditions. As a result, actual
losses incurred may differ from original estimates.



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If future auction values for all Honda and Acura vehicles in our U.S. lease portfolio as of March 31,
2005, were to decrease by approximately ¥10,000 per unit from our present estimates, the total impact would be an increase of our allowance for losses on residual value by about ¥1.8 billion, which would be charged to our provision for
losses on residual values in the current year. 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 to increase
our allowance for losses on residual values by about ¥0.5 billion, which would be charged to our provision for losses on residual values in the current year.



Note that these sensitivities may be asymmetric, and are specific to the base conditions in fiscal 2005.



Pension and Other Postretirement Benefits



We have various pension plans covering substantially all of our employees in
Japan and in certain 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 and expected long-term rate of return on plan assets are determined based on our evaluation of current market conditions, including changes in interest rates. The salary increase assumptions reflect our actual experience as well as near-term
outlook. Our assumed discount rate and rate of salary increase as of March 31, 2005 were 2.0% and 2.3%, respectively, and our assumed expected long-term rate of return for the year ended March 31, 2005 was 4.0% for Japanese plans. Our assumed
discount rate and rate of salary increase as of March 31, 2005 were 5.4-6.3% and 3.5-6.7%, respectively, and our assumed expected long-term rate of return for fiscal 2005 was 6.8-8.5% for foreign plans.



We believe that the accounting estimates related to our pension plans are
critical accounting estimates because changes in these estimates can materially affect our financial condition and results of operations.



Actual results that differ from our assumptions are accumulated and amortized over future periods and, therefore, generally affect our recognized expenses
and recorded obligations in future periods.



We believe that
the assumptions used are appropriate. However, differences in actual experience 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 on our funded status, equity and pension
expense from a 0.5% change in the assumed discount rate and the expected long-term rate of return.



|                                  |  |                          |  |                |  |             |  |                
|--------------------------------- |  | ------------------------ |  | -------------- |  | ----------- |  | ---------------
|Japanese Plans                    |  |                          |  | Yen (billions)
|                                  |  |                          |  |               
|Assumptions                       |  | PercentagePointChange(%) |  | Funded status  |  | Equity      |  | Pension expense
|Discount rate                     |  | +0.5/-0.5                |  | -132.2/+150.3  |  | +68.5/-78.0 |  | -7.7/+8.5      
|Expected long-term rate of return |  | +0.5/-0.5                |  |               |  |            |  | -4.1/+4.1      
|                                  |  |                         
|Foreign Plans                     |  |                          |  | Yen (billions)
|Assumptions                       |  | PercentagePointChange(%) |  | Funded status  |  | Equity      |  | Pension expense
|Discount rate                     |  | +0.5/-0.5                |  | -29.3/+33.2    |  | +5.2/-12.4  |  | -3.4/+4.3      
|Expected long-term rate of return |  | +0.5/-0.5                |  |               |  |            |  | -1.0/+1.0      

---

|(*1) | Note that these sensitivities may be asymmetric, and are specific to the base conditions at March 31, 2005.
|---- | -----------------------------------------------------------------------------------------------------------

|(*2) | Funded status for fiscal 2005 is affected by March 31, 2005 assumptions.
|---- | ------------------------------------------------------------------------

| | Pension expense for fiscal 2005 is affected by March 31, 2004 assumptions.
| | --------------------------------------------------------------------------



32



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##### Table of Contents

Fiscal 2005 Compared with Fiscal 2004



Overview



Net Sales and Other Operating Revenue



Hondas consolidated net sales and other operating revenue (hereafter net sales) for fiscal 2005, ended March 31, 2005, amounted to
¥8,650.1 billion, up 6.0% from the previous fiscal year.



Of this amount, domestic net sales increased by ¥70.7 billion, or 4.3%, to ¥1,699.2 billion, while overseas net sales increased by ¥416.7 billion, or 6.4% to ¥6,950.9 billion.



Operating Income



Operating income amounted to ¥630.9 billion, which was an increase by 5.1% from the previous fiscal year.



This increase was primarily due to positive impacts of increased profit from
higher revenue and ongoing cost reduction effects which offset negative impacts of the depreciation of the U.S. dollar and an increase in selling, general and administrative expenses and research and development expenses.



Selling, General and Administrative Expenses / Research and Development Expenses



SG&A expenses for fiscal 2005 increased by ¥9.5
billion or 0.6%, to ¥1,513.2 billion, reflecting increased expenses from higher revenue and increased advertisement expenses which offset the positive impact of decreased product warranty-related expenses.



R&D expenses increased by ¥18.7 billion or 4.2%, to ¥467.7
billion.



Income before Income Taxes and Equity in Income of Affiliates



Income before Income Taxes and Equity in Income of
Affiliates was up 2.3%, to ¥656.8 billion. Other income & expenses, net decreased by ¥15.8 billion from the previous fiscal year, due mainly to decline in gains on derivative instruments.



Equity in Income of Affiliates



Equity in income of affiliates increased by 27.8%, to ¥96.0 billion.
This increase was due mainly to boosted gains from affiliates in Asia.



Net
Income



Net income amounted to ¥486.1 billion, an
increase of 4.7%. The effective tax rate was 40.6%, an increase by 1.2 percentage points from the previous fiscal year.



Basic net income per common share amounted to ¥520.68, compared with ¥486.91 in fiscal 2004.



Segment Disclosure under Japanese Law



Honda discloses business and geographical segment information with respect
to its U.S. GAAP consolidated financial results in accordance with the requirements of a Ministerial Ordinance under the Securities and Exchange Law of Japan. The segment reporting requirements under the Ministerial Ordinance differ in certain
material respects from the segment reporting requirements under U.S. GAAP. The U.S. GAAP consolidated financial statements of Honda included in this Annual Report do not include segment information required under U.S. GAAP.



33



---

##### Table of Contents

Under the Japanese segment reporting requirements, business segments are based on Hondas business
organization and the similarity of the principal products within each segment, as well as the relevant markets for such products. The Motorcycle Business segment consists of motorcycles, ATVs, personal watercraft and relevant parts. The Automobile
Business segment consists of automobiles and relevant parts. The Financial Services segment consists of financial and insurance services business. The Power Product and Other Businesses segment consists of other businesses, including power products
and relevant parts.



The following tables set out Hondas
business and geographical segment information, prepared in accordance with Japanese segment reporting requirements, for the fiscal years ended March 31, 2004 and 2005.



(A) Business Segment Information



As of and for the year ended March 31, 2005



|                                       |  |                    |           |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|-------------------------------------- |  | ------------------ | --------- | ------------------ | - | ----------------- |  | ------------------------------- | --------- | ----- | - | -------------------------------- |  | - | ------------ |  | - | -------- | - |  | - | ---------
|                                       |  | Yen (millions)    
|                                       |  | MotorcycleBusiness |           | AutomobileBusiness |   | FinancialServices |  | PowerProduct andOtherBusinesses |           | Total |   | Corporate Assets andEliminations |  |   | Consolidated
|Net Sales and other Operating revenue: |  |                    |           |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|Sales to unaffiliated customers        |  | ¥                  | 1,097,754 |                    | ¥ | 6,963,635         |  | ¥                               | 255,741   |       | ¥ | 332,975                          |  | ¥ | 8,650,105    |  |   |         |   |  | ¥ | 8,650,105
|Intersegment-sales                     |  |                    | 0         |                    |   | 0                 |  | ¥                               | 3,447     |       | ¥ | 9,869                            |  | ¥ | 13,316       |  | ¥ | (13,316  | ) |  |   |         
|                                       |  |                    |           |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|Total                                  |  | ¥                  | 1,097,754 |                    | ¥ | 6,963,635         |  | ¥                               | 259,188   |       | ¥ | 342,844                          |  | ¥ | 8,663,421    |  | ¥ | (13,316  | ) |  | ¥ | 8,650,105
|Cost of sales,SG&A and R&D expenses    |  | ¥                  | 1,028,422 |                    | ¥ | 6,511,253         |  | ¥                               | 169,287   |       | ¥ | 323,539                          |  | ¥ | 8,032,501    |  | ¥ | (13,316  | ) |  | ¥ | 8,019,185
|                                       |  |                    |           |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|Operating income                       |  | ¥                  | 69,332    |                    | ¥ | 452,382           |  | ¥                               | 89,901    |       | ¥ | 19,305                           |  | ¥ | 630,920      |  |   | 0        |   |  | ¥ | 630,920  
|                                       |  |                    |           |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|Assets                                 |  | ¥                  | 848,671   |                    | ¥ | 4,160,818         |  | ¥                               | 4,362,096 |       | ¥ | 261,843                          |  | ¥ | 9,633,428    |  | ¥ | (316,458 | ) |  | ¥ | 9,316,970
|                                       |  |                    |           |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|Depreciation                           |  | ¥                  | 28,606    |                    | ¥ | 189,150           |  | ¥                               | 419       |       | ¥ | 7,577                            |  | ¥ | 225,752      |  |   |         |   |  | ¥ | 225,752  
|                                       |  |                    |           |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|Capital expenditures                   |  | ¥                  | 41,845    |                    | ¥ | 317,271           |  | ¥                               | 1,941     |       | ¥ | 12,923                           |  | ¥ | 373,980      |  |   |         |   |  | ¥ | 373,980  
|                                       |  |                    |           |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          



As of and for the year ended March
31, 2004



|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|-------------------------------------- |  | ------------------ | ------- | ------------------ | - | ----------------- |  | ------------------------------- | --------- | ----- | - | -------------------------------- |  | - | ------------ |  | - | -------- | - |  | - | ---------
|                                       |  | Yen (millions)    
|                                       |  | MotorcycleBusiness |         | AutomobileBusiness |   | FinancialServices |  | PowerProduct andOtherBusinesses |           | Total |   | Corporate Assets andEliminations |  |   | Consolidated
|Net Sales and other Operating revenue: |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|Sales to unaffiliated customers        |  | ¥                  | 996,290 |                    | ¥ | 6,592,024         |  | ¥                               | 242,696   |       | ¥ | 331,590                          |  | ¥ | 8,162,600    |  |   |         |   |  | ¥ | 8,162,600
|Intersegment-sales                     |  |                    | 0       |                    |   | 0                 |  | ¥                               | 3,138     |       | ¥ | 10,070                           |  | ¥ | 13,208       |  | ¥ | (13,208  | ) |  |   |         
|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|Total                                  |  | ¥                  | 996,290 |                    | ¥ | 6,592,024         |  | ¥                               | 245,834   |       | ¥ | 341,660                          |  | ¥ | 8,175,808    |  | ¥ | (13,208  | ) |  | ¥ | 8,162,600
|Cost of sales,SG&A and R&D expenses    |  | ¥                  | 953,857 |                    | ¥ | 6,153,133         |  | ¥                               | 137,396   |       | ¥ | 331,278                          |  | ¥ | 7,575,664    |  | ¥ | (13,208  | ) |  | ¥ | 7,562,456
|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|Operating income                       |  | ¥                  | 42,433  |                    | ¥ | 438,891           |  | ¥                               | 108,438   |       | ¥ | 10,382                           |  | ¥ | 600,144      |  |   | 0        |   |  | ¥ | 600,144  
|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|Assets                                 |  | ¥                  | 764,893 |                    | ¥ | 3,727,259         |  | ¥                               | 3,818,915 |       | ¥ | 247,451                          |  | ¥ | 8,558,518    |  | ¥ | (229,750 | ) |  | ¥ | 8,328,768
|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|Depreciation                           |  | ¥                  | 25,156  |                    | ¥ | 181,266           |  | ¥                               | 359       |       | ¥ | 6,664                            |  | ¥ | 213,445      |  |   |         |   |  | ¥ | 213,445  
|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          
|Capital expenditures                   |  | ¥                  | 35,041  |                    | ¥ | 240,416           |  | ¥                               | 430       |       | ¥ | 11,854                           |  | ¥ | 287,741      |  |   |         |   |  | ¥ | 287,741  
|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                  |  |   |              |  |   |          |   |  |   |          



34



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##### Table of Contents

(B) Geographical Segment Information



As of and for the year ended March 31, 2005



|                                        |  |                |           |              |   |           |  |      |           |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|--------------------------------------- |  | -------------- | --------- | ------------ | - | --------- |  | ---- | --------- | ------ | - | ------- |  | ------------------------------- | ------- |  | ------------ | ---------- |  | - | ---------- | - |  | - | ---------
|                                        |  | Yen (millions)
|                                        |  | Japan          |           | NorthAmerica |   | Europe    |  | Asia |           | Others |   | Total   |  | CorporateAssets andEliminations |         |  | Consolidated
|Net Sales and other operating revenue:  |  |                |           |              |   |           |  |      |           |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|Sales to unaffiliated customers         |  | ¥              | 1,983,182 |              | ¥ | 4,585,650 |  | ¥    | 858,936   |        | ¥ | 773,753 |  | ¥                               | 448,584 |  | ¥            | 8,650,105  |  |   |           |   |  | ¥ | 8,650,105
|Transfers between geographical segments |  | ¥              | 2,155,756 |              | ¥ | 119,904   |  | ¥    | 184,136   |        | ¥ | 86,810  |  | ¥                               | 17,373  |  | ¥            | 2,563,979  |  | ¥ | (2,563,979 | ) |  |   |         
|                                        |  |                |           |              |   |           |  |      |           |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|Total                                   |  | ¥              | 4,138,938 |              | ¥ | 4,705,554 |  | ¥    | 1,043,072 |        | ¥ | 860,563 |  | ¥                               | 465,957 |  | ¥            | 11,214,084 |  | ¥ | (2,563,979 | ) |  | ¥ | 8,650,105
|Cost of sales, SG&A and R&D expenses    |  | ¥              | 3,954,039 |              | ¥ | 4,384,400 |  | ¥    | 1,001,829 |        | ¥ | 799,871 |  | ¥                               | 432,764 |  | ¥            | 10,572,903 |  | ¥ | (2,553,718 | ) |  | ¥ | 8,019,185
|                                        |  |                |           |              |   |           |  |      |           |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|Operating income                        |  | ¥              | 184,899   |              | ¥ | 321,154   |  | ¥    | 41,243    |        | ¥ | 60,692  |  | ¥                               | 33,193  |  | ¥            | 641,181    |  | ¥ | (10,261    | ) |  | ¥ | 630,920  
|                                        |  |                |           |              |   |           |  |      |           |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|Assets                                  |  | ¥              | 2,480,052 |              | ¥ | 5,202,980 |  | ¥    | 649,547   |        | ¥ | 541,331 |  | ¥                               | 203,605 |  | ¥            | 9,077,515  |  | ¥ | 239,455    |   |  | ¥ | 9,316,970
|                                        |  |                |           |              |   |           |  |      |           |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          



As of and for the year ended March
31, 2004



|                                        |  |                |           |              |   |           |  |      |         |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|--------------------------------------- |  | -------------- | --------- | ------------ | - | --------- |  | ---- | ------- | ------ | - | ------- |  | ------------------------------- | ------- |  | ------------ | ---------- |  | - | ---------- | - |  | - | ---------
|                                        |  | Yen (millions)
|                                        |  | Japan          |           | NorthAmerica |   | Europe    |  | Asia |         | Others |   | Total   |  | CorporateAssets andEliminations |         |  | Consolidated
|Net Sales and other operating revenue:  |  |                |           |              |   |           |  |      |         |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|Sales to unaffiliated customers         |  | ¥              | 1,879,141 |              | ¥ | 4,552,941 |  | ¥    | 756,312 |        | ¥ | 637,163 |  | ¥                               | 337,043 |  | ¥            | 8,162,600  |  |   |           |   |  | ¥ | 8,162,600
|Transfers between geographical segments |  | ¥              | 2,051,729 |              | ¥ | 120,069   |  | ¥    | 192,235 |        | ¥ | 67,009  |  | ¥                               | 11,222  |  | ¥            | 2,442,264  |  | ¥ | (2,442,264 | ) |  |   |         
|                                        |  |                |           |              |   |           |  |      |         |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|Total                                   |  | ¥              | 3,930,870 |              | ¥ | 4,673,010 |  | ¥    | 948,547 |        | ¥ | 704,172 |  | ¥                               | 348,265 |  | ¥            | 10,604,864 |  | ¥ | (2,442,264 | ) |  | ¥ | 8,162,600
|Cost of sales, SG&A and R&D expenses    |  | ¥              | 3,738,419 |              | ¥ | 4,362,860 |  | ¥    | 922,704 |        | ¥ | 659,500 |  | ¥                               | 324,466 |  | ¥            | 10,007,949 |  | ¥ | (2,445,493 | ) |  | ¥ | 7,562,456
|                                        |  |                |           |              |   |           |  |      |         |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|Operating income                        |  | ¥              | 192,451   |              | ¥ | 310,150   |  | ¥    | 25,843  |        | ¥ | 44,672  |  | ¥                               | 23,799  |  | ¥            | 596,915    |  | ¥ | 3,229      |   |  | ¥ | 600,144  
|                                        |  |                |           |              |   |           |  |      |         |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|Assets                                  |  | ¥              | 2,370,214 |              | ¥ | 4,539,320 |  | ¥    | 571,419 |        | ¥ | 435,815 |  | ¥                               | 141,851 |  | ¥            | 8,058,619  |  | ¥ | 270,149    |   |  | ¥ | 8,328,768
|                                        |  |                |           |              |   |           |  |      |         |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          



Business segments



Motorcycles



In fiscal 2005, domestic unit sales of motorcycles fell 6.2%, to 378,000 units. Overseas unit sales, by contrast, rose
14.8%, to 10,104,000 units. As a result, total unit sales of motorcycles amounted to 10,482,000 units, up 13.9% compared to the previous fiscal year. Net sales from sales to unaffiliated customers in the motorcycle segment increased 10.2%, to
¥1,097.7 billion, due mainly to higher unit sales, offsetting negative currency translation effects. Operating income increased 63.4%, to ¥69.3 billion, due mainly to increased profits from higher revenue and ongoing cost reduction effects,
which offset the negative currency effects of the depreciation of the U.S. dollar.



35



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##### Table of Contents

Automobiles



Domestic unit sales of automobiles in fiscal 2005 was 712,000 units, almost the same level as previous fiscal year, and overseas unit sales increased by
11.6%, to 2,530,000 units. Consequently, total unit sales of automobiles grew 8.7%, to 3,242,000 units, compared to the previous fiscal year. Net sales from sales to unaffiliated customers in the automobile segment increased 5.6%, to ¥6,963.6
billion, due to increased unit sales, offsetting the negative currency translation effects. Operating income increased 3.1%, to ¥452.3 billion, due mainly to the positive impact of increased profits from higher revenue and cost reduction
effects, offsetting the negative impact of depreciation of the U.S. dollar.



Financial Services



Net sales from sales to
unaffiliated customers in financial services business rose 5.4%, to ¥255.7 billion, compared to the previous fiscal year. Operating income decreased 17.1%, to ¥89.9 billion, due mainly to increased funding costs.



Power Product and Other businesses



Domestic unit sales of power products in fiscal 2005 decreased 9.4%, to
432,000 units. Overseas unit sales climbed 6.5%, to 4,868,000 units. Accordingly, total unit sales of power products rose 5.0%, to 5,300,000 units, compared to the previous fiscal year.



Net sales from power products and other businesses increased 0.4%, to ¥332.9 billion, due mainly to increased unit sales
of power products. Operating income increased 85.9%, to ¥19.3 billion, due to increased profits from higher revenue in the power product businesses, offsetting the negative currency effects of the depreciation of the U.S. dollar.



Geographical segments



Geographical segments are based on the location of the Company and its
subsidiaries.



Japan



Net sales in Japan were ¥4,138.9 billion, up by 5.3% from the previous
fiscal year, due mainly to increased export sales in motorcycle and automobile businesses. Operating income in Japan was ¥184.8 billion, down by 3.9% from the previous fiscal year, due mainly to the negative currency impact caused by the
depreciation of the U.S. dollar, and increases in SG&A and R&D expenses, which offset the positive impact of increased profits from higher revenue and cost reduction effects.



North America



Net sales in North America increased by 0.7% from the previous fiscal year to ¥4,705.5 billion, due mainly to increased sales in the automobile and
power product businesses, which offset negative currency translation effects. Operating income increased 3.5%, to ¥321.1 billion from the previous fiscal year, due mainly to increased profits from higher revenue and a decrease in SG&A, which
offset the negative currency impact of the depreciation of the U.S. dollar.



Europe



Net sales in Europe increased by 10.0%
to ¥1,043.0 billion compared to the previous fiscal year, due mainly to increased unit sales in the motorcycle, automobile and power product businesses, and the positive impact of currency translation effects. Operating income increased by
59.6%, to ¥41.2 billion due mainly to the positive currency impact caused by the appreciation of the Euro, increased profit higher revenue and cost reduction effects.



Asia



Net sales in Asia increased by 22.2% to ¥860.5 billion from the previous fiscal year, due mainly to increased unit sales in the motorcycle, automobile
and power product businesses, offsetting the negative currency translation effects. Operating income also increased 35.9% to ¥60.6 billion from the previous fiscal year, due to increased profits from higher revenue, which offset the negative
impacts of an increase in SG&A.



36



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##### Table of Contents

Other Regions



Net sales in Other Regions increased by 33.8% to ¥465.9 billion compared to the previous fiscal year, due mainly to increased unit sales in the
motorcycle, automobile and power product businesses, offsetting the negative currency translation effect. Operating income increased by 39.5% to ¥33.1 billion from the previous year, due mainly to increased profits from higher revenue.



As described in Note (1) (s) to our consolidated financial
statements, certain reclassifications have been made to the prior years consolidated financial statements to conform to the presentation used for the fiscal year ended March 31, 2005.



Disclosure of unaudited consolidated balance sheets divided into non-financial services
businesses and finance subsidiaries and unaudited consolidated cash flow statements divided into non-financial services businesses and finance subsidiaries



Honda discloses unaudited consolidated balance sheets divided into non-financial services businesses and finance
subsidiaries, and unaudited consolidated cash flow statements divided into non-financial services businesses and finance subsidiaries, for investor relations purposes. For purposes of these disclosures, non-financial services include the Motorcycle,
Automobile and Power Product and Other Businesses segments, and finance subsidiaries include the Financial Services segment, respectively, under the Japanese segment reporting requirements described above. See Annex A to this Annual Report.



Fiscal 2004 Compared with Fiscal 2003



Overview



Net Sales and Other Operating Revenue



Hondas consolidated net sales and other operating revenue (hereafter net sales) for fiscal 2004, ended March 31, 2004, amounted to
¥8,162.6 billion, up 2.4% from the previous fiscal year.



Of this amount, domestic net sales decreased by ¥120.2 billion, or 6.9%, to ¥1,628.4 billion, while overseas net sales increased by ¥311.3 billion, or 5.0% to ¥6,534.1 billion.



Operating Income



Operating income amounted to ¥600.1 billion, which was a decrease of 17.2% from the previous fiscal year.



This decrease was primarily due to negative impacts of the depreciation of
the U.S. dollar against the yen and an increase in selling, general and administrative expenses, which offset positive impacts of increased revenue from increased unit sales and ongoing cost reduction effects.



Selling, General and Administrative Expenses / Research and Development Expenses



SG&A expenses for fiscal 2004 increased by ¥57.7
billion, or 4.0%, to ¥1,503.6 billion, reflecting increases in labor expenses, product warranty-related expenses and reserves with respect to our finance business in connection with growing unit sales in North America.



R&D expenses increased by ¥12.1 billion or 2.8%, to ¥448.9
billion.



Income before Income Taxes and Equity in Income of Affiliates



Income before Income Taxes and Equity in Income of
Affiliates was up 5.3%, to ¥641.9 billion.



Other income
& expenses, net improved by ¥156.5 billion from the previous fiscal year, due mainly to a decline in losses on derivative instruments and a decline in losses on impairment losses on available for sale marketable equity securities.



37



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##### Table of Contents

Equity in Income of Affiliates



Equity in income of affiliates increased 21.3%, to ¥75.1 billion, over the prior fiscal year. This increase was due
mainly to increases in the results of affiliates in Asia.



Net Income



Net income amounted to ¥464.3 billion, an increase of
8.8%. The effective tax rate was 39.4%, a decline of 0.8 percentage points from the previous fiscal year.



Basic net income per common share amounted to ¥486.91, compared with ¥439.43 in fiscal 2003.



(A) Business Segment Information



As of and for the year ended March 31, 2003



|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                 |  |   |              |  |   |          |   |  |   |          
|-------------------------------------- |  | ------------------ | ------- | ------------------ | - | ----------------- |  | ------------------------------- | --------- | ----- | - | ------------------------------- |  | - | ------------ |  | - | -------- | - |  | - | ---------
|                                       |  | Yen (millions)    
|                                       |  | MotorcycleBusiness |         | AutomobileBusiness |   | FinancialServices |  | PowerProduct andOtherBusinesses |           | Total |   | CorporateAssets andEliminations |  |   | Consolidated
|Net Sales and other operating revenue: |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                 |  |   |              |  |   |          |   |  |   |          
|Sales to unaffiliated customers        |  | ¥                  | 978,095 |                    | ¥ | 6,440,094         |  | ¥                               | 237,958   |       | ¥ | 315,352                         |  | ¥ | 7,971,499    |  |   |         |   |  | ¥ | 7,971,499
|Intersegment-sales                     |  |                    | 0       |                    |   | 0                 |  | ¥                               | 3,037     |       | ¥ | 10,971                          |  | ¥ | 14,008       |  | ¥ | (14,008  | ) |  |   |         
|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                 |  |   |              |  |   |          |   |  |   |          
|Total                                  |  | ¥                  | 978,095 |                    | ¥ | 6,440,094         |  | ¥                               | 240,995   |       | ¥ | 326,323                         |  | ¥ | 7,985,507    |  | ¥ | (14,008  | ) |  | ¥ | 7,971,499
|Cost of sales, SG&A and R&D expenses   |  | ¥                  | 920,865 |                    | ¥ | 5,888,702         |  | ¥                               | 133,182   |       | ¥ | 318,231                         |  | ¥ | 7,260,980    |  | ¥ | (14,008  | ) |  | ¥ | 7,246,972
|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                 |  |   |              |  |   |          |   |  |   |          
|Operating income                       |  | ¥                  | 57,230  |                    | ¥ | 551,392           |  | ¥                               | 107,813   |       | ¥ | 8,092                           |  | ¥ | 724,527      |  |   | 0        |   |  | ¥ | 724,527  
|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                 |  |   |              |  |   |          |   |  |   |          
|Assets                                 |  | ¥                  | 798,530 |                    | ¥ | 3,624,639         |  | ¥                               | 3,505,017 |       | ¥ | 241,085                         |  | ¥ | 8,169,271    |  | ¥ | (487,980 | ) |  | ¥ | 7,681,291
|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                 |  |   |              |  |   |          |   |  |   |          
|Depreciation                           |  | ¥                  | 25,311  |                    | ¥ | 187,839           |  | ¥                               | 804       |       | ¥ | 6,920                           |  | ¥ | 220,874      |  |   |         |   |  | ¥ | 220,874  
|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                 |  |   |              |  |   |          |   |  |   |          
|Capital expenditures                   |  | ¥                  | 37,496  |                    | ¥ | 270,263           |  | ¥                               | 646       |       | ¥ | 8,586                           |  | ¥ | 316,991      |  |   |         |   |  | ¥ | 316,991  
|                                       |  |                    |         |                    |   |                   |  |                                 |           |       |   |                                 |  |   |              |  |   |          |   |  |   |          



(B) Geographical Segment
Information



As of and for the year ended March 31, 2003



|                                        |  |                |           |              |   |           |  |      |         |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|--------------------------------------- |  | -------------- | --------- | ------------ | - | --------- |  | ---- | ------- | ------ | - | ------- |  | ------------------------------- | ------- |  | ------------ | ---------- |  | - | ---------- | - |  | - | ---------
|                                        |  | Yen (millions)
|                                        |  | Japan          |           | NorthAmerica |   | Europe    |  | Asia |         | Others |   | Total   |  | CorporateAssets andEliminations |         |  | Consolidated
|Net Sales and other operating revenue:  |  |                |           |              |   |           |  |      |         |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|Sales to unaffiliated customers         |  | ¥              | 1,975,518 |              | ¥ | 4,580,004 |  | ¥    | 663,032 |        | ¥ | 487,415 |  | ¥                               | 265,530 |  | ¥            | 7,971,499  |  |   |           |   |  | ¥ | 7,971,499
|Transfers between geographical segments |  | ¥              | 1,943,465 |              | ¥ | 131,906   |  | ¥    | 161,551 |        | ¥ | 35,710  |  | ¥                               | 8,865   |  | ¥            | 2,281,497  |  | ¥ | (2,281,497 | ) |  |   |         
|                                        |  |                |           |              |   |           |  |      |         |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|Total                                   |  | ¥              | 3,918,983 |              | ¥ | 4,711,910 |  | ¥    | 824,583 |        | ¥ | 523,125 |  | ¥                               | 274,395 |  | ¥            | 10,252,996 |  | ¥ | (2,281,497 | ) |  | ¥ | 7,971,499
|Cost of sales, SG&A and R&D expenses    |  | ¥              | 3,727,564 |              | ¥ | 4,267,527 |  | ¥    | 810,085 |        | ¥ | 485,316 |  | ¥                               | 251,184 |  | ¥            | 9,541,676  |  | ¥ | (2,294,704 | ) |  | ¥ | 7,246,972
|                                        |  |                |           |              |   |           |  |      |         |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|Operating income                        |  | ¥              | 191,419   |              | ¥ | 444,383   |  | ¥    | 14,498  |        | ¥ | 37,809  |  | ¥                               | 23,211  |  | ¥            | 711,320    |  | ¥ | 13,207     |   |  | ¥ | 724,527  
|                                        |  |                |           |              |   |           |  |      |         |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          
|Assets                                  |  | ¥              | 2,392,252 |              | ¥ | 4,182,861 |  | ¥    | 535,507 |        | ¥ | 362,432 |  | ¥                               | 109,827 |  | ¥            | 7,582,879  |  | ¥ | 98,412     |   |  | ¥ | 7,681,291
|                                        |  |                |           |              |   |           |  |      |         |        |   |         |  |                                 |         |  |              |            |  |   |            |   |  |   |          



38



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##### Table of Contents

Business segments



Motorcycles



In fiscal 2004, domestic unit sales of motorcycles fell 6.7%, to 403,000 units. Overseas unit sales, by contrast, rose 15.1%, to 8,803,000 units. As a
result, total unit sales of motorcycles amounted to 9,206,000 units, up 13.9%. Net sales in the motorcycle segment increased 1.9%, to ¥996.2 billion, due mainly to higher unit sales, which compensated for negative currency translation effects.
Operating income, however, declined 25.9%, to ¥42.4 billion.



Automobiles



Domestic unit sales of
automobiles in fiscal 2004 fell 15.7%, to 716,000 units, while overseas unit sales climbed 11.2%, to 2,267,000 units. Consequently, total unit sales of automobiles grew 3.3%, to 2,983,000 units, compared to the prior fiscal year. Net sales in this
segment increased 2.4%, to ¥6,592.0 billion, thanks to increased unit sales overseas, which outweighed negative currency translation effects. Operating income fell 20.4%, to ¥438.8 billion.



Financial Services



Net sales from Hondas financial services business rose 2.0%, to ¥245.8 billion, compared to the prior fiscal year.
Operating income edged up 0.6%, to ¥108.4 billion.



Power Product and
Other businesses



Domestic unit sales of power products
grew 1.1%, to 477,000 units. Overseas unit sales climbed 11.1%, to 4,570,000 units. Accordingly, total unit sales of power products rose 10.1%, to 5,047,000 units, compared to the prior fiscal year.



Net sales from power products and other businesses increased 4.7%, to
¥341.6 billion, due mainly to higher unit sales of power products. Operating income increased 28.3%, to ¥10.3 billion.



Geographical segments



Geographical segments are based on the location of the Company and its subsidiaries.



Japan



Despite a decline in domestic sales of automobiles, net sales in Japan remained largely unchanged, at ¥3,930.8 billion, owing mainly to an increase in
automobile exports. Domestic operating income also remained relatively unchanged, at ¥192.4 billion.



North America



Net
sales in North America edged down 0.8%, to ¥4,673.0 billion, due mainly to negative currency translation effects, which offset increased unit sales of motorcycles, automobiles and power products. Operating income dropped 30.2%, to ¥310.1
billion over the prior fiscal year.



Europe



Increased units sales of automobiles, together with positive currency
translation effects, boosted net sales in Europe 15.0%, to ¥948.5 billion. Operating income increased 78.3%, to ¥25.8 billion over the prior fiscal year.



Asia



Net sales in Asia increased 34.6%, to ¥704.1 billion, as increased unit sales of motorcycles and automobiles compensated for negative currency
translation effects. Operating income rose 18.2%, to ¥44.6 billion over the prior fiscal year.



39



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##### Table of Contents

Other Regions



Higher unit sales of motorcycles, automobiles and power products led to a 26.9% rise in net sales in other regions, to ¥348.2 billion over the prior
fiscal year. Operating income was up 2.5%, to ¥23.7 billion over the prior fiscal year.



As described in Note (1) (s) to our consolidated financial statements, certain reclassifications have been made to our prior years consolidated financial statements to conform to the presentation used for the
fiscal year ended March 31, 2005.



B. Liquidity and Capital Resources



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



Hondas main business is the manufacture 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 for dealers.



In its manufacturing and sales business, Honda requires operating capital mainly to purchase parts and materials required for production, as well as to
control inventory of finished products and cover receivables from dealers.



Honda also requires funds for capital expenditures, mainly to upgrade, rationalize and renew production facilities, as well as to expand and reinforce research and development and sales facilities.



Honda meets its operating capital requirements mainly through cash generated
by operations. Honda funds its financial programs for customers and dealers primarily from corporate bonds, medium-term notes and commercial paper, as well as securitization of finance receivables.



Cash Flows



Consolidated cash and cash equivalents at end of year amounted to ¥773.5
billion as of March 31, 2005, up ¥49.1 billion or an increase of 6.8%, from a year earlier.



Year-end cash and cash equivalents of business subsidiaries increased as net income, depreciation and other items sufficiently compensated for purchases
of production-related property and equipment, as well as funds required for investments in Asian affiliates. Year-end cash and cash equivalents of finance subsidiaries, however, remained largely unchanged.



Net cash provided by operating activities amounted to ¥746.6 billion.
Factors increasing cash flows included ¥486.1 billion in net income, ¥225.7 billion in depreciation and a ¥76.3 billion increase in trade payables related to Japanese and North American operations. By contrast, there was a ¥60.4
billion devaluation loss on derivative instruments and related others, which have no relation to cash flows.



Net cash used in investing activities totaled ¥807.8 billion. This was mainly due to a ¥464.9 billion increase in acquisition of finance
subsidiaries receivables associated with higher sales of automobiles in North America and elsewhere, as well as ¥373.9 billion in capital expenditures associated with introducing new models, upgrading and renewing production facilities,
and reforming the production organization in the automobile and other businesses.



Net cash provided by financing activities was ¥97.4 billion. During the year, Honda raised ¥704.4 billion in long-term debt through the issue of bonds and medium-term notes to meet capital requirements
associated with an increase in liabilities of finance subsidiaries, as well as to repay ¥495.1 billion in long-term debt. By contrast, Honda also made ¥84.1 billion in payments for purchase of treasury stock and ¥47.7 billion in cash
dividends paid.



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The ¥773.5 billion in cash and cash equivalents at end of year corresponds to approximately one month
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, financial subsidiaries carry total short-term borrowings of ¥1,310.6 billion in the form of commercial paper issued regularly to replace debt. This serves as alternative liquidity for a back-up credit line equivalent to ¥643.6
billion. In addition, Honda currently has ample credit limits, extended by prominent international banks that are not subject to contracts.



Hondas short- and long-term debt securities are rated by credit rating agencies, such as Moodys Investors Service, Inc., and Standard &
Poors Rating Services. Based on major current ratings, which are shown below, Honda will be able to raise funds even if it requires more capital than its present level of liquidity would allow.



The following table shows the ratings of Hondas unsecured debt
securities by Moodys and Standard & Poors at the date of filing of this annual report.



|                                  |  |                                     |  |                                   
|--------------------------------- |  | ----------------------------------- |  | ----------------------------------
|                                  |  | Credit ratings for                 
|                                  |  | Short-term unsecured debtsecurities |  | Long-term unsecured debtsecurities
|Moodys Investors Service         |  | P-1                                 |  | A1                                
|Standard & Poors Rating Services |  | A-1                                 |  | A+                                



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 uses
different standards for calculating Hondas credit rating, and also makes its own assessments. 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 debt.



Presentation of finance subsidiaries-receivables in the
consolidated statements of cash flows and the consolidated balance sheets



In prior periods, Honda reported the effects of all finance subsidiaries-receivables as investing activities for purposes of presentation in the consolidated statements of cash flows.



This policy, when applied to wholesale receivables related to sales of
inventory to outside dealers, had the effect of presenting an investing cash outflow and an operating cash inflow even though there was no cash flow on a consolidated basis. In the current year, based on concerns raised by the staff of the
Securities and Exchange Commission (SEC), management has decided to report the cash flow related effects of those finance subsidiaries-receivables which relate to sales of inventory as operating activities in the consolidated statements
of cash flows and also reclassify related finance subsidiaries-receivables to trade receivables in the consolidated balance sheets. This presentation results in the elimination of the intercompany activities and proper classification of cash
receipts from the settlement of wholesale receivables related to the sale of inventory as operating activities.



Certain finance subsidiaries provide retail finance to customers who purchased inventory from the consolidated dealers. The cash flows generated from
these retail finance were reported as investing cash flows in prior periods. In the current year, based on concerns raised by the staff of the SEC, management has decided to report the cash flow related effects of those finance
subsidiaries-receivables which relate to sales of inventory as operating activities in the consolidated statements of cash flows and also reclassify related finance subsidiaries-receivables to trade receivables, including those of non-current
portion to other assets, in the consolidated balance sheets.



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The cash flow related effects of finance subsidiaries-receivable from retail, direct finance leases,
wholesale and term loans to dealer which are unrelated to the sales of inventory continue to be reported as investing activities in the consolidated statements of cash flows.



Reconciliations of the amounts previously reported for the affected line items in the consolidated statements of cash flows
and balance sheets to the amounts currently presented are provided in Note 2 of the Notes to Consolidated Financial Statements.



C. Research and Development



Using the most advanced technologies, the Honda Group (Honda Motor Company and its consolidated subsidiaries) conduct R&D activities aimed at creating distinctive products that are internationally competitive. The Groups main
R&D divisions operate independently as subsidiaries, allowing technicians to pursue their tasks with complete freedom.



Product-related research and development is spearheaded by the Honda R&D Co., Ltd. in Japan, Honda R&D Americas, Inc., in the United States and
Honda R&D Europe (Deutschland) GmbH in Germany. Research and development on production technologies centers on Honda Engineering Co., Ltd., in Japan and Honda Engineering North America, Inc. All of these entities work in close association with
their respective regions.



Total consolidated R&D
expenditures for the fiscal year ended March 31, 2005 amounted to ¥467.7 billion.



Motorcycle Business



Honda is committed to
developing motorcycles with new value-added features that meet the individual needs of customers around the world, and to implementing timely local development of regional products at its overseas locations. At the same time, we focus on developing
technologies that lead the industry in addressing safety and environmental issues.



In Japan, we made a number of R&D achievements in fiscal 2005. The FORZA, which underwent a full model change, became the first 250cc scooter in the world to be equipped with the Honda S-Matic (electronically
controlled belt converter) transmission, which allows riders to easily choose between automatic and six-speed manual modes. The new FORZA also features the Honda Smart Card system for effective theft deterrence. It was the first motorcycle in the
world to incorporate such a system as standard.



In Europe, the
Honda Zoomer became the first 50cc scooter sold in the region to be equipped with PGM-FI (electronically controlled programmed fuel injection) system, which delivers enhanced start-up performance and response, as well as improved fuel economy and
cleaner exhaust emissions. Also, the SH125 and SH150 scooters equipped with PGM-FI were the first European models fitted with engines that meet the Euro 3 emission standard set by the European Union.



In India, Honda released the Unicorn, equipped with a newly developed
four-stroke, 150cc engine that offers superlative acceleration and fuel efficiency.



For some time, Honda has been studying next-generation motorcycle power sources from the perspective of reducing emissions and lowering the effect of global warming. By making motorcycle bodies lighter and more
compact and by incorporating a lightweight nickel-hydrogen battery into an aluminum frame, for example, we have developed an electric commuter-style scooter with superior heat dissipation and longer battery life. Seeking to reduce emissions and
greatly enhance fuel efficiency, we have also developed a hybrid 50cc scooter combining an electric motor with a gasoline engine that is nearing the market launch stage.



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Honda has a strong track record in fuel cell technologies for automobiles. In fiscal 2005, we applied
these technologies in our motorcycle business, developing a fuel cell model equipped with a specially modified version of Honda FC STACK, a light, compact fuel cell stack.



Research and development expenses in the Motorcycle Business segment in fiscal 2005 totaled ¥72.4 billion.



Automobile Business



In the Automobile Business Segment, we strive to develop innovative
technologies and products through creativity-oriented development in response to customer needs. We also actively develop technologies that address environmental issues and provide enhanced safety performance.



Major achievements in Japan in fiscal 2005 include the new Elysion, an
eight-seater minivan with a host of revolutionary features. These include a crash-compatibility body frame structure, designed to provide both improved self protection and reduced aggressivity toward other vehicles during a vehicle-to-vehicle
collision; a brake system that reduces damage and injury due to rear-end collisions; and the V6 3.0-liter i-VTEC engine, with a variable cylinder management system that improves fuel economy by varying the number of cylinders employed according to
driving conditions.



In fiscal 2005, we also introduced the new
Legend, featuring Hondas Super Handling All-Wheel Drive (SH-AWD) system, which provides variable torque distribution between the front and rear wheels while also varying the lateral torque distribution to the left and right rear wheels to
deliver maximum performance from all four wheels in all driving conditions. The new Legend also has the worlds first developed Intelligent Night Vision System, which uses infrared cameras to detect pedestrians during nighttime driving and
provides visual and audio cautions to help prevent accidents.



In the United States, we undertook a full model change of the Odyssey, which now has the V6 3.5-liter i-VTEC engine with a variable cylinder management system, making it more environmentally friendly. We also launched the Ridgeline, an
innovative next-generation pickup truck with four-wheel drive system and it delivers new levels of value, complemented by ample cabin and storage space.



In other news, we developed a pop-up hood system, which raises the engine hood in the event of a collision with a pedestrian and also provides added
engine compartment clearance, thus reducing the possibility of serious impact to the pedestrians head region.



In fuel cell technologies, the FCX received approval from Japans Minister for Land, Infrastructure and Transportation. The FCX features Honda FC
STACK, which enables startup at subzero temperatures. As a result, we can now sell the FCX in cold regions which have freezing winter temperatures. Also, the FCX was approved by the Environmental Protection Agency, which is the U.S. regulatory
authority for fuel cell vehicles, and the California Air Resources Board (CARB).



Research and development expenses in the Automobile Business segment in fiscal 2005 totaled ¥382.8 billion.



Power Product and Other Businesses



In the Power Product Business, we seek to develop products that meet customers lifestyles and needs while strengthening our lineup of products that
address environmental issues.



In fiscal 2005, we launched the
Honda i-Deluxe series of generators (sold as the EM45is and EM55is in Japan and EM5000is and EM7000is in the United States). Thanks to sine wave inverter technologies, these are the first generators in the world to provide simultaneous output of two
different voltages100V and 200V. They also feature Hondas Eco-Throttle, which automatically controls engine revolutions according to power load and thus reduces fuel consumption.



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During the year, Honda launched the Salad FF500 mini-tiller, featuring a high-output engine, a newly
developed single-side 10-blade rotary and a unique ratchet arrangement for enhanced tilling efficiency. The new machine went on sale in Japan and Europe.



Research and development expenses in this segment in fiscal 2005 amounted to ¥12.4 billion.



In the area of fundamental research, Honda pursues steady and varied research
activities into technologies that may lead to innovative applications in the future.



Previously, Honda established an experimental Home Energy Station (HES), which generates hydrogen from natural gas for use in fuel cell vehicles while supplying electricity and hot water to the home through fuel cell
cogeneration functions. In fiscal 2005, Honda began operating a second-generation Home Energy Station (HES II) in collaboration with Plug Power Inc. of the United States.



Additionally in fiscal 2005, we developed new technologies for the next-generation ASIMO humanoid robot. These include
Posture Control, which enables the robot to run in a natural human-like way, as well as Autonomous Continuous Movement and other technologies to ensure smooth human-like movements. These technologies provide a new level of mobility that will better
enable ASIMO to make swift decisions and act more nimbly in real-world environments.



Expenses incurred in fundamental research are distributed among Hondas business segments.



Patents and Licenses



On March 31, 2005, Honda owned more than 9,200 patents and 350 utility model registrations in Japan and more than 14,600 patents abroad. Honda also had
applications pending for more than 20,000 patents in Japan and for more than 17,500 patents abroad. Under Japanese law, a utility model registration is a right granted with respect to inventions of less originality than those which qualify for
patents. While the Company 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.



New Accounting Standard



In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 151, Inventory
Costs, an amendment of Accounting Research Bulletin (ARB) No. 43, Chapter 4. SFAS No. 151 amends the guidance in ARB No.43, Inventory Pricing, for abnormal amounts of idle facility expense, freight, handling costs, and wasted
material (spoilage) requiring that those items be recognized as current-period expenses regardless of whether they meet the criterion of so abnormal, as described in ARB No. 43. This statement also requires that allocation of fixed
production overheads to the costs of conversion be based on the normal capacity of the production facilities. The statement is effective for inventory costs incurred during the fiscal years beginning after June 15, 2005. Management does not expect
this statement to have a material impact on Hondas consolidated financial position or results of operations.



E. Off-Balance sheet Arrangements



(Special Purpose Entity)



For
the purpose of accelerating the receipt of cash related to our finance receivables, we periodically securitize and sell pools of these receivables. In these securitizations, we sell a portfolio of finance receivables to a special purpose entity,
which is established for the limited purpose of buying and reselling finance receivables.



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We remain as a servicer of the finance receivables and are paid a servicing fee for our services. The special purpose entity transfers the receivables to a
trust or bank conduit, which issues interest-bearing asset-backed securities or commercial paper, respectively, to investors. We retain certain subordinated interests in the sold receivables in the form of subordinated certificates, servicing assets
and residual interests in certain cash reserves provided as credit enhancements for investors. We apply significant assumptions regarding prepayments, credit losses and average interest rates in estimating expected cash flows from the trust or bank
conduit, which affect the recoverability of our retained interests in the sold finance receivables. We periodically evaluate these assumptions and adjust them, if appropriate, to reflect the performance of the finance receivables.



(Guarantee)



At March 31, 2005, we had guarantees of approximately ¥69.5 billion of
bank loans of employees 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
approximately ¥69.5 billion. As of March 31, 2005, 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, 2005:



Contractual Obligations



|                        |  |                                  |  |                  |  |           |  |           |  |              
|----------------------- |  | -------------------------------- |  | ---------------- |  | --------- |  | --------- |  | -------------
|                        |  | At March 31, 2005 Yen (millions)
|                        |  | Payments due by period          
|                        |  | Total                            |  | Less than 1 year |  | 1-3 years |  | 3-5 years |  | After 5 years
|Long-term debt          |  | 2,094,605                        |  | 535,105          |  | 1,099,200 |  | 436,525   |  | 23,775       
|Operating leases        |  | 118,923                          |  | 25,151           |  | 32,119    |  | 20,350    |  | 41,303       
|Purchase commitments(*) |  | 40,145                           |  | 40,145           |  |          |  |          |  |             

---

|(*) | Honda had commitments for purchases of property, plant and equipment at March 31, 2005.
|--- | ---------------------------------------------------------------------------------------



At March 31, 2005, 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.



Item 6. Director, Senior Management and Employees



A. Directors and Senior Management



Hondas Articles of Incorporation provide for a Board of Directors of not more than 30 members and for a Board of Corporate Auditors of not more than seven Corporate Auditors. Directors and Corporate Auditors are elected at general
meetings of shareholders. The Corporate Auditors are nominated by the Board of Directors as candidates for election. 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 elects a President and may elect one Chairman and one or more Executive Vice Presidents, Senior Managing Directors and Managing Directors from among its members. The President represents the Company. In addition, the Board of Directors may
elect, pursuant to its resolutions, Directors who shall each represent the Company. Under the Japanese Commercial Code, 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.



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Under the Japanese Commercial Code, the Corporate Auditors of the Company have the duty to examine the
financial statements and business reports which are submitted by the Board of Directors to the general meeting of shareholders and also to supervise the administration of the Companys affairs by the Directors. Corporate Auditors are not
required to be, and the Corporate Auditors of the Company are not, certified public accountants. They are entitled to participate in meetings of the Board of Directors but are not entitled to vote. In 1994, the Company established a Board of
Corporate Auditors. Under the Japanese Commercial Code and other related laws, this Board must consist of at least three Corporate Auditors (at least one of whom must be from outside the Company). In addition, the Company is required to appoint
independent certified public accountants as well as Corporate Auditors. Such independent certified public accountants have as their primary statutory duties the examination of the financial statements of the Company prepared in accordance with the
Japanese Commercial Code proposed to be submitted by the Board of Directors to general meetings of shareholders and the reporting of their opinion thereon to the Corporate Auditors as well as to the Directors.



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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | Number of Shares Owned
|Directors                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                       
|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Takeo Fukui (November 28, 1944) |  | Director of the Company from June 1988  President and Director of the Company,appointed in June 2003  Senior Managing Director of the Company,appointed in June 1999  Motor Sports, appointed in June 1999  President and Director of Honda R&D Co., Ltd.,appointed in June 1998  President and Director of Honda of America Mfg., Inc.,appointed in June 1996 
Managing Director of the Company, appointed in June 1996  Executive Vice President and Director of Honda of AmericaMfg., Inc., appointed in June 1994  General Manager of Hamamatsu Factory in Motorcycle Operations, appointed in June 1992  General Manager of Development Management Division in Motorcycle Operations, appointed in
March 1991  Senior Managing Director of Honda R&D Co., Ltd.,appointed
in June 1990  Director of the Company, appointed in June 1988  Managing Director of Honda R&D Co., Ltd.,appointed in May 1987  President and Director of Honda Racing Corporation,appointed in May 1987  Joined Honda in April 1969 |  | 9,100                 



46



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##### Table of Contents

|                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                      
|--------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------
|Name (Date of Birth)              |  | Current Positions and Biographies with Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | Number ofShares Owned
|                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Satoshi Aoki (August 19, 1946)    |  | Director of the Company from June 1995  Executive Vice President and Director of the Company,appointed in June 2005 
Compliance Officer, appointed in April 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | 6,300                
|                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                  |  | Senior Managing Director of the Company, appointed in June 2000  Managing Director of the Company, appointed in June 1998  Chief Operating Officer for Business Management Operations,appointed in June 1998 (presently held)  General Manager of Accounting Division for Business Management Operations, appointed in June
1996  Director of the Company, appointed in June 1995  General Manager of Finance Division for Business Management Operations, appointed in June
1994  Joined Honda in April 1969                                                                                                                                                                                                                                                                   |  |                      
|                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Michiyoshi Hagino (April 1, 1944) |  | Director of the Company from June 1990  General Supervisor, Quality, appointed in April 2005(presently held)  General Supervisor, Purchasing Policy, appointed in April 2004 (presently held) 
General Supervisor, Information Systems, appointed in April 2000  Senior Managing Director of the Company, appointed in June 1999  Chief Operating Officer for Automobile Operations,appointed in June 1999  Managing Director of the Company, appointed in June 1996  Executive Vice President and Director of Honda R&D Co., Ltd.,appointed in June 1994  Senior Managing Director of Honda R&D Co., Ltd.,appointed in June 1990  Director of the Company, appointed in June 1990  Managing Director of Honda R&D Co., Ltd.,appointed in June 1989  Joined Honda in April 1966 |  | 11,200               
|                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Minoru Harada (January 9, 1947)   |  | Director of the Company from June 1994  Chief Operating Officer for Motorcycle Operations,appointed in April 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 5,600                



47



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##### Table of Contents

|                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                      
|------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------
|Name (Date of Birth)                  |  | Current Positions and Biographies with Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | Number ofShares Owned
|                                      |  | Senior Managing Director of the Company,appointed in June 1999 (presently held)  President and Director of Honda Motor Europe Ltd.,appointed in June 1998  Chief Operating Officer for Regional Operations (Europe, the Middle & Near East and Africa),appointed in June 1998  Chief Operating Officer for Power Products Operations,appointed in 1997  Managing Director of the Company, appointed in June 1997  Chief
Operating Officer for Regional Operations (Asia & Oceania) and General Manager of Asia & Oceania Division (Automobiles), appointed in June 1995  General Manager of Asia & Oceania Division (Automobiles)in Regional Operations (Asia & Oceania), appointed in April 1995  General Manager of Asia & Oceania Divisionin Regional Operations (Asia &
Oceania), appointed in June 1994  Director of the Company, appointed in June
1994  General Manager of Asia & Oceania Division (Automobiles) for Overseas
Regional Automobile Operations(Asia & Oceania, the Middle & Near East, Africa and Latin America),appointed in October 1993  Joined Honda in April 1969 |  |                      
|                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Motoatsu Shiraishi (October 14, 1946) |  | Director of the Company from June 1994  President and Director of Honda R&D Co., Ltd.,appointed in April 2005 (presently held)  General Supervisor, Information Systems, appointed in April 2004  Risk Management Officer, appointed in April 2003  Chief Operating Officer for Production Operations,appointed in April 2001  Senior Managing Director of the Company, appointed in June 2000  General Supervisor, Production, appointed in April 2000  Chief Operating Officer of Domestic Production for Regional Operations (Japan), appointed in June 1998  President and Director of Honda Engineering Co., Ltd.,appointed in June 1997  Managing Director of the Company, appointed in June 1997                                                                                                                                                                                                                                                                                                                                                                                     |  | 6,200                



48



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##### Table of Contents

|                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                      
|--------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------
|Name (Date of Birth)              |  | Current Positions and Biographies with Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | Number ofShares Owned
|                                  |  | General Manager of Saitama Factory of Automobile Production Operations in Regional Operations (Japan), appointed in June 1996  General Manager of Saitama Factory of Automobile Production Operations in Regional
Operations (Japan) and General Manager of Production Planning Office in Automobile Operations, appointed in November 1995  General Manager of Production Planning Office in Automobile Operations, appointed in June 1994  Director of the Company, appointed in June 1994  General Manager of Automobile Production Planning Office of Auto Mobile Planning Board, appointed in February 1993  Joined Honda in April 1969                                                                                                                                         |  |                      
|                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Satoshi Dobashi (July 7, 1947)    |  | Director of the Company from June 1996  Senior Managing Director of the Company,appointed in June 2004  Government & Industrial Affairs,appointed in April 2004 (presently held)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | 3,400                
|                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                  |  | Chief Officer of Driving Safety Promotion Center in Regional Sales Operations (Japan), appointed in April 2004 (presently held)  Chief Operating Officer for Regional Sales Operations (Japan),appointed in April 2001
(presently held)  Managing Director of the Company, appointed in June
1999  Deputy Chief Operating Officer for Regional Operations
(Japan),appointed in June 1999  General Manager of Japan Automobile Sales
Operations for Regional Operations (Japan), appointed in June 1998  General
Manager of Sales Division of Automobile Operations in Regional Operations (Japan), appointed in June 1997  Director of the Company, appointed in June 1996  General Manager of Corporate Project of the Company,appointed in December 1995  Joined Honda in May 1970 |  |                      
|                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Atsuyoshi Hyogo (January 2, 1949) |  | Director of the Company from June 1995  Senior Managing Director of the Company,appointed in June 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 8,000                



49



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##### Table of Contents

|                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                       
|---------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------
|Name (Date of Birth)               |  | Current Positions and Biographies with Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | Number of Shares Owned
|                                   |  | President of Honda Motor (China) Investment Corporation, Limited, appointed in February 2004 (presently held)  Chief Operating Officer for Regional Operations (China), appointed in April 2003 (presently
held)  Managing Director of the Company, appointed in June 1998  Executive Vice President and Director of American Honda Motor Co., Inc., appointed in June
1996  Director of the Company, appointed in June 1995  President and Director of Honda Canada Inc.,appointed in October 1993  Joined Honda in April 1972 |  |                       
|                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Satoshi Toshida (January 13, 1947) |  | Director of the Company from June 1995  Senior Managing Director of the Company,appointed in June 2005  Chief Operating Officer for Regional Operations (Asia & Oceania), appointed in April 2003 (presently held)  President and Director of Honda Leasing (Thailand) Company, Limited, appointed in June
2002  President and Director of Honda Automobile (Thailand) Co., Ltd.,
appointed in December 2000  Managing Director of the Company, appointed in June
2000                                                          |  | 3,000                 
|                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                   |  | Deputy Chief Operating Officer for Regional Operations (Asia & Oceania), appointed in June 1999  President and Director of Honda Cars (Thailand) Co., Ltd., appointed in June 1998
 President and Director of Asian Honda Motor Co., Ltd.,appointed in May 1996
(presently held)  Director of the Company, appointed in June 1995  General Manager of Motorcycle Sales Division in Regional Operations (Asia & Oceania),
appointed in April 1995  Joined Honda in May 1973                                                      |  |                       
|                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Koki Hirashima (November 28, 1946) |  | Director of the Company from June 1997  Senior Managing Director of the Company,appointed in June 2005  General Supervisor, Information Systems,appointed in April 2005 (presently held)  Risk Management Officer,appointed in April 2005 (presently held)  Chief Operating Officer for Production Operations,appointed in April 2005 (presently held)  Managing Director of the Company, appointed in June 2000                                                                                                                |  | 3,000                 



50



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##### Table of Contents

|                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                       
|-------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------
|Name (Date of Birth)             |  | Current Positions and Biographies with Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | Number of Shares Owned
|                                 |  | President and Director of Honda of America Mfg., Inc.,appointed in June 1998  Executive Vice President and Director of Honda of AmericaMfg., Inc., appointed in June 1997  Director of the Company, appointed in June 1997  Executive Vice President of Honda of America Mfg., Inc., appointed in June 1993
 Joined Honda in April 1969                                                                                                                                                                                                                       |  |                       
|                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Koichi Kondo (February 13, 1947) |  | Director of the Company from June 1997  Senior Managing Director of the Company,appointed in June 2005  President and Director of Honda North America, Inc.,appointed in April 2005 (presently held)  Chief Operating Officer for Regional Operations (North America), appointed in April 2004  President and Director of American Honda Motor Co., Inc., appointed in June 2003 (presently
held)  Executive Vice President and Director of American Honda Motor Co., Inc.,
appointed in April 2003  Managing Director of the Company, appointed in June
2002 |  | 3,068                 
|                                 |  | Chief Operating Officer for Regional Operations (Latin America), appointed in April 2000  Director of the Company,
appointed in June 1997  President and Director of Honda Automoveis do Brasil
Ltda., appointed in June 1996  President and Director of Moto Honda da Amazonia
Ltda., appointed in June 1996  President and Director of Honda Motor do Brasil
Ltda. (presently Honda South America Ltda.), appointed in June 1996  Joined
Honda in April 1970                                                                                                |  |                       
|                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Toru Onda (March 18, 1949)       |  | Director of the Company from June 1999  Managing Director of the Company, appointed in June 2002  Chief Operating Officer for Purchasing Operations,appointed in April 2000 (presently held)  Director of the Company, appointed in June 1999  General Manager of Automobile Purchasing Division 1 in Purchasing Operations, appointed in June 1998  Joined Honda in April 1977                                                                                                                                                                               |  | 4,000                 



51



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|                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                       
|--------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------
|Name (Date of Birth)              |  | Current Positions and Biographies with Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | Number of Shares Owned
|Akira Takano (August 18, 1949)    |  | Director of the Company from June 1996  Chief Operating Officer for Customer Service Operations, appointed in April 2004 (presently held)  Managing Director of the Company, appointed in June 2003  President and Director of Honda of the U.K. Manufacturing Ltd., appointed in June 1998  Executive Vice President and Director of Honda Motor Europe Limited, appointed in June
1998  Director of the Company, appointed in June 1996  Director of Honda R&D Co., Ltd., appointed in June 1995  Joined Honda in April 1972 |  | 4,100                 
|                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Mikio Yoshimi (September 6, 1947) |  | Director of the Company from June 1998  Compliance Officer, appointed in April 2005 (presently held)  Managing Director of the Company, appointed in June 2004  Chief Operating Officer for Business Support Operations, appointed in April 2004 (presently held)                                                                                                                                                                                                                                                              |  | 3,100                 
|                                  |  | Human Resources, Associate Relations and Administration for Business Support Operations, appointed in April 2003  Human Resources and Associate Relations for Business Support Operations, appointed in April
2002  President and Director of Honda Manufacturing of Alabama, LLC, appointed
in April 2000  Director of the Company, appointed in June 1998  Executive Vice President and Director of Honda of America Mfg., Inc., appointed in June
1998  Joined Honda in April 1970                                          |  |                       
|                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Shigeru Takagi (February 4, 1952) |  | Director of the Company from June 1998  Managing Director of the Company, appointed in June 2004  President and Director of Honda Motor Europe Limited,appointed in April 2004 (presently held)  Chief Operating Officer for Regional Operations (Europe, the Middle & Near East and Africa),appointed in April 2004 (presently
held)  Director of the Company, appointed in June 1998  President and Director of Honda Canada Inc., appointed in June 1998  Joined Honda in April 1974                                        |  | 3,000                 



52



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|                                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                       
|----------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------
|Name (Date of Birth)                |  | Current Positions and Biographies with Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | Number of Shares Owned
|Hiroshi Kuroda (August 18, 1948)    |  | Director of the Company from June 1999  Managing Director of the Company, appointed in June 2004  Chief Operating Officer for Automobile Operations,appointed in April 2004 (presently held)  Director of the Company, appointed in June 1999  Products for Automobile Operations, appointed in June 1999  Product Planning and Marketing Office for Automobile Operations, appointed in June 1996  Joined Honda in April 1972                                                                                                                           |  | 3,000                 
|                                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Satoru Kishi (March 29, 1930)       |  | Director of the Company from June 2001  Adviser of the Board of The Bank of Tokyo-Mitsubishi, Ltd., appointed in June 2002 (presently held)  Director of the Company, appointed in June 2001  Chairman of the Board of The Bank of Tokyo-Mitsubishi, Ltd., appointed in June 2000                                                                                                                                                                                                                                                                        |  | None                  
|                                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Kensaku Hogen (August 2, 1941)      |  | Director of the Company, appointed in June 2005  Retired from Ministry of Foreign Affairs in January 2005 Ambassador in
Canada, appointed in April 2001  Undersecretary General of United
Nations,appointed in March 1998  General Manager of Training Institute,
appointed in July 1996  Manager of Middle Eastern and African Affairs
Bureau,appointed in January 1995  Japanese Consul General in Honolulu,
appointed in October 1991  Japanese Consul General in Boston, appointed in
January 1989  Joined Ministry of Foreign Affairs in April 1964 |  | None                  
|                                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Hiroyuki Yoshino (November 2, 1939) |  | Director of the Company from May 1983  Director and Advisor of the Company, appointed in June 2003  Chief Operating Officer for Regional Operations (Japan),appointed in June 1999  President and Director of the Company, appointed in June 1998  President and Director of Honda R&D Co., Ltd.,appointed in June 1994                                                                                                                                                                                                                                  |  | 19,400                



53



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|                               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                       
|------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------
|Name (Date of Birth)           |  | Current Positions and Biographies with Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Number of Shares Owned
|                               |  | Chief Operating Officer for Automobile Operations (Japan), appointed in June 1992  Executive Vice President and Director of the Company,appointed in June 1992  Senior Managing Director of the Company,appointed in June 1990  President and Director of Honda of America Mfg., Inc.,appointed in June 1988
 Managing Director of the Company, appointed in June 1988  General Manager of Suzuka Factory,appointed in March 1987  Director of the Company, appointed in May 1983  Executive Vice President and Director of Honda R&D Co., Ltd., appointed in May
1983  Director of Honda R&D Co., Ltd., appointed in March 1977
 Joined Honda R&D Co., Ltd. in April 1963 |  |                       
|                               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Tetsuo Iwamura (May 30, 1951)  |  | Director of the Company from June 2000  President and Director of Honda Automoveis do Brasil Ltda., appointed in April 2003 (presently held)  President and Director of Moto Honda da Amazonia Ltda., appointed in April 2003 (presently held)  President and Director of Honda South America Ltda.,appointed in April 2003 (presently
held)  Chief Operating Officer for Regional Operations (Latin America),
appointed in April 2003 (presently held)  Director of the Company, appointed in
June 2000  Chief Operating Officer for Service Parts Operations,appointed
in April 2000  Joined Honda in April 1978                                                         |  | 3,000                 
|                               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Tatsuhiro Oyama (July 9, 1950) |  | Director of the Company from June 2001  Chief Operating Officer for Parts Operations,appointed in April 2003 (presently held)  President and Director of Honda Motorcycle Japan Co., Ltd., appointed in August 2001  Director of the Company, appointed in June 2001  General Manager of Motorcycle Sales Division for Regional Sales Operations (Japan),
appointed in April 2001  Joined Honda in April 1969                                                                                                                                                                                                                                                              |  | 3,700                 



54



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|                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                   |  |                       
|---------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------
|Name (Date of Birth)               |  | Current Positions and Biographies with Registrant                                                                                                                                                                                                                                                                                                                                                 |  | Number of Shares Owned
|Fumihiko Ike (May 26, 1952)        |  | Director of the Company in June 2003  Chief Operating Officer for Power Products Operations, in April 2003 (presently held)  Joined Honda in February 1982                                                                                                                                                                                                                                        |  | 3,000                 
|                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|Corporate Auditors                 |  |                                                                                                                                                                                                                                                                                                                                                                                                   |  |                       
|                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|Hiroshi Okubo (October 30, 1945)   |  | Corporate Auditor (full-time), appointed in June 2004  Senior Managing Director of the Company,appointed in June 2003  Compliance Officer, appointed in April 2003  Managing Director of the Company, appointed in June 1999  Chief Operating Officer for Business Support Operations and Chief Officer of Driving Safety Promotion Center in Business Support Operations, appointed in June
1999 |  | 6,300                 
|                                   |  | Director of the Company, appointed in June 1996  General Manager of Executive Office in Business Support Operations, appointed in June 1994  Joined Honda in April 1970                                                                                                                                                                                                                           |  |                       
|                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|Koji Miyajima (June 10, 1948)      |  | Corporate Auditor (full-time), appointed in June 2003  Corporate Auditor, appointed in June 2001  General Manager of Overseas Operations Office No. 1 in Regional Operations (North America), appointed in April 2000  Joined Honda in April 1971                                                                                                                                                 |  | 3,500                 
|                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|Shinichi Sakamoto (August 3, 1950) |  | Corporate Auditor (full-time), appointed in June 2005  Regional Operating Officer of the Company,appointed in April 2004  Stationed at American Honda Motor Co., Inc., appointed in April
2000  General Manager of Regional Operations Planning Office in Regional
Operations (North America),appointed in April 2000 Joined in April 1969                                                        |  | 3,000                 
|                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|Koukei Higuchi (March 14, 1936)    |  | Corporate Auditor, appointed in June 2003  Advisor of the Board of The Tokio Marine & Fire Insurance Co., Ltd. (presently Tokio Marine & Nichido Fire Insurance Co., Ltd.) (presently
held)  Corporate Auditor, appointed in June 2003                                                                                                                                                            |  | None                  



55



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|                                |  |                                                                                                                                                                                                                                                                               |  |                       
|------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------
|Name (Date of Birth)            |  | Current Positions and Biographies with Registrant                                                                                                                                                                                                                             |  | Number of Shares Owned
|                                |  | Chairman of The Tokio Marine and Fire Insurance Co., Ltd. (presently Tokio Marine & Nichido Fire Insurance Co., Ltd.), appointed in June 2001  Joined The Tokio Marine and Fire Insurance Co., Ltd. (presently Tokio Marine & Nichido Fire Insurance Co., Ltd.) in April 1960 |  |                       
|                                |  |                                                                                                                                                                                                                                                                              
|Kuniyasu Yamada (July 21, 1944) |  | Corporate Auditor, appointed in June 2003  President of MTB Apple Planning Co., Ltd.,appointed in September 2002 (presently held)  Joined The Mitsubishi Trust and Banking Corp. in April 1967                                                                                |  | 1,000                 
|                                |  |                                                                                                                                                                                                                                                                              
|Fumihiko Saito (June 9, 1945)   |  | Corporate Auditor, appointed in June 2004  Partner of Haarmann Hemmelrath Saito Law Office in June 2003 (presently held)  Joined The Law Firm of Hamada & Yanagida (presently The Law Firm of Mori Hamada & Matsumoto) in April 1973                                          |  | None                  

---

|1. | Mr. Satoru Kishi and Mr. Kensaku Hogen satisfy the required conditions for outside directors provided for in Article 188, Paragraph 2, Item 7-2 of the Commercial Code of Japan.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Corporate Auditors Mr. Koukei Higuchi, Mr. Kuniyasu Yamada and Mr. Fumihiko Saito are outside corporate auditors as provided in Article 18, Section 1, of the Law for Special
Exceptions to the Commercial Code of Japan Concerning Audits, etc., of Kabushiki Kaisha.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | The Company has introduced an operating officer system to facilitate transfer of authority to regions and local workplaces and effectively separate the supervisory and executive
roles, while also making the Board of Directors more versatile. Managing Officers and Operating Officers do not conform to the definition of Directors and Senior Management as defined in Form 20-F. The Companys
Managing Officers and Operating Officers as voluntarily disclosed in Japan, are listed below.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                   |  |                                                                                                                                 
|------------------ |  | --------------------------------------------------------------------------------------------------------------------------------
|Managing Officers  |  |                                                                                                                                 
|                   | 
|Yasuo Ikenoya      |  | Deputy Chief Operating Officer for Regional Operations (China)                                                                  
|                   | 
|Takanobu Ito       |  | General Manager of Suzuka Factory of Production Operations                                                                      
|                   | 
|Masaaki Kato       |  | Executive Vice President and Director of Honda Motor Europe Ltd.  President and Director of Honda of the U.K. Manufacturing Ltd.
|                   | 
|Akio Hamada        |  | President and Director of Honda of America Mfg., Inc.                                                                           
|                   | 
|Teruo Kowashi      |  | General Manager of Saitama Factory of Production Operations                                                                     
|                   | 
|Operating Officers |  |                                                                                                                                 
|                   | 
|Takashi Yamamoto   |  | President and Director of Honda Manufacturing of Alabama, LLC                                                                   
|                   | 
|Suguru Kanazawa    |  | Executive Vice President and Director of Honda R&D Co., Ltd.  President and Director of Honda Racing Corporation                



56



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##### Table of Contents

|                  |  |                                                                                                                                                                                                                                           
|----------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Manabu Nishimae   |  | Deputy Chief Operating Officer for Regional Sales Operations (Japan)  General Manager of Automobile Sales Operations for Regional Sales Operations (Japan)  General Manager of Aftermarket Operations in Regional Sales Operations
(Japan)
|                  | 
|Masaya Yamashita  |  | General Manager of Automobile Purchasing Division 1 in Purchasing Operations                                                                                                                                                              
|                  | 
|Hiroshi Kobayashi |  | President and Director of Honda Canada Inc.                                                                                                                                                                                               
|                  | 
|Kazuo Sagawa      |  | Production in China                                                                                                                                                                                                                       
|                  | 
|Kazuto Iiyama     |  | Automobile Production for Production Operations                                                                                                                                                                                           
|                  | 
|Hiroshi Oshima    |  | Corporate Communications, Motor SportsGeneral Manager of Corporate Communications Division in Business Support Operations                                                                                                                 
|                  | 
|Sho Minekawa      |  | President of Guangzhou Honda Automobile Co., Ltd.                                                                                                                                                                                         
|                  | 
|Tsutomu Saka      |  | General Manager of Hamamatsu Factory of Production Operations                                                                                                                                                                             
|                  | 
|Hidenobu Iwata    |  | President and Director of Honda Engineering Co., Ltd.                                                                                                                                                                                     
|                  | 
|Motohide Sudo     |  | Executive Vice President and Director of Asian Honda Motor Co., Ltd.President and Director of A.P. Honda Company Ltd.                                                                                                                     
|                  | 
|Gen Tsujii        |  | Executive Vice President and Director of Honda of America Mfg., Inc.                                                                                                                                                                      
|                  | 
|Koichi Fukuo      |  | Quality, Certification & Regulation Compliance                                                                                                                                                                                            
|                  | 
|Hiroshi Soda      |  | Executive Vice President and Director of Honda North America, Inc.                                                                                                                                                                        
|                  | 
|Takuji Yamada     |  | Executive Vice President and Director of American Honda Motor Co., Inc.                                                                                                                                                                   



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 monthly remuneration, the aggregate maximum monthly amount of which is approved at the annual general meeting of shareholders. Also, Directors and Corporate Auditors receive bonuses, the aggregate amount of which is
approved at the annual general meeting of shareholders and is based on the Companys performance for the fiscal year. The amounts of the remuneration and bonuses approved to pay to Directors and Corporate Auditors are allocated among them at
meetings of the Board of Directors and Corporate Auditors.



In
accordance with customary Japanese business practice, when a Director or Corporate Auditor retires, a proposal to pay a lump sum retirement allowance is submitted at the general meeting of shareholders for approval. The amount of retirement
allowance for a Director or Corporate Auditor generally reflects his or her position at the time of retirement, the length of his service as a Director or Corporate Auditor and other factors, as appropriate under Hondas internal regulations.



The total amount of remuneration paid to the Companys
directors and corporate auditors during the fiscal year ended March 31, 2005 was 1,373 million yen, including 1,288 million yen paid to 40 directors (who include four directors who retired during that fiscal year) and 85 million yen paid to six
corporate auditors (who include one corporate auditors who retired during that fiscal year). The amount of remuneration paid to the directors includes amount of wages paid to those directors who were also employees of the Company or directors of
subsidiaries of the Company. The amount of remuneration paid to the corporate auditors includes amount of wages paid to those corporate auditors who were also employees of the Company or corporate auditors of subsidiaries of the Company.



57



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The total amount of executive bonuses that were paid during the year ended March 31, 2005 was 650 million
yen, including 606 million yen to our 36 directors as of the end of the year ended March 31, 2004 and 44 million yen to our four corporate auditors as of the end of the year ended March 31, 2004.



The amount of retirement allowances paid to four retired directors was 923
million yen, while 216 million yen was paid to one retired corporate auditor, both of which payments were in accordance with a resolution of the Ordinary General Meeting of Shareholders held in June 2004.



C. Board Practices



See Item 6.A
Director 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, 2005, 2004 and 2003.



As of March 31, 2005



|        |  |                     |  |                     |  |                    |  |                                  
|------- |  | ------------------- |  | ------------------- |  | ------------------ |  | ---------------------------------
|Total   |  | Motorcycle Business |  | Automobile Business |  | Financial Services |  | Power Product AndOther Businesses
|137,827 |  | 27,991              |  | 99,525              |  | 1,787              |  | 8,524                            
|        |  |                     |  |                     |  |                    |  |                                  



At March 31, 2005,
Honda had 137,827 full-time employees, including 76,763 local nationals employed in its overseas operations.



As of March 31, 2004



|        |  |                     |  |                     |  |                    |  |                                  
|------- |  | ------------------- |  | ------------------- |  | ------------------ |  | ---------------------------------
|Total   |  | Motorcycle Business |  | Automobile Business |  | Financial Services |  | Power Product AndOther Businesses
|131,600 |  | 25,700              |  | 95,500              |  | 1,700              |  | 8,700                            
|        |  |                     |  |                     |  |                    |  |                                  



At March 31, 2004,
Honda had approximately 131,600 full-time employees, including approximately 70,000 local nationals employed in its overseas operations.



As of March 31, 2003



|        |  |                     |  |                     |  |                    |  |                                  
|------- |  | ------------------- |  | ------------------- |  | ------------------ |  | ---------------------------------
|Total   |  | Motorcycle Business |  | Automobile Business |  | Financial Services |  | Power Product AndOther Businesses
|126,900 |  | 24,100              |  | 92,100              |  | 1,700              |  | 9,000                            
|        |  |                     |  |                     |  |                    |  |                                  



At March 31, 2003,
Honda had approximately 126,900 full-time employees, including approximately 65,000 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 Metal Workers Federation. Approximately 85% of the employees of the Company
and its Japanese subsidiaries were members of AHWU at March 31, 2005.



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In Japan, basic wages are negotiated annually and the average increases in wages of the Companys
employees in fiscal 2003, 2004 and 2005 were 2.0%, 2.0% and 2.0%, 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 domestic 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 directors and corporate auditors as a group as of June 23, 2005 is as follows.



|               |  |                |  |            |  
|-------------- |  | -------------- |  | ---------- | -
|Title of Class |  | Amount Owned   |  | % of Class |  
|Common Stock   |  | 118,968 shares |  | 0.013      | %



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, 2005, the Association owned 2,511,393 shares of the Companys common stock.



Item 7. Major shareholders and Related Party Transactions



A. Major Shareholders



As of
March 31, 2005, 928,414,215 shares of Hondas Common Stock were issued and 924,870,427 shares were outstanding.



We are not aware of any persons or groups that owned beneficially more than five percent of the Companys outstanding Common Stocks as of March 31,
2005.



ADRs representing American Depositary Shares are issued
by JPMorgan Chase Bank, 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, 2005 were 928,414,215 shares of Common Stock, of which 36,507,098 shares
represented by ADRs and 115,499,355 shares not represented by ADRs 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 196 at March 31, 2005.



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, 2005, Honda had sales of ¥148.3 billion and purchases of ¥595.5 billion with
equity affiliates accounted under the equity method. As of March 31, 2005, Honda had receivables of ¥25.4 billion from affiliated companies, and had payables of ¥106.5 billion to affiliated companies.



59



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##### Table of Contents

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



In addition, Mr. Minekawa, a Director of the Company, served
as the President of Guangzhou Honda Automobile Co., Ltd., one of our affiliates in China. In fiscal 2005, Honda sold Automobile parts, equipment and services to this affiliated company in the amount of ¥37.0 billion. Mr. Minekawa retired as a
Director of the Company as of June 23, 2005 and was assigned as an operating officer of the Company.



C. Interest 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 17Financial Statements. Except for Hondas consolidated financial statements included under Item 17, no other
information in this Annual Report has been audited by Hondas independent auditors.



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 reserves. Punitive damages are claimed in certain of these lawsuits. We are also subject to potential liability under other various lawsuits and claims.



Seventy-six purported class actions on behalf of all purchasers of new motor
vehicles in the United States since January 1, 2001, have been filed in various state and federal courts against American Honda Motor Co., Inc., Honda Canada, Inc., General Motors, Ford, Daimler Chrysler, Toyota, Nissan and BMW and their Canadian
affiliates, Volkswagen, the National Automobile Dealers Association and the Canadian Automobile Dealers Association. Several of the state court actions also name Honda Motor Co., Ltd. as a defendant, as well as other Japanese and German parent
companies of United States based subsidiaries. The federal court actions have been consolidated for coordinated pretrial proceedings in federal court in Maine and more than 30 California cases have been consolidated in the state court in San
Francisco. Additionally, there are pending cases in 10 other states.



The nearly identical complaints allege that the manufacturer defendants, aided by the association defendants, conspired among themselves and with their dealers to prevent United States citizens from purchasing vehicles produced for the
Canadian market and sold by dealers in Canada. The complaints allege that new vehicle prices in Canada are 10 to 30% lower than those in the United States and that preventing the sale of these vehicles to United States citizens resulted in the
payment of supracompetitive prices by United States consumers. The complaints seek treble damages under the antitrust laws, but do not specify damages. No Court has yet certified any of these cases as a class action. We believe our actions have been
lawful and intend to vigorously defend these cases.



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After consultation with legal counsel, and taking into account all known factors pertaining to existing
lawsuits and claims, we believe that the overall results of all lawsuits and pending claims should not result in liability to us that would be likely to have an adverse material effect on our consolidated financial position and results of
operations.



8. Profit Redistribution Policy



The Company strives to carry out its operations from a global perspective
and increase its corporate value. With respect to distribution of profits, the Company considers the distribution of profits to its shareholders to be one of the most important management issues, and its basic policy for dividends is to make
distributions after taking into account its long-term consolidated earnings performance. The Company will also acquire its own shares at the optimal timing with the aim of improving efficiency in capital structure. The present goal, however, is to
increase the shareholders return ratio (i.e., the ratio of the total of the dividend payment and the repurchase of Company shares to consolidated net income) to approximately 30%. Retained earnings will be applied toward financing R&D activities
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 year-end cash
dividend will be ¥37 per share, and total cash dividends for the year ended March 31, 2005 will be ¥65 per share, with an interim cash dividend of ¥28. For the year ending March 31, 2006, the Company plans to increase the interim cash
dividend by ¥9, to ¥37 per share. It also projects that the year-end cash dividend will be ¥37 per share. As a result, total cash dividends for the year ending March 31, 2006 are expected to be ¥74 per share, an increase of ¥9
per share from that for the year ended March 31, 2005. The Company will continue to work hard to earn and keep the support of its shareholders.



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. The Offer and Listing



Hondas shares have been listed on the Tokyo Stock Exchange (TSE) since 1958 and as of March 31, 2005, Hondas shares were traded over five stock exchanges in Japan.



Since February 11, 1977, American Depositary Shares (each representing one-half of 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 Stock Exchange of London. 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 1997. The Paris Stock Exchange was merged
with the exchanges in Amsterdam and Brussels and created Euronext in September 2000.



The monthly average turnover of Hondas shares of Common Stock and American Depositary Shares for the fiscal year ended March 31, 2005 was approximately 47,890,000 shares of Common Stock on the TSE and
approximately 6,749,400 American Depositary Shares on the NYSE.



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##### Table of Contents

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 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
|2001        |  | ¥                                        | 5,360 |                                                         | ¥ | 3,380 |  | $   | 22.59 |  | $ | 16.21
|2002        |  |                                          | 5,920 |                                                         |   | 3,090 |  |     | 23.09 |  |   | 13.65
|2003        |  |                                          | 5,990 |                                                         |   | 3,840 |  |     | 23.85 |  |   | 16.40
|            |  |                                          |       |                                                        
|2004        |  |                                          |       |                                                         |   |       |  |     |       |  |   |      
|1st quarter |  | ¥                                        | 4,790 |                                                         | ¥ | 3,570 |  | $   | 19.95 |  | $ | 15.47
|2nd quarter |  |                                          | 5,510 |                                                         |   | 4,420 |  |     | 23.59 |  |   | 18.54
|3rd quarter |  |                                          | 4,790 |                                                         |   | 4,090 |  |     | 22.53 |  |   | 18.81
|4th quarter |  |                                          | 5,140 |                                                         |   | 4,300 |  |     | 23.40 |  |   | 20.55
|            |  |                                          |       |                                                        
|2005        |  |                                          |       |                                                         |   |       |  |     |       |  |   |      
|1st quarter |  | ¥                                        | 5,320 |                                                         | ¥ | 4,370 |  | $   | 24.85 |  | $ | 19.25
|2nd quarter |  |                                          | 5,640 |                                                         |   | 4,890 |  |     | 25.40 |  |   | 22.56
|3rd quarter |  |                                          | 5,520 |                                                         |   | 4,830 |  |     | 26.10 |  |   | 23.55
|4th quarter |  |                                          | 5,700 |                                                         |   | 5,230 |  |     | 27.30 |  |   | 24.92
|            |  |                                          |       |                                                        
|Jan  2005  |  | ¥                                        | 5,470 |                                                         | ¥ | 5,260 |  | $   | 26.74 |  | $ | 25.23
|Feb         |  |                                          | 5,670 |                                                         |   | 5,380 |  |     | 26.99 |  |   | 25.70
|Mar         |  |                                          | 5,700 |                                                         |   | 5,230 |  |     | 27.30 |  |   | 24.92
|Apr         |  |                                          | 5,670 |                                                         |   | 5,030 |  |     | 26.00 |  |   | 23.75
|May         |  |                                          | 5,400 |                                                         |   | 5,020 |  |     | 24.95 |  |   | 23.80
|Jun         |  |                                          | 5,510 |                                                         |   | 5,220 |  |     | 25.40 |  |   | 24.45

---

|* | Hondas common stock-to-ADR exchange ratio was changed from two shares of common stock to one ADR, to one share of common stock to two ADRs, effective January 10, 2002. Per
American depositary share information has been restated for all periods presented to reflect this four-for-one ADR split.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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.



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Item 10. Additional Information



A. Share Capital



Not applicable



B. Memorandums and Article 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 Commercial Code of Japan and related legislation.



General



Hondas authorized share
capital as of March 31, 2005 is 3,554,000,000 shares of common stock, of which 928,414,215 shares were issued. Under the Commercial Code, shares must be registered and are transferable by delivery of share certificates. In order to assert
shareholders rights against Honda, a shareholder must have its name and address registered on Hondas register of shareholders, in accordance with Hondas share handling regulations. The registered beneficial holder of shares
underlying the ADSs or EDRs is the depositary for the ADSs or EDRs, respectively. Accordingly, holders of ADSs or EDRs will not be able directly to assert shareholders rights.



A holder of shares may choose, at its discretion, to participate in the central clearing system for share certificates under
the Law Concerning Central Clearing of Share Certificates and Other Securities of Japan. Participating shareholders must deposit certificates representing all of the shares to be included in this clearing system with the Japan Securities Depository
Center, Inc. (the Securities Center). If a holder of shares is not a participating institution in the Securities Center, it must participate through a participating institution, such as a securities company or a bank having a clearing
account with the Securities Center. All shares deposited with the Securities Center will be registered in the name of the Securities Center on Hondas register of shareholders. Each participating shareholder will in turn be registered on
Hondas register of beneficial shareholders and be treated in the same way as shareholders registered on Hondas register of shareholders. For the purpose of transferring deposited shares, delivery of share certificates is not required.
Entry of the share transfer in the books maintained by the Securities Center for participating institutions, or in the book maintained by a participating institution for its customers, has the same effect as delivery of share certificates. The
registered beneficial owners may exercise the rights attached to the deposited shares, such as voting rights, and will receive dividends (if any) and notices to shareholders directly from Honda. The shares held by a person as a registered
shareholder and those held by the same person as a registered beneficial owner are aggregated for these purposes. Beneficial owners may at any time withdraw and receive their share certificates from the Securities Center.



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.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | 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.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | 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 and dividends, if any, will be paid to shareholders of record as of that date. In addition to year-end dividends, the board of directors may by resolution declare an interim cash dividend to shareholders of record as
of September 30 of each year. Under the Commercial Code, however, Honda cannot declare or pay dividends unless specified non-consolidated financial criteria are met based on the amount of its net assets, stated capital, additional paid-in capital,
legal reserves, the excess, if any, of unamortized expenses incurred in preparation for commencement of business and in connection with research and development over the aggregate of the amounts referred above and the amount of share subscription
moneys paid.



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 be required to be accounted for as stated capital, although 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. Honda may at any time transfer the whole or any part of its additional paid-in capital and legal reserve to
stated capital by resolution of the board of directors. The whole or any part of retained earnings which may be distributed as annual dividends may also be transferred to stated capital by resolution of an ordinary general meeting of shareholders.
Honda may, by a resolution of an ordinary general meeting of shareholders (in the case of the reduction of stated capital, a special resolution of a general meeting of shareholders), reduce stated capital, additional paid-in capital and/or legal
reserve (in the case of the latter two reserves, in aggregate, the remainder after such reduction should not be less than one-quarter of Hondas stated capital).



Stock Splits



Honda may at any time split its shares into 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 shareholder approval to increase the number of its authorized shares in proportion to the stock split.



Upon stock splits, shareholders will not be required to exchange share certificates held by them for new share certificates.
In respect of deposited shares, new shares resulting from the stock split will be deposited with the Securities Center, and shareholders who directly possess share certificates will receive additional certificates representing the additional shares
resulting from the stock split.



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##### Table of Contents

Consolidation of Shares



Honda may at any time consolidate the 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.



Japanese Unit Share System



Consistent with the requirements of the Commercial Code, the articles of incorporation of Honda adopts unit share system called as
tan-gen-kabu, under which 100 shares constitute one unit of shares. The board of directors of Honda by itself may reduce, but not to increase, the number of shares that constitute a unit or abolish the unit share system entirely by a
board resolution. An increase in the number of shares that constitute one unit requires a resolution of a general shareholders meeting. In any case, the number of shares constituting one unit may not exceed the fewer of 1,000 shares and
one-two hundredths (1/200) of the number of all issued shares.



The articles of incorporation of Honda provide that Honda may not issue share certificates for a number of shares not constituting an integral number of units. Because the transfer of shares normally requires delivery of the share
certificates for the shares being transferred, shares constituting a fraction of a unit and for which no share certificates are issued may not be transferable, however, the holder of shares constituting less than one unit may at any time require
Honda to purchase or sell such shares at the market price in accordance with the Company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 unit of shares are not affected by these restrictions in their ability to transfer the ADRs. However, because transfers of less than one 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 units.



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



A holder of shares representing less
than one 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 unit may, in accordance with the provisions of the share handling regulations, make request to the effect
that such number of shares should be sold to it that will, when added to the shares less than one unit already held by that shareholder, constitute one 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 Unit



A holder of shares representing less than one unit has the following rights:



| |  |  | to receive, if any, dividends (including interim dividends),
| | - |  | ------------------------------------------------------------



| |  |  | to receive shares or cash by way of a stock split, upon consolidation of shares or upon a capital decrease, merger, share exchange or share transfer for the purpose of making Honda
a wholly-owned subsidiary of another company or upon a split-up of Honda,
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | to be allotted rights to subscribe for new shares and stock acquisition rights when such subscription rights are granted to shareholders,
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | to participate in any distribution of surplus assets upon the liquidation of Honda, and
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | to require Honda to issue replacement certificates for lost, stolen or destroyed share certificates, if issued.
| | - |  | ---------------------------------------------------------------------------------------------------------------



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A shareholder who owns shares representing less than one unit will not be able to exercise any other
rights, including voting rights and the right to examine Hondas accounting books and records.



Voting rights under the unit share system



Under the unit share system, the shareholders shall have one voting right for each unit of shares that they hold. Any number of shares less than a full unit will carry no voting rights.



Other than described above, the holders of shares representing less than one
unit have the same rights as the holders of shares constituting one unit.



Voting Rights



Honda holds its ordinary
general meeting of shareholders in June of each year at its head office or in its vicinity, or in Wako City, Saitama Prefecture, Japan. In addition, Honda may hold an extraordinary general meeting of shareholders whenever necessary by giving at
least two weeks advance notice. Under the Commercial Code, 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 holding regulations, at least two weeks prior to the date of the meeting.



A shareholder is generally entitled to one vote per unit of shares as described in this paragraph and under Japanese Unit Share System above.
In general, under the Commercial Code, a resolution can be adopted at a meeting of shareholders by a majority of the shares having voting rights represented at the meeting. The Commercial Code 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. 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.



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.



The Commercial Code provides that a quorum of the majority of voting rights
of all shareholders must be present at a shareholders meeting to approve any material corporate actions such as:



| |  |  | the amendment of the articles of incorporation (except amendments that the board of directors are authorized to make under the Commercial Code),
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the removal of a director or a corporate auditor,
| | - |  | -------------------------------------------------



| |  |  | the dissolution, merger, consolidation or split-up of Honda,
| | - |  | ------------------------------------------------------------



| |  |  | the transfer of the whole or an important part of Hondas business,
| | - |  | -------------------------------------------------------------------



| |  |  | the taking over of the whole of the business of any other corporation,
| | - |  | ----------------------------------------------------------------------



| |  |  | any issuance of new shares at a specially favorable price (or any issuance of stock acquisition rights with specially favorable conditions) to persons other than shareholders, and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the share exchange or share transfer for the purpose of establishing 100% parent-subsidiary relationships.
| | - |  | ----------------------------------------------------------------------------------------------------------



At least two-thirds of the voting rights of all shareholders represented at
the meeting must approve these actions.



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Pursuant to the terms of the Deposit Agreement, upon receipt of notice of any meeting of holders of
Common Shares 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 and the holders of EDRs 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 shares have no preemptive rights under Hondas articles of
incorporation. Under the Commercial Code, 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 on uniform terms 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 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 subscription 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.



Transfer Agent



The Chuo Mitsui Trust and Banking Company, Limited is the transfer agent for the shares. Chuo Mitsuis office is located at 33-1, Shiba 3-chome, Minato-ku, Tokyo, 105-8574, Japan. Chuo Mitsui maintains Hondas register of
shareholders and records transfers of record ownership upon presentation of share certificates.



Record Date



The
close of business on March 31 is the record date for Hondas year-end dividends, if paid. A holder of shares constituting one or more whole units who is registered as a holder on Hondas register of shareholders at the close of business as
of March 31 is also entitled to exercise shareholders voting rights at the ordinary general meeting of shareholders with respect to the fiscal year ended on March 31. The close of business on September 30 of each year is the record date for
interim dividends, if paid. 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 public notice.



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The shares generally trade ex-dividend or ex-rights on the Japanese stock exchanges on the third business
day before a record date (or if the record date is not a business day, the fourth business day prior thereto), for the purpose of dividends or rights offerings.



Acquisition by Honda of Shares



Honda may acquire its own shares through Japanese stock exchanges on which its shares are listed, by way of tender offer (pursuant to a resolution of the
board of directors or an ordinary resolution of an ordinary general meeting of shareholders), from a specific party (pursuant to a special resolution of an ordinary general meeting of shareholders) or from a subsidiary of Honda (pursuant to a
resolution of the board of directors). When such acquisition is made by Honda from a specific party other than a subsidiary of Honda, any shareholder may make a request directly to a representative director of Honda, five days prior to the relevant
shareholders meeting, that Honda also acquire the shares held by such shareholder. Any such acquisition of shares (other than the acquisition by Honda of its own shares from its subsidiary) must satisfy certain requirements, including the
requirement that the total amount of the purchase price not exceed the amount of retained earnings available for dividend payments plus the amount of any reduction of the stated capital, additional paid-in capital or legal reserve (if such reduction
of the stated capital, additional paid-in capital or legal reserve has been authorized pursuant to a resolution of the relevant general meeting of shareholders), minus the amount to be paid by way of appropriation of retained earnings for the
relevant fiscal year and any transfer of retained earnings to stated capital. In the case of the acquisition by Honda of its own shares from its subsidiary, the total amount of the purchase price may not exceed the amount of the retained earnings
available for interim dividend payment minus the amount of any interim dividend paid. However, if it is anticipated that the net assets on the balance sheet as at the end of the relevant fiscal year will be less than the aggregate amount of the
stated capital, additional paid-in capital and certain other items, Honda may not purchase such shares. Honda may hold the shares acquired in compliance with the provisions of the Commercial Code, and, generally, may dispose of or utilize for any
purpose or cancel such shares by a resolution of the board of directors; provided, however, that disposal of shares acquired to a person other than shareholders with specially favorable conditions will require a special resolution of the general
meeting of shareholders.



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, Honda must publish notices to shareholders in Japanese in the Nihon Keizai Shimbun, a Japanese newspaper of general circulation.



Report of Substantial Shareholdings



The Securities and Exchange Law of Japan and regulations under the 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 company listed on any Japanese stock 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, 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 company and to all Japanese stock exchanges on which the company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 to a 5% or greater shareholder upon exercise of share subscription warrants or stock acquisition rights are taken into account in determining
both the number of shares held by that holder and the companys total issued share capital.



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Daily Price Limits under Japanese Stock Exchange Rules



Share prices on Japanese stock 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 his 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 to
owners of our shares or ADSs who are non-resident individuals or non-Japanese corporations without a permanent establishment in Japan to which income from our 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:



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



| |  |  | the laws of the jurisdiction of which they are resident; and
| | - |  | ------------------------------------------------------------



| |  |  | 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 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 or a non-Japanese corporation is 20%. With respect to dividends paid on listed shares issued
by Japanese corporations (such as our shares) to any corporate or individual shareholder (including non-resident shareholders), the aforementioned 20% withholding tax rate is reduced to (i) 7% for dividends to be paid between January 1, 2004 and
March 31, 2008, and (ii) 15% for dividends to be paid thereafter, except for dividends paid to any individual shareholder who holds 5% or more of the issued shares of us. Japan has entered into income tax treaties, conventions or agreements, whereby
the maximum withholding tax rate is generally set at 15% for portfolio investors with, among others, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, New Zealand, Norway, Singapore, Spain,
Sweden, Switzerland, the United Kingdom and, prior to July 1, 2004, the United States. In the case of the Japan  U.S. tax treaty, however, as a result of its recent amendment, the maximum withholding tax rate will be reduced to 10% for
portfolio investors with effect from July 1, 2004. 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.



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On March 30, 2004, a new 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 New Treaty) entered into force and replaced the old 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 Old Treaty). Under the Old Treaty, which remained in effect until June 30, 2004 with respect to Japanese withholding taxes, a
portfolio investor that is a U.S. holder (as defined below in United States Taxes) was generally subject to Japanese withholding tax on dividends on our shares or ADSs at a rate of 15%. Under the New Treaty, which is effective for
distributions on shares and ADSs made on and after July 1, 2004, a portfolio investor that is a U.S. holder is generally subject to Japanese withholding tax on dividends on our shares or ADSs at a rate of 10%.



To obtain the benefits of the reduced withholding rate on dividends under the
Old Treaty or the New Treaty, a U.S. holder must file an application for reduced withholding with the Japanese tax authorities at least one day before the date of the dividend distribution. A U.S. holder of our ADSs must file, through the
depositary, one application for exemption from withholding tax for eight months for the purpose of investigating tax status of the holder one day from before the dividend payment and a second one for reduced withholding in accordance with the New
Treaty within eight months after the end of our fiscal year in which the annual dividend is paid or, in the case of interim dividend, within eight months after the record date for such interim dividend. For this purpose, a U.S. holder must file
proof of its taxpayer status, its residence and its beneficial ownership of the shares or ADSs. The depositary may require the U.S. holder also to provide other information in accordance with the Japanese tax laws and regulations. A U.S. holder that
does not submit an application for reduced withholding before a dividend is paid can file a claim for refund of the Japanese tax withheld in excess of the reduced tax under the Old Treaty or New Treaty with the Japanese tax authorities.



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 Old Treaty and the New 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 Old Treaty, the New 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 United States 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 Old
Treaty or the New Treaty, as applicable, (i) does not maintain a permanent establishment or fixed base in Japan to which shares or ADSs are attributable and through which the beneficial owner carries on or has carried on business (or in the case of
an individual, performs or has performed independent personal services) and (ii) is not otherwise ineligible for benefits under the Old Treaty or the New Treaty, as the case may be, with respect to income and gain from the shares or ADSs.



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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, 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 United States 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 in taxable years
beginning before January 1, 2009 that constitute qualified dividend income will be taxable to such holder at a maximum tax rate of 15% provided that the noncorporate U.S. holder holds shares or ADSs 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 Old Treaty or the New Treaty, as applicable, 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 maximum 15% tax rate. To the extent a
refund of the tax withheld is available to a U.S. holder under Japanese law or under the Old Treaty or the New Treaty, the amount of tax withheld that is refundable will not be eligible for credit against the U.S. holder United States federal income
tax liability. Please see Japanese Taxation, above, for the procedures for obtaining a reduced rate of withholding under a treaty or a tax refund.



Dividends will be income from sources outside the United States, but dividends paid in taxable years beginning before January 1, 2007 generally will be
passive income or financial services income, and dividends paid in taxable years beginning after December 1, 2006 will, depending on your circumstances, be passive or general income which in either case, is
treated separately from other types of income for purposes of computing the foreign tax credit allowable to a U.S. holder.



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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 that is recognized before January 1, 2009 will generally be taxed at a maximum rate of 15% 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
Rules



Honda believes that its shares and ADRs should not
be treated as stock of a PFIC for United States federal income tax purposes, but this conclusion is a factual determination that is made annually and thus may be subject to change. Moreover, the application of the PFIC rules to a corporation such as
Honda which among other things is engaged in leasing and financing through several subsidiaries is not entirely clear.



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



| |  |  | at least 75% of Hondas gross income for the taxable year is passive income; or
| | - |  | -------------------------------------------------------------------------------



| |  |  | 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:



| |  |  | any gain it realizes on the sale or other disposition of its shares or ADRs; and
| | - |  | --------------------------------------------------------------------------------



| |  |  | any excess distribution that Honda makes to it (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 ADRs during the three preceding taxable years or, if shorter, its holding period for the shares or ADRs).
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Under these rules:



| |  |  | the gain or excess distribution will be allocated ratably over its 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,
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



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



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



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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 ADRs
in a PFIC that are treated as marketable stock, it may also make a mark-to-market election. If it makes this election, it will not be subject to the PFIC rules described above. Instead, in general, it 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. It 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). Its 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-tomarket 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 our 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.



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 450 Fifth Street, N.W., 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.



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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 exchanges rates and in interest rates. Honda does not hold any derivative financial
instruments for trading purposes.



Foreign Currency Risk



Foreign currency forward contracts and purchased
option contracts are normally used to hedge 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 exchange risk as of March 31, 2004 and 2005. For forward exchange contracts and currency options, the table presents the contract amounts and fair value. All forward exchange contracts and
currency options to which we are a party have original maturities of less than one year.



Foreign Exchange Risk



|                                          |  |                 |         |            |                        |   |                |                 |  |                        |         |  |        |   |  |        
|----------------------------------------- |  | --------------- | ------- | ---------- | ---------------------- | - | -------------- | --------------- |  | ---------------------- | ------- |  | ------ | - |  | -------
|                                          |  | 2004            |         | 2005      
|                                          |  | Yen (millions)  |         |            | Averagecontractualrate |   | Yen (millions) |                 |  | Averagecontractualrate
|Forward Exchange Contract                 |  | Contractamounts |         | Fair value |                        |   |                | Contractamounts |  | Fair value             |         | 
|To sell US$                               |  | ¥               | 260,110 |            | 4,345                  |   |                | 107.34          |  | ¥                      | 225,573 |  | (5,233 | ) |  | 104.58 
|To sell EUR                               |  |                 | 67,123  |            | 2,176                  |   |                | 132.80          |  |                        | 56,727  |  | (915   | ) |  | 136.32 
|To sell CAD                               |  |                 | 22,716  |            | 110                    |   |                | 80.93           |  |                        | 22,736  |  | (845   | ) |  | 84.73  
|To sell GBP                               |  |                 | 21,695  |            | (13                    | ) |                | 191.70          |  |                        | 49,407  |  | (1,188 | ) |  | 195.81 
|To sell other foreign currencies          |  |                 | 14,140  |            | 315                    |   |                | various         |  |                        | 57,109  |  | (523   | ) |  | various
|To buy US$                                |  |                 | 3,774   |            | (74                    | ) |                | 107.62          |  |                        | 3,596   |  | 75     |   |  | 104.62 
|To buy other foreign currencies           |  |                 | 32      |            | 6                      |   |                | various         |  |                        | 2,304   |  | 19     |   |  | various
|Cross-currencies                          |  |                 | 173,108 |            | (437                   | ) |                | various         |  |                        | 275,389 |  | (1,023 | ) |  | various
|                                          |  |                 |         |            |                        |   |                |                 |  |                        |         |  |        |   |  |        
|Total                                     |  | ¥               | 562,698 |            | 6,428                  |   |                |                 |  | ¥                      | 692,841 |  | (9,633 | ) |  |        
|                                          |  |                 |         |            |                        |   |                |                 |  |                        |         |  |        |   |  |        
|                                          |  |                 |         |           
|                                          |  | Yen (millions)  |         |            | Averagecontractualrate |   | Yen (millions) |                 |  | Averagecontractualrate
|Currency Option                           |  | Contractamounts |         | Fair value |                        |   |                | Contractamounts |  | Fair value             |         | 
|Option purchased to sell US$              |  | ¥               | 50,497  |            | 1,454                  |   |                | various         |  | ¥                      | 71,004  |  | 258    |   |  | various
|Option written to sell US$                |  |                 | 64,497  |            | (192                   | ) |                | various         |  |                        | 92,482  |  | (1,270 | ) |  | various
|Option purchased to sell other currencies |  |                 | 2,050   |            | 151                    |   |                | various         |  |                        | 20,462  |  | 123    |   |  | various
|Option written to sell other currencies   |  |                 | 4,099   |            | (10                    | ) |                | various         |  |                        | 30,263  |  | (287   | ) |  | various
|Option purchased to buy other currencies  |  |                 |        |            |                       |   |                |                |  |                        |        |  |       |   |  |       
|Option written to buy other currencies    |  |                 |        |            |                       |   |                |                |  |                        |        |  |       |   |  |       
|                                          |  |                 |         |            |                        |   |                |                 |  |                        |         |  |        |   |  |        
|Total                                     |  | ¥               | 121,143 |            | 1,403                  |   |                |                 |  | ¥                      | 214,211 |  | (1,176 | ) |  |        
|                                          |  |                 |         |            |                        |   |                |                 |  |                        |         |  |        |   |  |        



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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 swap agreements are mainly used to convert floating
rate financing to (normally 3-5 years) fixed rate financing 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, 2004 and 2005. 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 & 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+aand an index at the fiscal year end.



Interest Rate Risk



Finance Subsidiaries-Receivables



|                                                             |  |                |           |                |           |       |   |              |  |                        |  |                      |  |          |  |          |  |            |  |            |  |           |  |      |  
|------------------------------------------------------------ |  | -------------- | --------- | -------------- | --------- | ----- | - | ------------ |  | ---------------------- |  | -------------------- |  | -------- |  | -------- |  | ---------- |  | ---------- |  | --------- |  | ---- | -
|                                                             |  | 2004           |           | 2005           |          
|                                                             |  | Yen (millions) |           | Yen (millions) |           |       |  
|                                                             |  |                |           |                |           |       |   |              |  | Expected maturity date |  | Averageinterestrates | 
|                                                             |  | Total          |           | Fair value     |           | Total |   | Within1 year |  | 1-2 year               |  | 2-3 year             |  | 3-4 year |  | 4-5 year |  | Thereafter |  | Fair value | 
|Direct Finance Leases :                                      |  |                |           |                |           |       |   |              |  |                        |  |                      |  |          |  |          |  |            |  |            |  |           |  |      |  
|JP¥                                                          |  | ¥              | 22,817    |                | *         |       | ¥ | 24,250       |  | 14,187                 |  | 4,985                |  | 3,051    |  | 1,354    |  | 673        |  |           |  | *         |  | 5.30 | %
|US$                                                          |  |                | 1,454,460 |                | *         |       |   | 1,562,695    |  | 439,500                |  | 517,893              |  | 472,591  |  | 132,654  |  | 57         |  |           |  | *         |  | 4.77 | %
|Other                                                        |  |                | 244,439   |                | *         |       |   | 335,303      |  | 103,436                |  | 80,554               |  | 79,358   |  | 62,332   |  | 9,522      |  | 101        |  | *         |  | 5.51 | %
|                                                             |  |                |           |                |           |       |   |              |  |                        |  |                      |  |          |  |          |  |            |  |            |  |           |  |      |  
|TotalDirect Finance Leases                                  |  | ¥              | 1,721,716 |                | *         |       | ¥ | 1,922,248    |  | 557,123                |  | 603,432              |  | 555,000  |  | 196,340  |  | 10,252     |  | 101        |  | *         |  |      |  
|                                                             |  |                |           |                |           |       |   |              |  |                        |  |                      |  |          |  |          |  |            |  |            |  |           |  |      |  
|Other Finance Reveivables:                                   |  |                |           |                |           |       |   |              |  |                        |  |                      |  |          |  |          |  |            |  |            |  |           |  |      |  
|JP¥                                                          |  | ¥              | 331,559   |                | 301,749   |       | ¥ | 350,281      |  | 127,665                |  | 93,683               |  | 63,417   |  | 37,891   |  | 18,080     |  | 9,545      |  | 319,697   |  | 5.30 | %
|US$                                                          |  |                | 1,510,120 |                | 1,522,724 |       |   | 1,768,541    |  | 609,739                |  | 364,769              |  | 338,470  |  | 277,123  |  | 154,368    |  | 24,072     |  | 1,743,376 |  | 4.77 | %
|Other                                                        |  |                | 264,546   |                | 256,201   |       |   | 314,043      |  | 167,836                |  | 61,574               |  | 46,295   |  | 26,810   |  | 9,904      |  | 1,624      |  | 281,768   |  | 8.81 | %
|                                                             |  |                |           |                |           |       |   |              |  |                        |  |                      |  |          |  |          |  |            |  |            |  |           |  |      |  
|TotalOther Finance Reveivables                              |  | ¥              | 2,106,225 |                | 2,080,674 |       | ¥ | 2,432,865    |  | 905,240                |  | 520,026              |  | 448,182  |  | 341,824  |  | 182,352    |  | 35,241     |  | 2,344,841 |  |      |  
|                                                             |  |                |           |                |           |       |   |              |  |                        |  |                      |  |          |  |          |  |            |  |            |  |           |  |      |  
|Retained interest in the sold pool of finance receivables ** |  |                | 61,072    |                | 61,072    |       |   | 62,904       |  |                        |  |                      |  |          |  |          |  |            |  |            |  | 62,904    |  |      |  
|                                                             |  |                |           |                |           |       |   |              |  |                        |  |                      |  |          |  |          |  |            |  |            |  |           |  |      |  
|Total ***                                                    |  | ¥              | 3,889,013 |                |           |       | ¥ | 4,418,017    |  |                        |  |                      |  |          |  |          |  |            |  |            |  |           |  |      |  
|                                                             |  |                |           |                |           |       |   |              |  |                        |  |                      |  |          |  |          |  |            |  |            |  |           |  |      |  

---

|* : | Under U.S. generally accepted accounting principles, disclosure of fair values of direct finance leases is not required.
|--- | ------------------------------------------------------------------------------------------------------------------------

|** : | The retained interest in the sold pool of finance receivables is accounted for as "trading" securities and is reported at fair value.
|---- | -------------------------------------------------------------------------------------------------------------------------------------

|*** : | The finance subsidiaries-receivables include finance subsidiaries-receivables classified as trade receivables and other assets in the consolidated balance sheets. Additional
detailed information is provided at the "(3) Finance Subsidiaries-Receivables and Securitizations" in the notes to the accompanying consolidated financial statements.
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Long-Term Debt (including current maturities)



|                                      |  |                |           |                |           |       |   |                        |  |          |  |                      |  |          |  |          |  |            |  |            |  |           |  |      |  
|------------------------------------- |  | -------------- | --------- | -------------- | --------- | ----- | - | ---------------------- |  | -------- |  | -------------------- |  | -------- |  | -------- |  | ---------- |  | ---------- |  | --------- |  | ---- | -
|                                      |  | 2004           |           | 2005           |          
|                                      |  | Yen (millions) |           | Yen (millions) |           |       |  
|                                      |  |                |           |                |           |       |   | Expected maturity date |  |          |  | Averageinterestrates | 
|                                      |  | Total          |           | Fair value     |           | Total |   | Within 1year           |  | 1-2 year |  | 2-3 year             |  | 3-4 year |  | 4-5 year |  | Thereafter |  | Fair value | 
|Japanese yen bonds                    |  | ¥              | 171,000   |                | 170,989   |       | ¥ | 171,000                |  |         |  | 61,000               |  | 50,000   |  | 30,000   |  | 30,000     |  |           |  | 172,209   |  | 0.70 | %
|Japanese yen medium-term notes        |  |                | 379,707   |                | 382,677   |       |   | 470,273                |  | 93,000   |  | 56,623               |  | 138,522  |  | 117,418  |  | 64,710     |  |           |  | 475,575   |  | 0.60 | %
|U.S. dollar medium-term notes         |  |                | 1,028,039 |                | 1,033,548 |       |   | 1,111,126              |  | 391,759  |  | 354,176              |  | 164,801  |  | 90,844   |  | 88,172     |  | 21,374     |  | 1,118,885 |  | 3.17 | %
|U.S. dollar commercial paper          |  |                | 184,690   |                | 184,690   |       |   | 187,526                |  |         |  | 187,526              |  |         |  |         |  |           |  |           |  | 187,526   |  | 2.71 | %
|Loans and othersprimarily fixed rate |  |                | 118,301   |                | 118,482   |       |   | 154,680                |  | 50,346   |  | 53,614               |  | 32,938   |  | 14,429   |  | 952        |  | 2,401      |  | 154,832   |  | 3.53 | %
|                                      |  |                |           |                |           |       |   |                        |  |          |  |                      |  |          |  |          |  |            |  |            |  |           |  |      |  
|Total                                 |  | ¥              | 1,881,737 |                | 1,890,386 |       | ¥ | 2,094,605              |  | 535,105  |  | 712,939              |  | 386,261  |  | 252,691  |  | 183,834    |  | 23,775     |  | 2,109,027 |  |      |  
|                                      |  |                |           |                |           |       |   |                        |  |          |  |                      |  |          |  |          |  |            |  |            |  |           |  |      |  



Interest Rate Swaps



|                          |             |             |                 |                |           |   |                |                 |           |              |                        |          |           |          |           |                    |           |          |                 |            |        |  |        |  |        |   |  |      |   |  |      |  
|------------------------- | ----------- | ----------- | --------------- | -------------- | --------- | - | -------------- | --------------- | --------- | ------------ | ---------------------- | -------- | --------- | -------- | --------- | ------------------ | --------- | -------- | --------------- | ---------- | ------ |  | ------ |  | ------ | - |  | ---- | - |  | ---- | -
|                          |             |             |                 | 2004           |           |   | 2005           |                
|                          |             |             |                 | Yen (millions) |           |   | Yen (millions) |                 |           |              |                        |          |           |         
|Notionalprincipalcurrency |             |             |                 |                |           |   |                |                 |           |              | Expected maturity date |          | Fairvalue |          |           | Averagereceiverate |           |          | Averagepay rate |           
|                          | Receive/Pay |             | Contractamounts |                | Fairvalue |   |                | Contractamounts |           | Within 1year |                        | 1-2 year |           | 2-3 year |           | 3-4 year           |           | 4-5 year |                 | Thereafter |        |  |       
|JP¥                       |             | Float/Fix   |                 | ¥              | 5,499     |   | (103           | )               |           | ¥            | 4,525                  |          | 260       |          | 1,360     |                    | 1,120     |          | 885             |            | 900    |  |       |  | (87    | ) |  | 0.82 | % |  | 1.83 | %
|US$                       |             | Float/Fix   |                 |                | 1,997,417 |   | (21,866        | )               |           |              | 2,326,726              |          | 200,052   |          | 406,948   |                    | 1,033,436 |          | 686,290         |            |       |  |       |  | 28,996 |   |  | 2.82 | % |  | 3.14 | %
|                          |             | Fix/Float   |                 |                | 114,145   |   | 4,064          |                 |           |              | 250,219                |          | 2,148     |          | 22,552    |                    | 32,217    |          | 91,281          |            | 80,543 |  | 21,478 |  | (1,635 | ) |  | 4.13 | % |  | 2.97 | %
|                          |             | Float/Float |                 |                | 71,975    |   | (2             | )               |           |              | 40,808                 |          | 24,700    |          |          |                    | 8,054     |          |                |            | 8,054  |  |       |  | (199   | ) |  | 2.84 | % |  | 2.93 | %
|CA$                       |             | Float/Fix   |                 |                | 238,581   |   | (5,409         | )               |           |              | 361,748                |          | 39,778    |          | 45,763    |                    | 101,954   |          | 129,460         |            | 44,793 |  |       |  | (1,981 | ) |  | 2.46 | % |  | 3.78 | %
|                          |             | Fix/Float   |                 |                | 19,877    |   | 261            |                 |           |              | 50,737                 |          |          |          |          |                    |          |          | 38,493          |            |       |  | 12,244 |  | (288   | ) |  | 3.22 | % |  | 2.59 | %
|                          |             | Float/Float |                 |                | 19,878    |   | (94            | )               |           |              | 93,270                 |          |          |          |          |                    | 93,270    |          |                |            |       |  |       |  | (147   | ) |  | 2.58 | % |  | 2.68 | %
|GBP                       |             | Float/Fix   |                 |                | 66,232    |   | 83             |                 |           |              | 75,061                 |          | 31,460    |          | 23,269    |                    | 14,621    |          | 5,155           |            | 556    |  |       |  | 175    |   |  | 5.13 | % |  | 5.03 | %
|                          |             | Fix/Float   |                 |                | 22,575    |   | 83             |                 |           |              | 24,311                 |          | 11,597    |          | 7,797     |                    | 3,900     |          | 1,017           |            |       |  |       |  | (31    | ) |  | 5.18 | % |  | 5.02 | %
|                          |             |             |                 |                |           |   |                |                 |           |              |                        |          |           |          |           |                    |           |          |                 |            |        |  |        |  |        |   |  |      |   |  |      |  
|Total                     |             | ¥           | 2,556,179       |                | (22,983   | ) |                | ¥               | 3,227,405 |              | 309,995                |          | 507,689   |          | 1,288,572 |                    | 952,581   |          | 134,846         |            | 33,722 |  | 24,803 |  |        |   |  |      |   | 
|                          |             |             |                 |                |           |   |                |                 |           |              |                        |          |           |          |           |                    |           |          |                 |            |        |  |        |  |        |   |  |      |   |  |      |  



Currency & Interest Rate Swaps



|                      |  |                    |         |                 |        |                |         |   |                 |   |              |   |                        |  |          |  |          |                    |          |  |                 |  |           |  |       |  |        |   |  |      |   |  |      |  
|--------------------- |  | ------------------ | ------- | --------------- | ------ | -------------- | ------- | - | --------------- | - | ------------ | - | ---------------------- |  | -------- |  | -------- | ------------------ | -------- |  | --------------- |  | --------- |  | ----- |  | ------ | - |  | ---- | - |  | ---- | -
|                      |  | 2004               |         |                 | 2005   |               
|                      |  |                    |         |                 |        | Yen (millions) |         |   | Yen (millions)  |   |              |   |                        |  |          | 
|Receivingsidecurrency |  | Payingsidecurrency |         |                 |        |                |         |   |                 |   |              |   | Expected maturity date |  |          |  |          | Averagereceiverate |          |  | Averagepay rate | 
|                      |  | Receive/Pay        |         | Contractamounts |        | Fairvalue      |         |   | Contractamounts |   | Within 1year |   | 1-2 year               |  | 2-3 year |  | 3-4 year |                    | 4-5 year |  | Thereafter      |  | Fairvalue |  |       | 
|JP¥                   |  | US$                |         | Fix/Float       |        | ¥              | 255,323 |   | 25,836          |   |              | ¥ | 353,314                |  | 70,912   |  | 29,581   |                    | 106,939  |  | 92,692          |  | 53,190    |  |      |  | 21,472 |   |  | 0.69 | % |  | 3.11 | %
|                      |  |                    |         | Float/Float     |        |                | 81,678  |   | 8,540           |   |              |   | 84,526                 |  | 9,201    |  | 23,895   |                    | 23,082   |  | 20,535          |  | 7,813     |  |      |  | 4,588  |   |  | 0.23 | % |  | 3.08 | %
|JP¥                   |  | EUR                |         | Fix/Float       |        |                | 12,000  |   | 198             |   |              |   |                       |  |         |  |         |                    |         |  |                |  |          |  |      |  |       |   |  |     |   |  |     |  
|JP¥                   |  | CA$                |         | Fix/Float       |        |                |        |   |                |   |              |   | 2,418                  |  |         |  |         |                    |         |  |                |  |          |  | 2,418 |  | (182   | ) |  | 0.95 | % |  | 3.01 | %
|                      |  |                    |         | Float/Float     |        |                | 8,647   |   | (329            | ) |              |   | 5,846                  |  | 4,692    |  |         |                    |         |  |                |  | 1,154     |  |      |  | (868   | ) |  | 0.83 | % |  | 2.83 | %
|JP¥                   |  | GBP                |         | Fix/Float       |        |                | 13,028  |   | (70             | ) |              |   | 28,314                 |  | 28,314   |  |         |                    |         |  |                |  |          |  |      |  | 5      |   |  | 0.04 | % |  | 4.94 | %
|Other                 |  | Other              |         | Fix/Float       |        |                | 1,665   |   | 39              |   |              |   |                       |  |         |  |         |                    |         |  |                |  |          |  |      |  |       |   |  |     |   |  |     |  
|                      |  |                    |         | Float/Float     |        |                | 29,915  |   | (260            | ) |              |   | 30,854                 |  | 30,854   |  |         |                    |         |  |                |  |          |  |      |  | (194   | ) |  | 2.72 | % |  | 5.03 | %
|                      |  |                    |         |                 |        |                |         |   |                 |   |              |   |                        |  |          |  |          |                    |          |  |                 |  |           |  |       |  |        |   |  |      |   |  |      |  
|Total                 |  | ¥                  | 402,256 |                 | 33,954 |                |         | ¥ | 505,272         |   | 143,973      |   | 53,476                 |  | 130,021  |  | 113,227  |                    | 62,157   |  | 2,418           |  | 24,821    |  |       |  |        |   |  |     
|                      |  |                    |         |                 |        |                |         |   |                 |   |              |   |                        |  |          |  |          |                    |          |  |                 |  |           |  |       |  |        |   |  |      |   |  |      |  



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##### Table of Contents

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 generally securities of domestic Japanese companies and are held for purposes other than trading. At March 31, 2004 and 2005, the estimated fair value of marketable equity securities was ¥98.3 billion and
¥93.0 billion, respectively.



Additionally, Honda has
convertible notes and convertible preferred stocks with conversion features that enable Honda to convert its investment into common shares of the issuer. Convertible features are accounted for as embedded derivatives.



The conversion features are measured at fair value in our consolidated
balance sheets, and the changes in fair value are recognized as other income or expense in our consolidated statements of income.



Item 12. Description of Securities to be Registered



Not applicable.



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



Under the supervision and the participation of our management, including our Chief Executive Officer and Chief Operating Officer for Business Management Operations (who is our principal 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, 2005. 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.



No significant changes were made in our internal control over financial reporting during the fiscal year ended March 31, 2005 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 Auditors has determined that Mr. Shinichi Sakamoto, a corporate auditor of the Company, is an audit committee financial expert as such term is defined by the rules of the SEC. He was
elected as one of Hondas corporate auditors at the general meeting of shareholders held on June 23, 2005. See Item 6.A. for additional information regarding Mr. Sakamoto.



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



Our Principal Accountant, who conducted audits of our consolidated financial statements under U.S. generally accepted accounting principles or its affiliates, is our independent auditor under applicable SEC rules and
billed the following fees to us for professional services:



|                   |  |                |  |      
|------------------ |  | -------------- |  | -----
|                   |  | Yen (millions)
|                   |  | 2004           |  | 2005 
|Audit Fees         |  | 581            |  | 688  
|Audit-Related Fees |  | 221            |  | 113  
|Tax Fees           |  | 484            |  | 390  
|All Other Fees     |  | 2              |  |     
|Total              |  | 1,288          |  | 1,191



77



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##### Table of Contents

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. For example, this category includes fees for financial statement
audits of employee benefit plans, accounting consulting, internal control reviews, attest services that are not required by statute or regulation, and consultation concerning financial accounting and reporting standards.



Tax fees means fees for tax services, which are services provided
by independent auditors related to tax compliance, tax advice and tax planning.



All other fees means fees for all other services, which are any services provided by independent auditors other than the audit services, audit-related services and tax services set forth above. This
category includes fees for training and other miscellaneous support services.



Pre-approval policies and procedures of the Board of 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 our principal accountant to ensure that the
independence of our 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.



All services to be provided to us by our principal accountant and its
affiliates that are not specifically set forth in this list must be specifically pre-approved by our Board of Corporate Auditors.



Each of our business departments or subsidiaries receiving services from our principal accountant or its affiliate must submit a report to our Board of
Corporate Auditors each fiscal year including the details of each service received during that fiscal year and the fees paid for each service. Our Board of Corporate Auditors takes this report into consideration at the time of reviewing the list of
services attached to its pre-approval policies and procedures.



None of the services described above in this Item 16C were waived from the pre-approval requirements pursuant to Rule 2-01(c)(7)(iXC) of Regulation S-X.



Item 16D. Exemption from the Listing Standards for Audit Committees



Not applicable.



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##### Table of Contents

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, 2005. There were
no purchases of Hondas shares by its affiliated purchasers during that year.



|                                  |  |                                         |  |                               |       |                                                                                  |            |                                                                                        |          
|--------------------------------- |  | --------------------------------------- |  | ----------------------------- | ----- | -------------------------------------------------------------------------------- | ---------- | -------------------------------------------------------------------------------------- | ---------
|Period                            |  | (a) Total Number ofShares Purchased (1) |  | (b)AveragePrice Paidper Share |       | (c) Total Number of SharesPurchased as Partof PubliclyAnnounced Plans orPrograms |            | (d) Maximum Number of Shares that May Yet Be Purchased Under the Plans
or Programs (2)
|April 1 to April 30, 2004         |  | 1,761,421                               |  | ¥                             | 4,735 |                                                                                  | 1,760,900  |                                                                                        | 4,099,900
|May 1 to May 31, 2004             |  | 676,948                                 |  | ¥                             | 4,435 |                                                                                  | 676,400    |                                                                                        | 0        
|June 1 to June 30, 2004           |  | 685                                     |  | ¥                             | 5,001 |                                                                                  | 0          |                                                                                        | 0        
|July 1 to July 31, 2004           |  | 1,830                                   |  | ¥                             | 5,084 |                                                                                  | 0          |                                                                                        | 0        
|August 1 to August 31, 2004       |  | 2,642,128                               |  | ¥                             | 5,268 |                                                                                  | 2,640,500  |                                                                                        | 4,859,500
|September 1 to September 30, 2004 |  | 1,698,824                               |  | ¥                             | 5,469 |                                                                                  | 1,697,000  |                                                                                        | 3,162,500
|October 1 to October 31, 2004     |  | 1,256,487                               |  | ¥                             | 5,421 |                                                                                  | 1,255,400  |                                                                                        | 0        
|November 1 to November 30, 2004   |  | 1,858,958                               |  | ¥                             | 5,192 |                                                                                  | 1,857,000  |                                                                                        | 4,393,000
|December 1 to December 31, 2004   |  | 2,005,142                               |  | ¥                             | 5,171 |                                                                                  | 2,001,000  |                                                                                        | 2,392,000
|January 1, to January 31, 2005    |  | 944,117                                 |  | ¥                             | 5,381 |                                                                                  | 930,900    |                                                                                        | 0        
|February 1, to February 28, 2005  |  | 1,598,057                               |  | ¥                             | 5,531 |                                                                                  | 1,596,800  |                                                                                        | 4,153,200
|March 1 to March 31, 2005         |  | 1,603,526                               |  | ¥                             | 5,512 |                                                                                  | 1,602,400  |                                                                                        | 2,550,800
|                                  |  |                                         |  |                               |       |                                                                                  |            |                                                                                        |          
|Total                             |  | 16,048,123                              |  | ¥                             | 5,244 |                                                                                  | 16,018,300 |                                                                                        |          
|                                  |  |                                         |  |                               |       |                                                                                  |            |                                                                                        |          

---

Notes:

|(1) | 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 Unit to Require Honda to
Purchase or Sell Its Shares under Item 10.B of this Annual Report.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | During the year ended March 31, 2005, the following share repurchase programs were in effect:
|--- | ---------------------------------------------------------------------------------------------



Share repurchase approved at the ordinary general meeting of shareholders on June 24, 2003

Date of announcement: June 24, 2003

Maximum number of shares authorized to be repurchased: 25,000,000

Maximum yen amount
authorized to be used for repurchase: ¥100,000,000,000

Repurchase period: from June 24, 2003 to May 11, 2004

(This program expired on the last day of the repurchase period referred to above.)



Share repurchase approved by the Board of Directors pursuant
to the Articles of Incorporation

Date of announcement: July 28, 2004

Maximum number of shares authorized to be repurchased: 7,500,000

Maximum yen amount authorized to be used for repurchase: ¥30,000,000,000

Repurchase period: from August 3, 2004 to October 15, 2004

(This program expired on the last day of the repurchase period referred to above.)



Share repurchase approved by the Board of Directors pursuant
to the Articles of Incorporation

Date of announcement: October 27, 2004

Maximum number of shares authorized to be repurchased: 6,250,000

Maximum yen amount authorized to be used for repurchase: ¥25,000,000,000

Repurchase period: from November 2, 2004 to January 18, 2005

(This program expired on the last day of the repurchase period referred to above.)



79



---

##### Table of Contents

Share repurchase approved by the Board of Directors pursuant to the Articles of
Incorporation

Date of announcement: January 28, 2005

Maximum number of shares authorized to be repurchased: 5,750,000

Maximum yen amount authorized to be used for repurchase: ¥23,000,000,000

Repurchase period: from February 3, 2005 to April 14, 2005

(This program expired on the last day of the repurchase period referred to above.)



Item 17. Financial Statements



See Consolidated Financial Statements attached hereto.



Item 18. Financial Statements



Not applicable.



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)
|--- | ------------------------------------------------------------------------------------------------------------------------------



|8.1 | List of Significant Subsidiaries (See Organizational Structure in Item 4.C. of this Form 20-F)
|--- | ------------------------------------------------------------------------------------------------



|11.1 | Code of Ethics (4)
|---- | ------------------



|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
|---- | -------------------------------------------------------------------------------

---

|(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 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.



80



---

##### Table of Contents

Annex A. Unaudited Consolidated Balance Sheets Divided into Non-Financial

Services Businesses and Finance
Subsidiaries



|                                                 |  |                |           |   |            |   |            |   |  |       |  
|------------------------------------------------ |  | -------------- | --------- | - | ---------- | - | ---------- | - |  | ----- | -
|At March 31, 2004 and 2005                       |  | Yen (millions) |           |   | % of total |  
|                                                 |  | 2004           |           |   | 2005       |   |           
|Assets                                           |  |                |           |   |            |   |            |   |  |       |  
|                                                 |  |                |          
|Non-financial services businesses                |  |                |           |   |            |   |            |   |  |       |  
|Current Assets:                                  |  | ¥              | 3,033,178 |   |            | ¥ | 3,376,411  |   |  | 36.2  |  
|Cash and cash equivalents                        |  |                | 707,917   |   |            |   | 757,894    |   |  |       |  
|Trade accounts and notes receivable              |  |                | 377,049   |   |            |   | 422,673    |   |  |       |  
|Inventories                                      |  |                | 765,433   |   |            |   | 862,370    |   |  |       |  
|Other current assets                             |  |                | 1,182,779 |   |            |   | 1,333,474  |   |  |       |  
|Investment and advances                          |  |                | 743,427   |   |            |   | 830,698    |   |  | 8.9   |  
|Property, plant and equipment, at cost           |  |                | 1,418,397 |   |            |   | 1,564,762  |   |  | 16.8  |  
|Other assets                                     |  |                | 269,073   |   |            |   | 274,958    |   |  | 3.0   |  
|                                                 |  |                |           |   |            |   |            |   |  |       |  
|Total assets                                     |  |                | 5,464,075 |   |            |   | 6,046,829  |   |  | 64.9  |  
|                                                 |  |                |          
|Finance Subsidiaries                             |  |                |           |   |            |   |            |   |  |       |  
|Cash and cash equivalents                        |  |                | 16,504    |   |            |   | 15,644     |   |  | 0.2   |  
|Finance subsidiariesshort-term receivables, net |  |                | 956,284   |   |            |   | 1,028,488  |   |  | 11.0  |  
|Finance subsidiarieslong-term receivables, net  |  |                | 2,266,881 |   |            |   | 2,625,078  |   |  | 28.2  |  
|Other assets                                     |  |                | 579,246   |   |            |   | 692,886    |   |  | 7.4   |  
|                                                 |  |                |           |   |            |   |            |   |  |       |  
|Total assets                                     |  |                | 3,818,915 |   |            |   | 4,362,096  |   |  | 46.8  |  
|Eliminations                                     |  |                | (954,222  | ) |            |   | (1,091,955 | ) |  | (11.7 | )
|                                                 |  |                |           |   |            |   |            |   |  |       |  
|Total assets                                     |  | ¥              | 8,328,768 |   |            |   | 9,316,970  |   |  | 100.0 |  
|                                                 |  |                |           |   |            |   |            |   |  |       |  
|Liabilities and Stockholders Equity             |  |                |           |   |            |   |            |   |  |       |  
|Non-financial services businesses                |  |                |           |   |            |   |            |   |  |       |  
|Current liabilities:                             |  | ¥              | 2,017,607 |   |            | ¥ | 2,281,768  |   |  | 24.5  |  
|Short-term debt                                  |  |                | 200,784   |   |            |   | 228,558    |   |  |       |  
|Current portion of long-term debt                |  |                | 6,912     |   |            |   | 6,385      |   |  |       |  
|Trade payables                                   |  |                | 913,649   |   |            |   | 1,022,394  |   |  |       |  
|Accrued expenses                                 |  |                | 691,637   |   |            |   | 770,887    |   |  |       |  
|Other current liabilities                        |  |                | 204,625   |   |            |   | 253,544    |   |  |       |  
|Long-term debt                                   |  |                | 28,370    |   |            |   | 19,570     |   |  | 0.2   |  
|Other liabilities                                |  |                | 724,331   |   |            |   | 717,636    |   |  | 7.7   |  
|                                                 |  |                |           |   |            |   |            |   |  |       |  
|Total liabilities                                |  |                | 2,770,308 |   |            |   | 3,018,974  |   |  | 32.4  |  
|                                                 |  |                |          
|Finance subsidiaries                             |  |                |           |   |            |   |            |   |  |       |  
|Short-term debt                                  |  |                | 1,170,538 |   |            |   | 1,310,678  |   |  | 14.1  |  
|Current portion of long-term debt                |  |                | 482,563   |   |            |   | 535,825    |   |  | 5.8   |  
|Accrued expenses                                 |  |                | 127,232   |   |            |   | 151,867    |   |  | 1.6   |  
|Long-term debt                                   |  |                | 1,378,346 |   |            |   | 1,546,953  |   |  | 16.6  |  
|Other liabilities                                |  |                | 287,705   |   |            |   | 352,317    |   |  | 3.7   |  
|                                                 |  |                |           |   |            |   |            |   |  |       |  
|Total liabilities                                |  |                | 3,446,384 |   |            |   | 3,897,640  |   |  | 41.8  |  
|Eliminations                                     |  |                | (762,324  | ) |            |   | (888,938   | ) |  | (9.5  | )
|                                                 |  |                |           |   |            |   |            |   |  |       |  
|Total liabilities                                |  |                | 5,454,368 |   |            |   | 6,027,676  |   |  | 64.7  |  
|                                                 |  |                |           |   |            |   |            |   |  |       |  
|Common stock                                     |  |                | 86,067    |   |            |   | 86,067     |   |  | 0.9   |  
|Capital surplus                                  |  |                | 172,719   |   |            |   | 172,531    |   |  | 1.9   |  
|Legal reserves                                   |  |                | 32,418    |   |            |   | 34,688     |   |  | 0.4   |  
|Retained earnings                                |  |                | 3,589,434 |   |            |   | 3,809,383  |   |  | 40.8  |  
|Accumulated other comprehensive income (loss)    |  |                | (854,573  | ) |            |   | (793,934   | ) |  | (8.5  | )
|Treasury stock                                   |  |                | (151,665  | ) |            |   | (19,441    | ) |  | (0.2  | )
|                                                 |  |                |           |   |            |   |            |   |  |       |  
|Total stockholders equity                       |  |                | 2,874,400 |   |            |   | 3,289,294  |   |  | 35.3  |  
|                                                 |  |                |           |   |            |   |            |   |  |       |  
|Total liabilities and stockholders equity       |  | ¥              | 8,328,768 |   |            |   | 9,316,970  |   |  | 100.0 |  
|                                                 |  |                |           |   |            |   |            |   |  |       |  

---

Note:



In this current year, Honda reclassified certain finance
subsidiaries-receivables to trade receivables in the consolidated balance sheets divided into Non-financial services businesses and Finance subsidiaries (unaudited). Reclassifications have been made to prior years consolidated financial
statements to confirm to the presentation used for the year ended March 31, 2005.



81



---

##### Table of Contents

Annex A. Unaudited Consolidated Statements of Cash Flows Divided into Non-Financial

Service Businesses and Finance Subsidiaries



|                                                                                 |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|-------------------------------------------------------------------------------- |  | --------------------------------- | -------- | - | -------------------- | - | -------- | --------------------------------- |  | - | -------------------- | - |  | - | -------- | -
|                                                                                 |  | Yen (millions)                    |         
|                                                                                 |  | 2004                              |          |   | 2005                 |  
|Year ended March 31, 2004 and 2005                                               |  | Non-financial services businesses |          |   | Finance Subsidiaries |   |          | Non-financial services businesses |  |   | Finance Subsidiaries |  
|Cash flows from operating activities:                                            |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|Net income                                                                       |  | ¥                                 | 423,794  |   |                      | ¥ | 40,569   |                                   |  | ¥ | 408,251              |   |  | ¥ | 77,955   |  
|Adjustments to reconcile net income to net cash provided by operating activities |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|Depreciation                                                                     |  |                                   | 213,086  |   |                      |   | 359      |                                   |  |   | 225,333              |   |  |   | 419      |  
|Deferred income taxes                                                            |  |                                   | 34,532   |   |                      |   | 78,890   |                                   |  |   | 38,737               |   |  |   | 76,782   |  
|Equity in income of affiliates                                                   |  |                                   | (75,424  | ) |                      |   |         |                                   |  |   | (97,821              | ) |  |   |         |  
|Loss on derivative instruments and related others                                |  |                                   | (74,469  | ) |                      |   | (10,314  | )                                 |  |   | (4,000               | ) |  |   | (56,432  | )
|Decrease (increase) in trade accounts and notes receivable                       |  |                                   | 53,035   |   |                      |   | (28,096  | )                                 |  |   | (29,754              | ) |  |   | (43,224  | )
|Decrease (increase) in inventories                                               |  |                                   | (51,836  | ) |                      |   |         |                                   |  |   | (79,483              | ) |  |   |         |  
|Increase (decrease) in trade payables                                            |  |                                   | 130,322  |   |                      |   |         |                                   |  |   | 82,548               |   |  |   |         |  
|Other, net                                                                       |  |                                   | (104,351 | ) |                      |   | 56,135   |                                   |  |   | 89,703               |   |  |   | 59,382   |  
|                                                                                 |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|Net cash provided by operating activities                                        |  |                                   | 548,689  |   |                      |   | 137,543  |                                   |  |   | 633,514              |   |  |   | 114,882  |  
|                                                                                 |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|Cash flows from investing activities:                                            |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|Decrease (increase) in investments and advances                                  |  |                                   | 94,562   |   |                      |   | 12       |                                   |  |   | (119,182             | ) |  |   |         |  
|Capital expenditures                                                             |  |                                   | (287,311 | ) |                      |   | (430     | )                                 |  |   | (372,039             | ) |  |   | (1,941   | )
|Proceeds from sales of property, plant and equipment                             |  |                                   | 14,398   |   |                      |   | 4,759    |                                   |  |   | 13,990               |   |  |   | 226      |  
|Decrease (increase) in finance subsidiaries-receivables                          |  |                                   |         |   |                      |   | (708,418 | )                                 |  |   |                     |   |  |   | (465,841 | )
|                                                                                 |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|Net cash used in investing activities                                            |  |                                   | (178,351 | ) |                      |   | (704,077 | )                                 |  |   | (477,231             | ) |  |   | (467,556 | )
|                                                                                 |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|Cash flows from financing activities:                                            |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|Increase (decrease) in short-term debt                                           |  |                                   | (37,401  | ) |                      |   | (97,505  | )                                 |  |   | 14,604               |   |  |   | 138,511  |  
|Proceeds from long-term debt                                                     |  |                                   | 11,663   |   |                      |   | 885,084  |                                   |  |   | 7,752                |   |  |   | 697,703  |  
|Repayment of long-term debt                                                      |  |                                   | (11,169  | ) |                      |   | (278,079 | )                                 |  |   | (9,172               | ) |  |   | (486,568 | )
|Proceeds from issuance of common stock                                           |  |                                   |         |   |                      |   | 57,280   |                                   |  |   |                     |   |  |   | 1,911    |  
|Cash dividends paid                                                              |  |                                   | (33,566  | ) |                      |   |         |                                   |  |   | (47,806              | ) |  |   |         |  
|Increase (decrease) in commercial paper classified as long-term debt             |  |                                   |         |   |                      |   | 280      |                                   |  |   |                     |   |  |   | (131     | )
|Payment for purchase of treasury stock, net                                      |  |                                   | (95,312  | ) |                      |   |         |                                   |  |   | (84,147              | ) |  |   |         |  
|                                                                                 |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|Net cash provided by (used in) financing activities financing activities         |  |                                   | (165,785 | ) |                      |   | 567,060  |                                   |  |   | (118,769             | ) |  |   | 351,426  |  
|                                                                                 |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|Effect of exchange rate changes on cash and cash equivalents                     |  |                                   | (26,979  | ) |                      |   | (1,083   | )                                 |  |   | 12,463               |   |  |   | 388      |  
|                                                                                 |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|Net change in cash and cash equivalents                                          |  |                                   | 177,574  |   |                      |   | (557     | )                                 |  |   | 49,977               |   |  |   | (860     | )
|                                                                                 |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|Cash and cash equivalents at beginning of year                                   |  |                                   | 530,343  |   |                      |   | 17,061   |                                   |  |   | 707,917              |   |  |   | 16,504   |  
|                                                                                 |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  
|Cash and cash equivalents at end of year                                         |  | ¥                                 | 707,917  |   |                      | ¥ | 16,504   |                                   |  | ¥ | 757,894              |   |  | ¥ | 15,644   |  
|                                                                                 |  |                                   |          |   |                      |   |          |                                   |  |   |                      |   |  |   |          |  



82



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##### Table of Contents

---

Notes:

|1. | The Company and its subsidiaries engaged in financial services are referred to as finance subsidiaries. Other subsidiaries are referred to as non-financial services businesses.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Free cash flow (the net of cash flows from operating activities and cash flows from investing activities) for non-financial services businesses was ¥370,338 million, while
finance subsidiaries generated a negative free cash flow of ¥566,534 million in fiscal 2004. Non-financial services businesses lend to finance subsidiaries. These cash flows are included in the decrease (increase) in investments and advances,
increase (decrease) in short-term debt, proceeds from long-term debt and repayment of long-term debt. Excluding the decrease in loans to finance subsidiaries (¥112,116 million), free cash flow for non-financial services businesses in fiscal 2004
was ¥258,222 million.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Free cash flow (the net of cash flows from operating activities and cash flows from investing activities) for non-financial services businesses was ¥156,283 million, while
finance subsidiaries generated a negative free cash flow of ¥352,674 million in fiscal 2005. Excluding the increase in loans to finance subsidiaries (¥132,317 million), free cash flow for non-financial services businesses in fiscal 2005 was
¥288,600 million.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | For each cash flow item shown above, the sum of the amounts for the non-financial services businesses and the finance subsidiaries do not necessarily equal the consolidated amounts
reflected in the Companys audited consolidated statements of cash flows appearing elsewhere in this annual report due to the existence of intercompany transactions such as loans from the non-financial services businesses to the finance
subsidiaries described in Notes 2 and 3 which have not been eliminated in the unaudited consolidated statements of cash flows presented above.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | In this current year, Honda changed its reporting of cash flow related to the finance subsidiaries-receivables which relate to sales of inventory as cash flows from operating
activities instead of cash flows from investing activities in the consolidated statements of cash flows divided into Non-financial services businesses and Finance subsidiaries (unaudited). Reclassifications have been made to prior years
consolidated financial statements to confirm to the presentation used for the year ended March 31, 2005.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | Decrease(increase) in trade accounts and notes receivable for finance subsidiaries is due to the reclassification of finance subsidiaries-receivables which relate to sales of
inventory in the unaudited consolidated statements of cash flows presented above.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



83



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##### Table of Contents

HONDA MOTOR CO., LTD.

(Honda Giken Kogyo Kabushiki Kaisha)

(A Japanese Company)

AND SUBSIDIARIES



Consolidated Financial Statements

and

Report of Independent Registered

Public Accounting Firm



March 31, 2005





To be Included in

The Annual Report

Form 20-F

Filed with

The Securities and Exchange Commission

Washington, D.C., U.S.A.



---

##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Index to Consolidated Financial Statements and Schedule



|                                                                                            |  |    
|------------------------------------------------------------------------------------------- |  | ---
|Report of Independent Registered Public Accounting Firm                                     |  | F-3
|Consolidated Balance Sheets - March 31, 2004 and 2005                                       |  | F-4
|Consolidated Statements of Income - Years ended March 31, 2003, 2004 and 2005               |  | F-5
|Consolidated Statements of Stockholders Equity - Years ended March 31, 2003, 2004 and 2005 |  | F-6
|Consolidated Statements of Cash Flows - Years ended March 31, 2003, 2004 and 2005           |  | F-7
|Notes to Consolidated Financial Statements                                                  |  | F-8



Financial statements
of affiliates are omitted because such affiliates are not individually significant.



F-2



---

##### Table of Contents

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, 2004
and 2005, and the related consolidated statements of income, stockholders equity and cash flows for each of the years in the three-year period ended March 31, 2005. 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.



The Companys consolidated financial
statements do not disclose certain information required by Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information. In our opinion, disclosure of this information is
required by U.S. generally accepted accounting principles.



In
our opinion, except for the omission of the segment information referred to in the preceding paragraph, 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, 2004 and 2005, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2005 in conformity with U.S. generally accepted accounting principles.



/S/ KPMG AZSA & Co.



Tokyo, Japan

April 26, 2005



F-3



---

##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Consolidated Balance Sheets



March 31, 2004
and 2005



|                                                                                                                                                         |  |                |           |   |      |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | --------- | - | ---- | - | --------- | -
|                                                                                                                                                         |  | Yen (millions) |          
|                                                                                                                                                         |  | 2004           |           |   | 2005 |  
|Assets                                                                                                                                                   |  |                |           |   |      |   |           |  
|Current assets:                                                                                                                                          |  |                |           |   |      |   |           |  
|Cash and cash equivalents                                                                                                                                |  | ¥              | 724,421   |   |      | ¥ | 773,538   |  
|Trade accounts and notes receivable, net of allowance for doubtful accounts of ¥10,919 million in 2004 and ¥9,710 million in 2005
(note 2)               |  |                | 688,303   |   |      |   | 791,195   |  
|Finance subsidiaries-receivables, net (notes 2, 3 and 7)                                                                                                 |  |                | 949,733   |   |      |   | 1,021,116 |  
|Inventories (note 4)                                                                                                                                     |  |                | 765,433   |   |      |   | 862,370   |  
|Deferred income taxes (note 9)                                                                                                                           |  |                | 222,179   |   |      |   | 214,059   |  
|Other current assets (notes 6, 7 and 14)                                                                                                                 |  |                | 303,185   |   |      |   | 346,464   |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Total current assets                                                                                                                                     |  |                | 3,653,254 |   |      |   | 4,008,742 |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Finance subsidiaries-receivables, net (notes 2, 3 and 7)                                                                                                 |  |                | 2,265,874 |   |      |   | 2,623,909 |  
|                                                                                                                                                         |  |               
|Investments and advances:                                                                                                                                |  |                |           |   |      |   |           |  
|Investments in and advances to affiliates (note 5)                                                                                                       |  |                | 298,242   |   |      |   | 349,664   |  
|Other, including marketable equity securities (note 6)                                                                                                   |  |                | 242,824   |   |      |   | 264,926   |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Total investments and advances                                                                                                                           |  |                | 541,066   |   |      |   | 614,590   |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Property, plant and equipment, at cost (note 7):                                                                                                         |  |                |           |   |      |   |           |  
|Land                                                                                                                                                     |  |                | 354,762   |   |      |   | 365,217   |  
|Buildings                                                                                                                                                |  |                | 968,159   |   |      |   | 1,030,998 |  
|Machinery and equipment                                                                                                                                  |  |                | 2,072,347 |   |      |   | 2,260,826 |  
|Construction in progress                                                                                                                                 |  |                | 49,208    |   |      |   | 96,047    |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|                                                                                                                                                         |  |                | 3,444,476 |   |      |   | 3,753,088 |  
|Less accumulated depreciation                                                                                                                            |  |                | 2,008,945 |   |      |   | 2,168,836 |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Net property, plant and equipment                                                                                                                        |  |                | 1,435,531 |   |      |   | 1,584,252 |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Other assets (notes 2, 7, 9 and 14)                                                                                                                      |  |                | 433,043   |   |      |   | 485,477   |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Total assets                                                                                                                                             |  | ¥              | 8,328,768 |   |      | ¥ | 9,316,970 |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Liabilities and Stockholders Equity                                                                                                                     |  |                |           |   |      |   |           |  
|Current liabilities:                                                                                                                                     |  |                |           |   |      |   |           |  
|Short-term debt (note 7)                                                                                                                                 |  | ¥              | 734,271   |   |      | ¥ | 769,314   |  
|Current portion of long-term debt (note 7)                                                                                                               |  |                | 487,125   |   |      |   | 535,105   |  
|Trade payables:                                                                                                                                          |  |                |           |   |      |   |           |  
|Notes                                                                                                                                                    |  |                | 29,096    |   |      |   | 26,727    |  
|Accounts                                                                                                                                                 |  |                | 882,141   |   |      |   | 987,045   |  
|Accrued expenses                                                                                                                                         |  |                | 813,733   |   |      |   | 913,721   |  
|Income taxes payable (note 9)                                                                                                                            |  |                | 31,194    |   |      |   | 65,029    |  
|Other current liabilities (notes 7, 9 and 14)                                                                                                            |  |                | 357,259   |   |      |   | 451,623   |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Total current liabilities                                                                                                                                |  |                | 3,334,819 |   |      |   | 3,748,564 |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Long-term debt (note 7)                                                                                                                                  |  |                | 1,394,612 |   |      |   | 1,559,500 |  
|Other liabilities (notes 7, 8, 9, 11 and 14)                                                                                                             |  |                | 724,937   |   |      |   | 719,612   |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Total liabilities                                                                                                                                        |  |                | 5,454,368 |   |      |   | 6,027,676 |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Stockholders equity:                                                                                                                                    |  |                |           |   |      |   |           |  
|Common stock, authorized 3,600,000,000 shares in 2004 and 3,554,000,000 shares in 2005; issued 974,414,215 shares in 2004 and 928,414,215
shares in 2005 |  |                | 86,067    |   |      |   | 86,067    |  
|Capital surplus                                                                                                                                          |  |                | 172,719   |   |      |   | 172,531   |  
|Legal reserves (note 10)                                                                                                                                 |  |                | 32,418    |   |      |   | 34,688    |  
|Retained earnings (note 10)                                                                                                                              |  |                | 3,589,434 |   |      |   | 3,809,383 |  
|Accumulated other comprehensive income (loss) (notes 6, 9, 11 and 13)                                                                                    |  |                | (854,573  | ) |      |   | (793,934  | )
|Treasury stock, at cost 33,498,264 shares in 2004 and 3,543,788 shares in 2005                                                                           |  |                | (151,665  | ) |      |   | (19,441   | )
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Total stockholders equity                                                                                                                               |  |                | 2,874,400 |   |      |   | 3,289,294 |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  
|Commitments and contingent liabilities (notes 16 and 17)                                                                                                 |  |                |           |   |      |   |           |  
|Total liabilities and stockholders equity                                                                                                               |  | ¥              | 8,328,768 |   |      | ¥ | 9,316,970 |  
|                                                                                                                                                         |  |                |           |   |      |   |           |  



See accompanying notes
to consolidated financial statements.



F-4



---

##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Consolidated Statements of Income



Years
ended March 31, 2003, 2004 and 2005



|                                                              |  |                |           |      |   |           |  |   |          
|------------------------------------------------------------- |  | -------------- | --------- | ---- | - | --------- |  | - | ---------
|                                                              |  | Yen (millions)
|                                                              |  | 2003           |           | 2004 |   | 2005     
|Net sales and other operating revenue (note 3)                |  | ¥              | 7,971,499 |      | ¥ | 8,162,600 |  | ¥ | 8,650,105
|                                                              |  |                |          
|Operating costs and expenses:                                 |  |                |           |      |   |           |  |   |          
|Cost of sales (note 3)                                        |  |                | 5,364,204 |      |   | 5,609,806 |  |   | 6,038,172
|Selling, general and administrative                           |  |                | 1,445,905 |      |   | 1,503,683 |  |   | 1,513,259
|Research and development                                      |  |                | 436,863   |      |   | 448,967   |  |   | 467,754  
|                                                              |  |                |           |      |   |           |  |   |          
|                                                              |  |                | 7,246,972 |      |   | 7,562,456 |  |   | 8,019,185
|                                                              |  |                |           |      |   |           |  |   |          
|Operating income                                              |  |                | 724,527   |      |   | 600,144   |  |   | 630,920  
|                                                              |  |                |          
|Other income (notes 1(p) and 6):                              |  |                |           |      |   |           |  |   |          
|Interest                                                      |  |                | 7,445     |      |   | 9,299     |  |   | 10,696   
|Other                                                         |  |                | 5,741     |      |   | 54,909    |  |   | 60,541   
|                                                              |  |                |           |      |   |           |  |   |          
|                                                              |  |                | 13,186    |      |   | 64,208    |  |   | 71,237   
|                                                              |  |                |           |      |   |           |  |   |          
|Other expenses (notes 1(c), (p) and 6):                       |  |                |           |      |   |           |  |   |          
|Interest                                                      |  |                | 12,207    |      |   | 10,194    |  |   | 11,655   
|Other                                                         |  |                | 115,751   |      |   | 12,231    |  |   | 33,697   
|                                                              |  |                |           |      |   |           |  |   |          
|                                                              |  |                | 127,958   |      |   | 22,425    |  |   | 45,352   
|                                                              |  |                |           |      |   |           |  |   |          
|Income before income taxes and equity in income of affiliates |  |                | 609,755   |      |   | 641,927   |  |   | 656,805  
|                                                              |  |                |          
|Income taxes (note 9):                                        |  |                |           |      |   |           |  |   |          
|Current                                                       |  |                | 176,632   |      |   | 139,318   |  |   | 151,146  
|Deferred                                                      |  |                | 68,433    |      |   | 113,422   |  |   | 115,519  
|                                                              |  |                |           |      |   |           |  |   |          
|                                                              |  |                | 245,065   |      |   | 252,740   |  |   | 266,665  
|                                                              |  |                |           |      |   |           |  |   |          
|Income before equity in income of affiliates                  |  |                | 364,690   |      |   | 389,187   |  |   | 390,140  
|                                                              |  |                |          
|Equity in income of affiliates (note 5)                       |  |                | 61,972    |      |   | 75,151    |  |   | 96,057   
|                                                              |  |                |           |      |   |           |  |   |          
|Net income                                                    |  | ¥              | 426,662   |      | ¥ | 464,338   |  | ¥ | 486,197  
|                                                              |  |                |           |      |   |           |  |   |          
|                                                              | 
|                                                              |  | Yen           
|                                                              |  | 2003           |           | 2004 |   | 2005     
|Basic net income per common share (note 1(n))                 |  | ¥              | 439.43    |      | ¥ | 486.91    |  | ¥ | 520.68   
|                                                              |  |                |           |      |   |           |  |   |          



See accompanying notes
to consolidated financial statements.



F-5



---

##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Consolidated Statements of Stockholders Equity



Years ended March 31, 2003, 2004 and 2005



|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|--------------------------------------------------------------------------------- |  | -------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                                                  |  | Yen (millions) |          
|                                                                                  |  | 2003           |           |   | 2004 |   |           | 2005 | 
|Common stock:                                                                     |  |                |           |   |      |   |           |      |  |   |           |  
|Balance at beginning of year                                                      |  | ¥              | 86,067    |   |      | ¥ | 86,067    |      |  | ¥ | 86,067    |  
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Balance at end of year                                                            |  |                | 86,067    |   |      |   | 86,067    |      |  |   | 86,067    |  
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Capital surplus:                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Balance at beginning of year                                                      |  |                | 172,529   |   |      |   | 172,529   |      |  |   | 172,719   |  
|Reissuance of treasury stock                                                      |  |                |          |   |      |   | 190       |      |  |   | 2         |  
|Retirement of treasury stock                                                      |  |                |          |   |      |   |          |      |  |   | (190      | )
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Balance at end of year                                                            |  |                | 172,529   |   |      |   | 172,719   |      |  |   | 172,531   |  
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Legal reserves:                                                                   |  |                |           |   |      |   |           |      |  |   |           |  
|Balance at beginning of year                                                      |  |                | 28,969    |   |      |   | 29,391    |      |  |   | 32,418    |  
|Transfer from retained earnings (note 10)                                         |  |                | 422       |   |      |   | 3,027     |      |  |   | 2,270     |  
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Balance at end of year                                                            |  |                | 29,391    |   |      |   | 32,418    |      |  |   | 34,688    |  
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Retained earnings:                                                                |  |                |           |   |      |   |           |      |  |   |           |  
|Balance at beginning of year                                                      |  |                | 2,765,600 |   |      |   | 3,161,664 |      |  |   | 3,589,434 |  
|Net income for the year                                                           |  |                | 426,662   |   |      |   | 464,338   |      |  |   | 486,197   |  
|Cash dividends (note 10)                                                          |  |                | (30,176   | ) |      |   | (33,541   | )    |  |   | (47,797   | )
|Transfer to legal reserves (note 10)                                              |  |                | (422      | ) |      |   | (3,027    | )    |  |   | (2,270    | )
|Retirement of treasury stock                                                      |  |                |          |   |      |   |          |      |  |   | (216,181  | )
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Balance at end of year                                                            |  |                | 3,161,664 |   |      |   | 3,589,434 |      |  |   | 3,809,383 |  
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Accumulated other comprehensive income (loss)(notes 6, 9, 11 and 13):             |  |                |           |   |      |   |           |      |  |   |           |  
|Balance at beginning of year                                                      |  |                | (479,175  | ) |      |   | (763,165  | )    |  |   | (854,573  | )
|Other comprehensive income (loss) for the year, net of tax                        |  |                | (283,990  | ) |      |   | (91,408   | )    |  |   | 60,639    |  
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Balance at end of year                                                            |  |                | (763,165  | ) |      |   | (854,573  | )    |  |   | (793,934  | )
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Treasury stock:                                                                   |  |                |           |   |      |   |           |      |  |   |           |  
|Balance at beginning of year                                                      |  |                | (49       | ) |      |   | (56,766   | )    |  |   | (151,665  | )
|Purchase of treasury stock                                                        |  |                | (56,717   | ) |      |   | (95,318   | )    |  |   | (84,160   | )
|Reissuance of treasury stock                                                      |  |                |          |   |      |   | 419       |      |  |   | 13        |  
|Retirement of treasury stock                                                      |  |                |          |   |      |   |          |      |  |   | 216,371   |  
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Balance at end of year                                                            |  |                | (56,766   | ) |      |   | (151,665  | )    |  |   | (19,441   | )
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Total stockholders equity                                                        |  | ¥              | 2,629,720 |   |      | ¥ | 2,874,400 |      |  | ¥ | 3,289,294 |  
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Disclosure of comprehensive income:                                               |  |                |           |   |      |   |           |      |  |   |           |  
|Net income for the year                                                           |  | ¥              | 426,662   |   |      | ¥ | 464,338   |      |  | ¥ | 486,197   |  
|Other comprehensive income (loss) for the year, net of tax(notes 6, 9, 11 and 13) |  |                |           |   |      |   |           |      |  |   |           |  
|Adjustments from foreign currency translation                                     |  |                | (169,391  | ) |      |   | (195,941  | )    |  |   | 40,476    |  
|Unrealized gains (losses) on marketable equity securities:                        |  |                |           |   |      |   |           |      |  |   |           |  
|Unrealized holding gains (losses) arising during the year                         |  |                | (1,047    | ) |      |   | 21,246    |      |  |   | (3,668    | )
|Reclassification adjustments for losses realized in net income                    |  |                | 7,137     |   |      |   |          |      |  |   | 1,346     |  
|Minimum pension liabilities adjustment                                            |  |                | (120,689  | ) |      |   | 83,287    |      |  |   | 22,485    |  
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|                                                                                  |  |                | (283,990  | ) |      |   | (91,408   | )    |  |   | 60,639    |  
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  
|Total comprehensive income for the year                                           |  | ¥              | 142,672   |   |      | ¥ | 372,930   |      |  | ¥ | 546,836   |  
|                                                                                  |  |                |           |   |      |   |           |      |  |   |           |  



See accompanying notes
to consolidated financial statements.



F-6



---

##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Consolidated Statements of Cash Flows



Years
ended March 31, 2003, 2004 and 2005



|                                                                                            |  |                |            |   |      |   |            |      |  |   |            |  
|------------------------------------------------------------------------------------------- |  | -------------- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                            |  | Yen (millions) |           
|                                                                                            |  | 2003           |            |   | 2004 |   |            | 2005 | 
|Cash flows from operating activities (note 12):                                             |  |                |            |   |      |   |            |      |  |   |            |  
|Net income                                                                                  |  | ¥              | 426,662    |   |      | ¥ | 464,338    |      |  | ¥ | 486,197    |  
|Adjustments to reconcile net income to net cash provided by operating activities:           |  |                |            |   |      |   |            |      |  |   |            |  
|Depreciation                                                                                |  |                | 220,874    |   |      |   | 213,445    |      |  |   | 225,752    |  
|Deferred income taxes                                                                       |  |                | 68,433     |   |      |   | 113,422    |      |  |   | 115,519    |  
|Equity in income of affiliates                                                              |  |                | (61,972    | ) |      |   | (75,151    | )    |  |   | (96,057    | )
|Provision for credit and lease residual losses on finance subsidiaries-receivables (note 2) |  |                | 39,256     |   |      |   | 45,937     |      |  |   | 50,638     |  
|Loss (gain) on derivative instruments and related others, net                               |  |                | 36,983     |   |      |   | (84,783    | )    |  |   | (60,432    | )
|Decrease (increase) in assets:                                                              |  |                |            |   |      |   |            |      |  |   |            |  
|Trade accounts and notes receivable (note 2)                                                |  |                | (31,642    | ) |      |   | 22,829     |      |  |   | (70,145    | )
|Inventories                                                                                 |  |                | (146,574   | ) |      |   | (51,836    | )    |  |   | (79,483    | )
|Other current assets                                                                        |  |                | (104,583   | ) |      |   | (154,320   | )    |  |   | (11,797    | )
|Other assets (note 2)                                                                       |  |                | (52,780    | ) |      |   | (33,376    | )    |  |   | (52,198    | )
|Increase (decrease) in liabilities:                                                         |  |                |            |   |      |   |            |      |  |   |            |  
|Trade accounts and notes payable                                                            |  |                | 28,675     |   |      |   | 132,541    |      |  |   | 76,338     |  
|Accrued expenses                                                                            |  |                | 130,615    |   |      |   | 64,830     |      |  |   | 71,469     |  
|Income taxes payable                                                                        |  |                | 3,964      |   |      |   | (31,068    | )    |  |   | 33,704     |  
|Other current liabilities                                                                   |  |                | 17,708     |   |      |   | 13,763     |      |  |   | 19,973     |  
|Other liabilities                                                                           |  |                | 30,412     |   |      |   | 43,656     |      |  |   | 19,826     |  
|Other, net (note 2)                                                                         |  |                | 59,336     |   |      |   | (8,739     | )    |  |   | 17,320     |  
|                                                                                            |  |                |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                                   |  |                | 665,367    |   |      |   | 675,488    |      |  |   | 746,624    |  
|                                                                                            |  |                |           
|Cash flows from investing activities:                                                       |  |                |            |   |      |   |            |      |  |   |            |  
|Decrease (increase) in investments and advances                                             |  |                | (16,041    | ) |      |   | 54,007     |      |  |   | 26,148     |  
|Payment for purchase of available-for-sale securities                                       |  |                | (3,904     | ) |      |   | (61        | )    |  |   | (1,608     | )
|Proceeds from sales of available-for-sale securities                                        |  |                | 40,682     |   |      |   | 10,082     |      |  |   | 13,140     |  
|Payment for purchase of held-to-maturity securities                                         |  |                |           |   |      |   | (13,409    | )    |  |   | (20,856    | )
|Capital expenditures                                                                        |  |                | (316,991   | ) |      |   | (287,741   | )    |  |   | (373,980   | )
|Proceeds from sales of property, plant and equipment                                        |  |                | 16,438     |   |      |   | 19,157     |      |  |   | 14,216     |  
|Acquisitions of finance subsidiaries-receivables (note 2)                                   |  |                | (2,424,416 | ) |      |   | (2,689,554 | )    |  |   | (2,710,520 | )
|Collections of finance subsidiaries-receivables (note 2)                                    |  |                | 892,933    |   |      |   | 1,156,888  |      |  |   | 1,561,299  |  
|Proceeds from sales of finance subsidiaries-receivables                                     |  |                | 760,500    |   |      |   | 820,650    |      |  |   | 684,308    |  
|                                                                                            |  |                |            |   |      |   |            |      |  |   |            |  
|Net cash used in investing activities                                                       |  |                | (1,050,799 | ) |      |   | (929,981   | )    |  |   | (807,853   | )
|                                                                                            |  |                |           
|Cash flows from financing activities:                                                       |  |                |            |   |      |   |            |      |  |   |            |  
|Increase (decrease) in short-term debt                                                      |  |                | (47,959    | ) |      |   | (7,910     | )    |  |   | 20,244     |  
|Proceeds from long-term debt                                                                |  |                | 775,987    |   |      |   | 885,162    |      |  |   | 704,433    |  
|Repayment of long-term debt                                                                 |  |                | (292,063   | ) |      |   | (289,107   | )    |  |   | (495,107   | )
|Cash dividends paid (note 10)                                                               |  |                | (30,176    | ) |      |   | (33,541    | )    |  |   | (47,797    | )
|Increase (decrease) in commercial paper classified as long-term debt                        |  |                | (2,131     | ) |      |   | 280        |      |  |   | (131       | )
|Payment for purchase of treasury stock, net                                                 |  |                | (56,717    | ) |      |   | (95,312    | )    |  |   | (84,147    | )
|                                                                                            |  |                |            |   |      |   |            |      |  |   |            |  
|Net cash provided by financing activities                                                   |  |                | 346,941    |   |      |   | 459,572    |      |  |   | 97,495     |  
|Effect of exchange rate changes on cash and cash equivalents                                |  |                | (23,546    | ) |      |   | (28,062    | )    |  |   | 12,851     |  
|                                                                                            |  |                |            |   |      |   |            |      |  |   |            |  
|Net change in cash and cash equivalents                                                     |  |                | (62,037    | ) |      |   | 177,017    |      |  |   | 49,117     |  
|                                                                                            |  |                |           
|Cash and cash equivalents at beginning of year                                              |  |                | 609,441    |   |      |   | 547,404    |      |  |   | 724,421    |  
|                                                                                            |  |                |            |   |      |   |            |      |  |   |            |  
|Cash and cash equivalents at end of year                                                    |  | ¥              | 547,404    |   |      | ¥ | 724,421    |      |  | ¥ | 773,538    |  
|                                                                                            |  |                |            |   |      |   |            |      |  |   |            |  



See accompanying notes
to consolidated financial statements.



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements



Years ended March 31, 2003, 2004 and 2005



(1) General and
Summary of Significant Accounting Policies



(a)
Description of Business



Honda Motor Co., Ltd. (the
Company) and its subsidiaries (collectively Honda) develop, manufacture, distribute and provide financing for the sale of its motorcycles, automobiles and power products. Hondas manufacturing operations are principally
conducted in 30 separate factories, 4 of which are located in Japan. Principal overseas manufacturing facilities are located in the United States of America, Canada, Mexico, the United Kingdom, France, Italy, Spain, India, Indonesia, Malaysia,
Pakistan, the Philippines, Taiwan, Thailand, Vietnam, Brazil and Turkey.



Net sales and other operating revenue by category of activity for the year ended March 31, 2005 were derived from: motorcycle business 12.7%, automobile business 80.5%, financial services 3.0%, and power products and
other businesses 3.8%. Operating income by category of activity for the year ended March 31, 2005 was derived from: motorcycle business 11.0%, automobile business 71.7%, financial services 14.2%, and power products and other businesses 3.1%. The
total assets at March 31, 2005 were attributable to: motorcycle business 9.1%, automobile business 44.7%, financial services 46.8%, power products and other businesses 2.8%, and corporate assets (net of company-wide accounts eliminated in
consolidation) (3.4%).



Honda sells motorcycles, automobiles
and power products in most countries in the world. For the year ended March 31, 2005, 77.1% of net sales and other operating revenue (¥6,666,923 million) was derived from subsidiaries operating outside Japan (2004: ¥6,283,459 million, 2003:
¥5,995,981 million). Net sales and other operating revenue for the year ended March 31, 2005 was geographically broken down based on the location of customers as follows: Japan 19.6%, North America 52.9%, Europe 10.1%, Asia 11.3% and others
6.1%. For the year ended March 31, 2005, 72.3% of operating income (¥456,282 million) was generated from foreign subsidiaries, disregarding the effect of elimination of unrealized profits between domestic operations and foreign operations (2004:
¥404,464 million, 2003: ¥519,901 million). Also, 70.8% of Hondas assets at March 31, 2005 (¥6,597,463 million) was identified with foreign operations (2004: ¥5,688,405 million).



(b) Basis of Presenting Consolidated Financial Statements



The Company and its domestic 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.



(c) Consolidation Policy



The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions
have been eliminated in consolidation.



Investments in 20% to
50% owned affiliates in which the Company has the ability to exercise significant influence over their operating and financial policies, but where the Company does not have a controlling financial interest are accounted for using the equity method.



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. (FIN)
46, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51, which was revised in December 2003 (FIN 46R). FIN 46R addresses how a business enterprise should evaluate whether it has a controlling
financial interest in an entity through means other than voting rights and accordingly should consolidate the entity. Honda adopted the provisions FIN 46R as of March 31, 2004. The implementation of FIN 46R did not have a significant effect on
Hondas consolidated financial statements.



Minority
interests in net assets and income are not significant and, accordingly, are not presented separately in the accompanying consolidated balance sheets and statements of income. The amount of minority interest recognized in earnings, included in other
expenses  other, for each of the years in the three-year period ended March 31, 2005 were ¥9,658 million, ¥11,753 million and ¥11,559 million, respectively.



(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 these consolidated financial statements in conformity with U.S. generally accepted accounting principles. Significant items subject to such estimates and assumptions include, but are not
limited to, allowance for credit losses, allowance for losses on lease residual values, valuation allowance for inventories and deferred tax assets, impairment of long-lived assets, product warranty, and assets and obligations related to employee
benefits. Actual results could differ from those estimates.



(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 a market-based interest or lease rate. Honda also provides dealer
incentives retained by the dealer, which generally represent discounts provided by Honda to the dealers. These incentives are classified as a reduction of sales revenue as the consideration is paid in cash and Honda does not receive an identifiable
benefit in exchange for this consideration. The estimated costs are accrued at the time the product is sold to the dealer.



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.



Finance subsidiaries of the Company periodically sell finance receivables. Gain or loss is recognized equal to the difference between the cash proceeds
received and the carrying value of the receivables sold and is recorded in the period in which the sale occurs. Honda allocates the recorded investment in finance receivables between the portion(s) of the receivables sold and portion(s) retained
based on the relative fair values of those portions on the date the receivables are sold. Honda recognizes gains or losses attributable to the change in the fair value of the retained interests, which are recorded at estimated fair value and
accounted for as trading securities. Honda determines the fair value of the retained interests by discounting the future cash flows. Those cash flows are estimated based on prepayments, credit losses and other information as available
and are discounted at a rate which Honda believes is commensurate with the risk free rate plus a risk premium. A servicing asset or liability is amortized in proportion to and over the period of estimated net servicing income. Servicing assets and
servicing liabilities at March 31, 2004 and 2005 were not significant.



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



(f) Cash Equivalents



Honda considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.



(g) Inventories



Inventories are stated at the lower of cost, determined principally by the
first-in, first-out method, or market.



(h) Investments in
Securities



Honda classifies its debt and equity
securities in one of three categories: available-for-sale, trading, or held-to-maturity. Debt securities that are classified as held-to-maturity securities are reported at amortized cost. Debt and equity securities classified as
trading securities are reported at fair value, with unrealized gains and losses included in earnings. Other debt and 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 stockholders equity section of the consolidated balance sheets. Honda did not hold any trading securities at March
31, 2004 and 2005, except for retained interests in the sold pools of finance receivables, which are accounted for as trading securities and included in finance subsidiaries-receivables.



Honda periodically reviews the fair value of investment securities. If the
fair value of investment securities has declined below our cost basis and such decline is judged to be other-than-temporary, Honda recognizes the impairment of the investment securities and the carrying value is reduced to its fair value 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 determining the nature and extent of impairment, Honda considers such factors
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.



(i) Goodwill



Goodwill is not amortized but instead be tested for impairment at least annually. Goodwill is considered impaired if its estimated fair value is less than
the carrying value. Honda completed its annual test during each of its fiscal years ended March 31, 2003, 2004 and 2005 and concluded no impairment needed to be recognized. The carrying amount of goodwill at March 31, 2004 and 2005 was ¥17,666
million and ¥17,887 million, respectively.



(j)
Depreciation



Depreciation of property, plant and
equipment is calculated principally by the declining-balance method based on estimated useful lives and salvage values of the respective assets.



The estimated useful lives used in computing depreciation of property, plant and equipment are as follows:



|                        |  |               
|----------------------- |  | --------------
|Asset                   |  | Life          
|Buildings               |  | Up to 50 years
|Machinery and equipment |  | 2 to 20 years 



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



(k) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of



Hondas long-lived assets and certain identifiable intangibles 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 assets 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. Assets to be disposed of by sale are reported at the lower of the carrying amount or estimated fair value less costs to sell.



(l) 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.



(m) Product-Related Expenses



Advertising and sales promotion costs are expensed as incurred. Advertising expenses for each of the years in the three-year period ended March 31, 2005
were ¥234,670 million, ¥239,332 million and ¥246,997 million, 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, product recalls and service actions outside the general warranties.



(n) Basic Net Income per Common Share



Basic net income per common share has been computed by dividing net income available to common stockholders 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, 2003, 2004 and 2005 was 970,952,677, 953,638,262 and 933,767,978 respectively. There were no potentially dilutive shares
outstanding during the years ended March 31, 2003, 2004 or 2005.



(o) Foreign Currency Translation



Foreign
currency financial statement amounts are translated into Japanese yen on the basis of the year-end rate for all assets and liabilities and the weighted average rate for the year for all income and expense amounts. Translation adjustments resulting
therefrom are included in accumulated other comprehensive income (loss) in the stockholders equity section of the consolidated balance sheets.



Foreign currency receivables and payables are translated at the applicable current rates on the balance sheet date. All revenue and expenses associated
with foreign currencies are converted at the rates of exchange prevailing when such transactions occur. The resulting exchange gains or losses are reflected in other income (expense) in the consolidated statements of income.



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



Foreign currency transaction gains (losses) included in other income (expenses)  other for each
of the years in the three-year period ended March 31, 2005 are as follows:



|               |  |           |  |            
|-------------- |  | --------- |  | -----------
|Yen (millions)
|2003           |  | 2004      |  | 2005       
|¥  520         |  | ¥  13,668 |  | ¥  (17,146)



(p) Derivative
Financial Instruments



The Company and certain of its
subsidiaries have 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.



Honda recognizes the fair
value of all derivative financial instruments in its consolidated balance sheet. As Honda does not apply hedge accounting, the changes in the fair value of its derivative financial instruments are recognized in earnings in the period of the change.
The amount recognized in earnings included in other income (expenses)  other during the year ended March 31, 2003, 2004 and 2005 are ¥19,910 million loss, ¥122,583 million gain and ¥44,905 million gain, respectively. In relation to
this, the Company included gains and losses on translation of debts of finance subsidiaries denominated in foreign currencies intended to be hedged of ¥12,778 million loss, ¥36,410 million loss and ¥10,667 million gain in other income
(expenses)  other during the years ended March 31, 2003, 2004 and 2005, respectively. In addition, net realized gains and losses on interest rate swap contracts not designated as accounting hedges by finance subsidiaries of ¥45,988 million
loss, ¥38,894 million loss and ¥28,000 million loss are included in other income (expenses)  other during the years ended March 31, 2003, 2004 and 2005. These gains and losses are presented on a net basis.



(q) 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, 2005 are as follows:



|               |  |            |  |           
|-------------- |  | ---------- |  | ----------
|Yen (millions)
|2003           |  | 2004       |  | 2005      
|¥  144,791     |  | ¥  146,698 |  | ¥  159,472



(r) New Accounting
Pronouncements Not Yet Adopted



In November 2004, the
Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 151, Inventory Costs, an amendment of Accounting Research Bulletin (ARB) No. 43, Chapter 4. SFAS No. 151 amends the guidance in ARB
No. 43, Inventory Pricing, for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) requiring that those items be recognized as current-period expenses regardless of whether they meet the
criterion of so abnormal, as described in ARB No. 43. This statement also requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The statement is
effective for inventory costs incurred during the fiscal years beginning after June 15, 2005. Management does not expect this statement to have a material impact on Hondas consolidated financial position or results of operations.



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



(s) Reclassifications



Certain reclassifications have been made to the prior years consolidated financial statements to conform to the
presentation used for the year ended March 31, 2005.



|(2) |  | Presentation of finance subsidiaries-receivables in the consolidated statements of cash flows and the consolidated balance sheets
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------



In prior periods, Honda reported the effects of all finance
subsidiaries-receivables as investing activities for purposes of presentation in the consolidated statements of cash flows. This policy, when applied to wholesale receivables related to sales of inventory to outside dealers, had the effect of
presenting an investing cash outflow and an operating cash inflow even though there was no cash flow on a consolidated basis.



In the current year, based on concerns raised by the staff of the Securities and Exchange Commission (SEC), management has decided to report
the cash flow related effects of those finance subsidiaries-receivables which relate to sales of inventory as operating activities in the consolidated statements of cash flows and also reclassify related finance subsidiaries-receivables to trade
receivables in the consolidated balance sheets. This presentation results in the elimination of the intercompany activities and proper classification of cash receipts from the settlement of wholesale receivables related to the sale of inventory as
operating activities.



Certain finance subsidiaries provide
retail finance to customers who purchased inventory from the consolidated dealers. The cash flows generated from these retail finance were reported as investing cash flows in prior periods. In the current year, based on concerns raised by the staff
of the SEC, management has decided to report the cash flow related effects of those finance subsidiaries-receivables which relate to sales of inventory as operating activities in the consolidated statements of cash flows and also reclassify related
finance subsidiaries-receivables to trade receivables, including those of non-current portion to other assets, in the consolidated balance sheets.



Consequently, management has revised the presentation in the consolidated statements of cash flows for the years ended March 31, 2003 and 2004 and the
consolidated balance sheet at March 31, 2004 to achieve a comparable presentation for all periods presented herein.



The cash flow related effects of finance subsidiaries-receivable from retail, direct finance leases, wholesale and term loans to dealer which are
unrelated to the sales of inventory continue to be reported as investing activities in the consolidated statements of cash flows.



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



The impacts of the reclassification of the affected line items in the consolidated statements of cash
flows with respect to the years ended March 31, 2003 and 2004 and in the consolidated balance sheet at March 31, 2004 are as follows:



Consolidated statements of cash flows



|                                                                                   |  |                                     |            |   |      |   |          |  
|---------------------------------------------------------------------------------- |  | ----------------------------------- | ---------- | - | ---- | - | -------- | -
|                                                                                   |  | Year ended March 31, Yen (millions) |           
|                                                                                   |  | 2003                                |            |   | 2004 |  
|Cash provided by operating activities, as previously reported                      |  | ¥                                   | 688,127    |   |      | ¥ | 712,942  |  
|Amounts reclassified from investing activities;                                    |  |                                     |            |   |      |   |          |  
|Provision for credit and lease residual losses on finance subsidiaries-receivables |  |                                     | (121       | ) |      |   | (1,003   | )
|Increase in trade account and notes receivable                                     |  |                                     | (14,800    | ) |      |   | (28,096  | )
|Increase in other assets                                                           |  |                                     | (7,960     | ) |      |   | (9,358   | )
|Other, net                                                                         |  |                                     | 121        |   |      |   | 1,003    |  
|                                                                                   |  |                                     |            |   |      |   |          |  
|Cash provided by operating activities, after reclassification                      |  |                                     | 665,367    |   |      |   | 675,488  |  
|                                                                                   |  |                                     |            |   |      |   |          |  
|Cash used in investing activities, as previously reported                          |  |                                     | (1,073,559 | ) |      |   | (967,435 | )
|Amount reclassified to operating activities;                                       |  |                                     |            |   |      |   |          |  
|Acquisitions of finance subsidiaries-receivables                                   |  |                                     | 840,660    |   |      |   | 874,458  |  
|Collections of finance subsidiaries-receivables                                    |  |                                     | (817,900   | ) |      |   | (837,004 | )
|                                                                                   |  |                                     |            |   |      |   |          |  
|Cash used in investing activities, after reclassification                          |  | ¥                                   | (1,050,799 | ) |      | ¥ | (929,981 | )
|                                                                                   |  |                                     |            |   |      |   |          |  



Consolidated
balance sheet



|                                                                       |  |                            |           |  
|---------------------------------------------------------------------- |  | -------------------------- | --------- | -
|                                                                       |  | AtMarch 31, Yen (millions) |          
|                                                                       |  | 2004                       |          
|Trade accounts and notes receivables, as previously reported           |  | ¥                          | 373,416   |  
|Amount reclassified from finance subsidiaries-receivables, net-current |  |                            | 314,887   |  
|                                                                       |  |                            |           |  
|Trade accounts and notes receivables, after reclassification           |  |                            | 688,303   |  
|                                                                       |  |                            |           |  
|Finance subsidiaries-receivables, net-current, as previously reported  |  |                            | 1,264,620 |  
|Amount reclassified to trade accounts and notes receivables            |  |                            | (314,887  | )
|                                                                       |  |                            |           |  
|Finance subsidiaries-receivables, net-current, after reclassification  |  |                            | 949,733   |  
|                                                                       |  |                            |           |  
|Finance subsidiaries-receivables, net, as previously reported          |  |                            | 2,377,338 |  
|Amount reclassified to other assets                                    |  |                            | (111,464  | )
|                                                                       |  |                            |           |  
|Finance subsidiaries-receivables, net, after reclassification          |  |                            | 2,265,874 |  
|                                                                       |  |                            |           |  
|Other assets, as previously reported                                   |  |                            | 321,579   |  
|Amount reclassified from finance subsidiaries-receivables, net         |  |                            | 111,464   |  
|                                                                       |  |                            |           |  
|Other assets, after reclassification                                   |  | ¥                          | 433,043   |  
|                                                                       |  |                            |           |  



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



(3) Finance Subsidiaries-Receivables and Securitizations



Finance subsidiaries-receivables represent finance receivables generated by
finance subsidiaries. Certain finance receivables related to sales of inventory are reclassified to trade receivables and other assets in the consolidated balance sheets. Finance receivables include wholesale financing to dealers and retail
financing and direct financing leases to consumers.



The
allowance for credit losses is maintained at an amount management deems adequate to cover estimated losses on finance receivables. The allowance is based on managements evaluation of many factors, including current economic trends, industry
experience, inherent risks in the portfolio and the borrowers ability to pay.



Finance subsidiaries of the Company purchase insurance to cover a substantial amount of the estimated residual value of vehicles leased 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.



Finance subsidiaries-receivables, net, consisted of the following at March 31, 2004 and 2005:



|                                                               |  |                |           |      |   |          
|-------------------------------------------------------------- |  | -------------- | --------- | ---- | - | ---------
|                                                               |  | Yen (millions)
|                                                               |  | 2004           |           | 2005
|Direct financing leases                                        |  | ¥              | 1,721,716 |      | ¥ | 1,922,248
|Retail                                                         |  |                | 1,822,873 |      |   | 2,110,018
|Wholesale                                                      |  |                | 256,588   |      |   | 312,318  
|Term loans to dealers                                          |  |                | 26,764    |      |   | 10,529   
|                                                               |  |                |           |      |   |          
|Total finance receivables                                      |  |                | 3,827,941 |      |   | 4,355,113
|Retained interests in the sold pools of finance receivables    |  |                | 61,072    |      |   | 62,904   
|                                                               |  |                |           |      |   |          
|                                                               |  |                | 3,889,013 |      |   | 4,418,017
|Less:                                                          |  |                |           |      |   |          
|Allowance for credit losses (a)                                |  |                | 26,327    |      |   | 32,749   
|Allowance for losses on lease residual values                  |  |                | 26,124    |      |   | 34,025   
|Unearned interest income and fees (b)                          |  |                | 194,604   |      |   | 201,873  
|                                                               |  |                |           |      |   |          
|Finance subsidiaries-receivables, net, before reclassification |  |                | 3,641,958 |      |   | 4,149,370
|Less:                                                          |  |                |           |      |   |          
|Reclassification to trade receivables, net (note 2)            |  |                | 314,887   |      |   | 374,988  
|Reclassification to other assets, net (note 2)                 |  |                | 111,464   |      |   | 129,357  
|Finance subsidiaries-receivables, net                          |  |                | 3,215,607 |      |   | 3,645,025
|Less current portion                                           |  |                | 949,733   |      |   | 1,021,116
|                                                               |  |                |           |      |   |          
|Noncurrent finance subsidiaries-receivables, net               |  | ¥              | 2,265,874 |      | ¥ | 2,623,909
|                                                               |  |                |           |      |   |          

---

|(a) | The allowance for credit losses of finance subsidiaries-receivables at March 31, 2004 and 2005 include ¥1,916 million and ¥1,823 million, which were reclassified to the
allowance for doubtful accounts of trade receivable and other assets in the consolidated balance sheets.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | The unearned interest income and fees at March 31, 2004 and 2005 include ¥16,800 million and ¥19,118 million, which were reclassified to trade receivable and other assets in
the consolidated balance sheets.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



The following schedule shows the contractual maturities of finance receivables for
each of the five years following March 31, 2005 and thereafter:

|
|

|                      |  |                |          
|--------------------- |  | -------------- | ---------
|Years ending March 31 |  | Yen (millions)
|2006                  |  | ¥              | 1,462,363
|                      |  |                |          
|2007                  |  |                | 1,123,458
|2008                  |  |                | 1,003,182
|2009                  |  |                | 538,164  
|2010                  |  |                | 192,604  
|After five years      |  |                | 35,342   
|                      |  |                |          
|                      |  |                | 2,892,750
|                      |  |                |          
|Total                 |  | ¥              | 4,355,113
|                      |  |                |          



Net sales and other
operating revenue and cost of sales include finance income and related cost of finance subsidiaries for each of the years in the three-year period ended March 31, 2005 as follows:



|               |  |                |         |      |   |         |  |   |        
|-------------- |  | -------------- | ------- | ---- | - | ------- |  | - | -------
|               |  | Yen (millions)
|               |  | 2003           |         | 2004 |   | 2005   
|Finance income |  | ¥              | 240,995 |      | ¥ | 245,834 |  | ¥ | 259,188
|Finance cost   |  |                | 42,507  |      |   | 35,796  |  |   | 54,815 



Finance subsidiaries
of the Company periodically sell finance receivables. Finance subsidiaries sold retail finance receivables subject to limited recourse provisions during the year ended March 31, 2003, 2004 and 2005 totaling approximately ¥735,047 million,
¥793,261 million and ¥731,508 million, respectively, to investors. Pre-tax net gains or losses on such sales for each of the years in the three-year period ended March 31, 2005, which are included in finance income in the table above, are
¥10,144 million gain, ¥3,821 million gain and ¥4,291 million loss, respectively. No direct financing lease receivables were sold in 2003, 2004 or 2005.



Finance subsidiaries serviced approximately ¥1,001,891 million and ¥1,078,463 million of receivables for investors
at March 31, 2004 and 2005, respectively.



Retained interests
in securitizations were comprised of the following at March 31 2004 and 2005:



|                          |  |                |        |      |       
|------------------------- |  | -------------- | ------ | ---- | ------
|                          |  | Yen (millions)
|                          |  | 2004           |        | 2005
|Subordinated certificates |  | ¥              | 30,775 |      | 37,480
|Residual interests        |  |                | 30,297 |      | 25,424
|                          |  |                |        |      |       
|Total                     |  | ¥              | 61,072 |      | 62,904
|                          |  |                |        |      |       



F-16



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HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



The changes in retained interest in securitizations for each of the years in the three-year period
ended March 31, 2005 are as follows:



|                                        |  |                |         |   |      |   |         |      |  |   |         |  
|--------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                        |  | Yen (millions) |        
|                                        |  | 2003           |         |   | 2004 |   |         | 2005 | 
|Balance at beginning of year            |  | ¥              | 106,879 |   |      | ¥ | 67,024  |      |  | ¥ | 61,072  |  
|Additions                               |  |                | 40,060  |   |      |   | 41,045  |      |  |   | 31,267  |  
|Repurchases                             |  |                | (45,404 | ) |      |   | (7,716  | )    |  |   | (4,632  | )
|Amortization and fair value adjustments |  |                | 2,582   |   |      |   | 868     |      |  |   | 2,846   |  
|Cash received                           |  |                | (27,317 | ) |      |   | (32,140 | )    |  |   | (28,606 | )
|Foreign exchange translation            |  |                | (9,776  | ) |      |   | (8,009  | )    |  |   | 957     |  
|                                        |  |                |         |   |      |   |         |      |  |   |         |  
|Balance at end of year                  |  | ¥              | 67,024  |   |      | ¥ | 61,072  |      |  | ¥ | 62,904  |  
|                                        |  |                |         |   |      |   |         |      |  |   |         |  



At March 31, 2005, the
significant assumptions used in estimating the retained interest in the sold pools of finance receivables are as follows:



|                                  |  |                            |  
|--------------------------------- |  | -------------------------- | -
|                                  |  | Weighted averageAssumption |  
|Prepayment speed                  |  | 1.29                       | %
|Expected credit losses            |  | 0.39                       | %
|Residual cash flows discount rate |  | 9.70                       | %



The sensitivity of the
current fair value to immediate 10% and 20% adverse changes from expected levels for each significant assumption above mentioned were immaterial.



Key economic assumptions used in initially estimating the fair values at the date of the securitizations during each of the years in the three-year period
ended March 31, 2005 are as follows:



|                                  |  |                    |  |                    |  |                   
|--------------------------------- |  | ------------------ |  | ------------------ |  | ------------------
|                                  |  | 2003               |  | 2004               |  | 2005              
|Weighted average life (years)     |  | 1.54     to   1.74 |  | 1.59     to   1.79 |  | 1.64     to   1.77
|Prepayment speed                  |  | 1.00% to   1.50%   |  | 1.00% to   1.50%   |  | 1.25% to   1.30%  
|Expected credit losses            |  | 0.21% to   0.35%   |  | 0.22% to   0.81%   |  | 0.30% to   0.70%  
|Residual cash flows discount rate |  | 6.67% to 12.00%    |  | 5.30% to 12.00%    |  | 6.55% to 12.00%   



The outstanding
balance of securitized financial assets at March 31, 2005 is summarized as follows:



|                       |  |                |          
|---------------------- |  | -------------- | ---------
|                       |  | Yen (millions)
|Receivables sold:      |  |                |          
|Retail                 |  | ¥              | 1,078,463
|                       |  |                |          
|Total receivables sold |  | ¥              | 1,078,463
|                       |  |                |          



F-17



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HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



(4) Inventories



Inventories at March 31, 2004 and 2005 are summarized as follows:



|                |  |                |         |      |   |        
|--------------- |  | -------------- | ------- | ---- | - | -------
|                |  | Yen (millions)
|                |  | 2004           |         | 2005
|Finished goods  |  | ¥              | 521,146 |      | ¥ | 570,922
|Work in process |  |                | 22,237  |      |   | 24,965 
|Raw materials   |  |                | 222,050 |      |   | 266,483
|                |  |                |         |      |   |        
|                |  | ¥              | 765,433 |      | ¥ | 862,370
|                |  |                |         |      |   |        



(5) Investments and
Advances-Affiliates



Significant investments in affiliates
accounted for under the equity method at March 31, 2004 and 2005 are Showa Corporation (33.5%), Keihin Corporation (42.2%), Guangzhou Honda Automobile Co., Ltd. (50.0%), Dongfeng Honda Engine Co., Ltd. (50.0%), and P.T. Astra Honda Motor (50.0%).



Certain combined financial information in respect of
affiliates accounted for under the equity method at March 31, 2004 and 2005, and for each of the years in the three-year period ended March 31, 2005 is shown below:



|                                                        |  |                |           |      |   |          
|------------------------------------------------------- |  | -------------- | --------- | ---- | - | ---------
|                                                        |  | Yen (millions)
|                                                        |  | 2004           |           | 2005
|Current assets                                          |  | ¥              | 713,957   |      | ¥ | 876,559  
|Other assets, principally property, plant and equipment |  |                | 796,967   |      |   | 830,827  
|                                                        |  |                |           |      |   |          
|Total assets                                            |  |                | 1,510,924 |      |   | 1,707,386
|                                                        |  |                |           |      |   |          
|Current liabilities                                     |  |                | 548,466   |      |   | 629,578  
|Other liabilities                                       |  |                | 146,039   |      |   | 146,554  
|                                                        |  |                |           |      |   |          
|Total liabilities                                       |  |                | 694,505   |      |   | 776,132  
|                                                        |  |                |           |      |   |          
|Stockholders equity                                    |  | ¥              | 816,419   |      | ¥ | 931,254  
|                                                        |  |                |           |      |   |          



|                                                 |  |                |           |      |   |           |  |   |          
|------------------------------------------------ |  | -------------- | --------- | ---- | - | --------- |  | - | ---------
|                                                 |  | Yen (millions)
|                                                 |  | 2003           |           | 2004 |   | 2005     
|Net sales                                        |  | ¥              | 2,527,293 |      | ¥ | 2,646,166 |  | ¥ | 3,039,751
|Net income                                       |  |                | 153,422   |      |   | 168,905   |  |   | 220,596  
|Cash dividends received by Honda during the year |  |                | 26,741    |      |   | 46,780    |  |   | 35,824   



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, 2004 and 2005 included in retained earnings was ¥194,417 million and
¥224,047 million, respectively.



F-18



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



Trade receivables and trade payables include the following balances with affiliates at March 31, 2004
and 2005, and purchases and sales include the following transactions with affiliates for each of the years in the three-year period ended March 31, 2005:



|                       |  |                |         |      |   |        
|---------------------- |  | -------------- | ------- | ---- | - | -------
|                       |  | Yen (millions)
|                       |  | 2004           |         | 2005
|Trade receivables from |  | ¥              | 26,487  |      | ¥ | 25,421 
|Trade payables to      |  |                | 106,831 |      |   | 106,543



|               |  |                |         |      |   |         |  |   |        
|-------------- |  | -------------- | ------- | ---- | - | ------- |  | - | -------
|               |  | Yen (millions)
|               |  | 2003           |         | 2004 |   | 2005   
|Purchases from |  | ¥              | 555,257 |      | ¥ | 551,757 |  | ¥ | 595,589
|Sales to       |  |                | 107,985 |      |   | 122,241 |  |   | 148,352



Mr. Minekawa, a
Director of the Company, served as the President of Guangzhou Honda Automobile Co., Ltd., one of our affiliates in China. In fiscal 2005, Honda sold automobile parts, equipment and services to the affiliated company in the amount of ¥37,023
million. He is expected to retire as a Director of the Company as of June 23 2005 and will be assigned as an operating officer of the Company.



(6) Investments and Advances



Investments and advances at March 31, 2004 and 2005 consisted of the following:

|
|

|                                           |  |                |   |      |   |       
|------------------------------------------ |  | -------------- | - | ---- | - | ------
|                                           |  | Yen (millions)
|                                           |  | 2004           |   | 2005
|Current                                    |  |                |   |      |   |       
|Corporate debt securities                  |  | ¥              |  |      | ¥ | 7,485 
|U.S. government and agency debt securities |  |                |  |      |   | 3,222 
|                                           |  |                |   |      |   |       
|                                           |  | ¥              |  |      | ¥ | 10,707
|                                           |  |                |   |      |   |       



Investments due within
one year are included in other current assets.



|                                           |  |   |         |  |   |        
|------------------------------------------ |  | - | ------- |  | - | -------
|Noncurrent                                 |  |   |         |  |   |        
|Marketable equity securities               |  | ¥ | 98,300  |  | ¥ | 93,004 
|Nonmarketable preferred stocks             |  |   | 16,200  |  |   | 11,100 
|Convertible preferred stocks               |  |   | 18,739  |  |   | 27,476 
|Convertible notes                          |  |   | 49,759  |  |   | 65,920 
|Government bonds                           |  |   |        |  |   | 3,000  
|U.S. government and agency debt securities |  |   | 13,211  |  |   | 20,347 
|Guaranty deposits                          |  |   | 31,040  |  |   | 31,076 
|Advances                                   |  |   | 4,064   |  |   | 3,915  
|Other                                      |  |   | 11,511  |  |   | 9,088  
|                                           |  |   |         |  |   |        
|                                           |  | ¥ | 242,824 |  | ¥ | 264,926
|                                           |  |   |         |  |   |        



F-19



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



Certain information with respect to marketable securities at March 31, 2004 and 2005 is summarized
below:



|                        |  |                |        |      |   |       
|----------------------- |  | -------------- | ------ | ---- | - | ------
|                        |  | Yen (millions)
|                        |  | 2004           |        | 2005
|Available-for-sale      |  |                |        |      |   |       
|Cost                    |  | ¥              | 30,928 |      | ¥ | 29,815
|Fair value              |  |                | 98,300 |      |   | 93,004
|Gross unrealized gains  |  |                | 67,694 |      |   | 63,319
|Gross unrealized losses |  |                | 322    |      |   | 130   
|                        |  |               
|Held-to-maturity        |  |                |        |      |   |       
|Amortized cost          |  | ¥              | 13,211 |      | ¥ | 34,054
|Fair value              |  |                | 13,228 |      |   | 33,692
|Gross unrealized gains  |  |                | 17     |      |   | 75    
|Gross unrealized losses |  |                |       |      |   | 437   





Maturities of debt securities classified as held-to-maturity at March 31, 2005 were as follows:



|                                       |  |                |       
|-------------------------------------- |  | -------------- | ------
|                                       |  | Yen (millions)
|Due within one year                    |  | ¥              | 10,707
|Due after one year through five years  |  |                | 21,349
|Due after five years through ten years |  |                | 1,998 
|Due after ten years                    |  |                |      
|                                       |  |                |       
|Total                                  |  | ¥              | 34,054
|                                       |  |                |       



Realized gains and
losses from available-for-sale securities included in other expenses (income)  other for each of the years in the three-year period ended March 31, 2005, were, ¥21,797 million net losses, ¥3,468 million net gains and ¥2,206 million
net gains, respectively.



Gross unrealized losses on marketable
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, 2005 were as follows:



|                    |  |                |        |                   |   |      |  
|------------------- |  | -------------- | ------ | ----------------- | - | ---- | -
|                    |  | Yen (millions) |       
|                    |  | Fair value     |        | Unrealized losses |  
|Available-for-sale  |  |                |        |                   |   |      |  
|Less than 12 months |  | ¥              | 207    |                   | ¥ | (18  | )
|12 months or longer |  |                | 637    |                   |   | (112 | )
|                    |  |                |        |                   |   |      |  
|                    |  | ¥              | 844    |                   | ¥ | (130 | )
|                    |  |                |        |                   |   |      |  
|                    |  |               
|Held-to-maturity    |  |                |        |                   |   |      |  
|Less than 12 months |  | ¥              | 30,617 |                   | ¥ | (437 | )
|12 months or longer |  |                |       |                   |   |     |  
|                    |  |                |        |                   |   |      |  
|                    |  | ¥              | 30,617 |                   | ¥ | (437 | )
|                    |  |                |        |                   |   |      |  



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



(7) Short-term and Long-term Debt



Short-term debt at March 31, 2004 and 2005 is as follows:



|                      |  |                |         |      |   |        
|--------------------- |  | -------------- | ------- | ---- | - | -------
|                      |  | Yen (millions)
|                      |  | 2004           |         | 2005
|Short-term bank loans |  | ¥              | 258,556 |      | ¥ | 279,696
|Medium-term notes     |  |                | 85,979  |      |   | 85,273 
|Commercial paper      |  |                | 389,736 |      |   | 404,345
|                      |  |                |         |      |   |        
|                      |  | ¥              | 734,271 |      | ¥ | 769,314
|                      |  |                |         |      |   |        



The weighted average
interest rates on short-term debt outstanding at March 31, 2004 and 2005 were 1.58% and 2.09%, respectively.



Long-term debt at March 31, 2004 and 2005 is as follows:



|                                           |  |                |           |      |   |          
|------------------------------------------ |  | -------------- | --------- | ---- | - | ---------
|                                           |  | Yen (millions)
|                                           |  | 2004           |           | 2005
|Honda Motor Co., Ltd.:                     |  |                |           |      |   |          
|Loans, maturing through 2031:              |  |                |           |      |   |          
|Unsecured, principally from banks          |  | ¥              | 253       |      | ¥ | 238      
|                                           |  |                |           |      |   |          
|                                           |  |                | 253       |      |   | 238      
|Subsidiaries:                              |  |                |           |      |   |          
|Commercial paper                           |  |                | 184,958   |      |   | 187,932  
|Loans, maturing through 2029               |  |                |           |      |   |          
|Secured, principally from banks            |  |                | 20,571    |      |   | 30,147   
|Unsecured, principally from banks          |  |                | 71,603    |      |   | 65,892   
|1.31% Japanese yen unsecured bond due 2005 |  |                | 30,000    |      |   |         
|0.69% Japanese yen unsecured bond due 2006 |  |                | 60,000    |      |   | 60,000   
|0.81% Japanese yen unsecured bond due 2006 |  |                | 1,000     |      |   | 1,000    
|0.47% Japanese yen unsecured bond due 2007 |  |                | 50,000    |      |   | 50,000   
|0.79% Japanese yen unsecured bond due 2008 |  |                | 30,000    |      |   | 30,000   
|0.99% Japanese yen unsecured bond due 2009 |  |                |          |      |   | 30,000   
|3.65% Thai baht unsecured bond due 2007    |  |                |          |      |   | 5,460    
|Medium-term notes, maturing through 2019   |  |                | 1,433,620 |      |   | 1,634,342
|Less unamortized discount, net             |  |                | 268       |      |   | 406      
|                                           |  |                |           |      |   |          
|                                           |  |                | 1,881,484 |      |   | 2,094,367
|                                           |  |                |           |      |   |          
|Total long-term debt                       |  |                | 1,881,737 |      |   | 2,094,605
|Less current portion                       |  |                | 487,125   |      |   | 535,105  
|                                           |  |                |           |      |   |          
|                                           |  | ¥              | 1,394,612 |      | ¥ | 1,559,500
|                                           |  |                |           |      |   |          



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HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



The loans maturing through 2031 and through 2029 are either secured by property, plant and equipment
or subject to collateralization upon request, and their interest rates range from 0.69% to 22.37% per annum at March 31, 2005 and weighted average interest rate on total outstanding long-term debt at March 31, 2004 and 2005 is 2.55% and 4.05%,
respectively. Property, plant and equipment with a net book value of approximately ¥11,425 million and ¥12,881 million at March 31, 2004 and 2005, respectively, were subject to specific mortgages securing indebtedness. Furthermore, finance
subsidiaries-receivables of approximately ¥ 14,313 million and ¥ 22,597 million at March 31, 2004 and 2005, respectively, were pledged as collateral by a financial subsidiary for certain loans.



At March 31, 2004 and 2005, ¥184,958 million and ¥ 187,932 million,
respectively, of commercial paper borrowings were classified as long-term, as it is the respective finance subsidiarys intention to refinance them on a long-term basis and it has established the necessary credit facilities to do so. The
weighted average interest rate on commercial paper at March 31, 2004 and 2005 was approximately 1.04% and 2.71%, respectively.



Medium-term notes are unsecured, and their interest rates range from 0.53% to 8.95% at March 31, 2004 and from 0.6% to 3.17% at March 31, 2005.



The following schedule shows the maturities of long-term debt
for each of the five years following March 31, 2005 and thereafter:



|                       |  |                |          
|---------------------- |  | -------------- | ---------
|Years ending March 31: |  | Yen (millions)
|2006                   |  | ¥              | 535,105  
|                       |  |                |          
|2007                   |  |                | 712,939  
|2008                   |  |                | 386,261  
|2009                   |  |                | 252,691  
|2010                   |  |                | 183,834  
|After five years       |  |                | 23,775   
|                       |  |                |          
|                       |  |                | 1,559,500
|                       |  |                |          
|Total                  |  | ¥              | 2,094,605
|                       |  |                |          



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/liabilities and/or other current assets/liabilities in the consolidated balance sheets, as appropriate (see note 14). Unless a right of setoff exists, the offsetting of assets and liabilities is not
made in the consolidated balance sheets.



At March 31, 2005,
Honda had unused line of credit facilities amounting to ¥1,125,290 million, of which ¥378,232 million related to commercial paper programs and ¥747,058 million related to medium-term notes programs. Honda is authorized to obtain
financing at prevailing interest rates under these programs.



At March 31, 2005, Honda also had committed lines of credit amounting to ¥661,864 million, none of which was in use. The committed lines are used to back up the commercial paper programs. 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.



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HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



(8) Other Liabilities



Other liabilities at March 31, 2004 and 2005 are summarized as follows:



|                                                       |  |                |         |      |   |        
|------------------------------------------------------ |  | -------------- | ------- | ---- | - | -------
|                                                       |  | Yen (millions)
|                                                       |  | 2004           |         | 2005
|Allowance for product warranty, net of current portion |  | ¥              | 151,286 |      | ¥ | 141,394
|Minority interest                                      |  |                | 59,185  |      |   | 70,001 
|Additional minimum pension liabilities (note 11)       |  |                | 419,747 |      |   | 381,124
|Deferred income taxes                                  |  |                | 44,456  |      |   | 68,561 
|Other                                                  |  |                | 50,263  |      |   | 58,532 
|                                                       |  |                |         |      |   |        
|                                                       |  | ¥              | 724,937 |      | ¥ | 719,612
|                                                       |  |                |         |      |   |        



(9) Income Taxes



Total income taxes for each of the years in the three-year period ended
March 31, 2005 were allocated as follows:



|                                                                               |  |                |         |   |      |   |         |  |   |        
|------------------------------------------------------------------------------ |  | -------------- | ------- | - | ---- | - | ------- |  | - | -------
|                                                                               |  | Yen (millions)
|                                                                               |  | 2003           |         |   | 2004 |   | 2005   
|Income                                                                         |  | ¥              | 245,065 |   |      | ¥ | 252,740 |  | ¥ | 266,665
|Stockholders equity  Accumulated other comprehensive income (loss) (note 13) |  |                | (85,643 | ) |      |   | 43,620  |  |   | 12,718 
|                                                                               |  |                |         |   |      |   |         |  |   |        
|                                                                               |  | ¥              | 159,422 |   |      | ¥ | 296,360 |  | ¥ | 279,383
|                                                                               |  |                |         |   |      |   |         |  |   |        



Income before income
taxes and equity in income of affiliates by domestic and foreign source and income tax expense (benefit) for each of the years in the three-year period ended March 31, 2005 consisted of the following:



|         |  |                           |         |              |   |          |  |   |         |   |  |   |        
|-------- |  | ------------------------- | ------- | ------------ | - | -------- |  | - | ------- | - |  | - | -------
|         |  | Yen (millions)           
|         |  |                           |         | Income taxes
|         |  | Income beforeincome taxes |         | Current      |   | Deferred |  |   | Total  
|2003:    |  |                           |         |              |   |          |  |   |         |   |  |   |        
|Japanese |  | ¥                         | 176,515 |              | ¥ | 114,809  |  | ¥ | (33,664 | ) |  | ¥ | 81,145 
|Foreign  |  |                           | 433,240 |              |   | 61,823   |  |   | 102,097 |   |  |   | 163,920
|         |  |                           |         |              |   |          |  |   |         |   |  |   |        
|         |  | ¥                         | 609,755 |              | ¥ | 176,632  |  | ¥ | 68,433  |   |  | ¥ | 245,065
|         |  |                           |         |              |   |          |  |   |         |   |  |   |        
|2004:    |  |                           |         |              |   |          |  |   |         |   |  |   |        
|Japanese |  | ¥                         | 204,695 |              | ¥ | 106,672  |  | ¥ | (16,448 | ) |  | ¥ | 90,224 
|Foreign  |  |                           | 437,232 |              |   | 32,646   |  |   | 129,870 |   |  |   | 162,516
|         |  |                           |         |              |   |          |  |   |         |   |  |   |        
|         |  | ¥                         | 641,927 |              | ¥ | 139,318  |  | ¥ | 113,422 |   |  | ¥ | 252,740
|         |  |                           |         |              |   |          |  |   |         |   |  |   |        
|2005:    |  |                           |         |              |   |          |  |   |         |   |  |   |        
|Japanese |  | ¥                         | 147,455 |              | ¥ | 57,066   |  | ¥ | 24,134  |   |  | ¥ | 81,200 
|Foreign  |  |                           | 509,350 |              |   | 94,080   |  |   | 91,385  |   |  |   | 185,465
|         |  |                           |         |              |   |          |  |   |         |   |  |   |        
|         |  | ¥                         | 656,805 |              | ¥ | 151,146  |  | ¥ | 115,519 |   |  | ¥ | 266,665
|         |  |                           |         |              |   |          |  |   |         |   |  |   |        



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HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



The significant components of deferred income tax expense for each of the years in the three-year
period ended March 31, 2005 are as follows:



|                                                                                             |  |                |        |   |      |   |         |  |   |        
|-------------------------------------------------------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------- |  | - | -------
|                                                                                             |  | Yen (millions)
|                                                                                             |  | 2003           |        |   | 2004 |   | 2005   
|Deferred tax expense (exclusive of the effects of the other component listed below)          |  | ¥              | 70,731 |   |      | ¥ | 109,931 |  | ¥ | 115,519
|Adjustments to deferred tax assets and liabilities for enacted changes in tax laws and rates |  |                | (2,298 | ) |      |   | 3,491   |  |   |       
|                                                                                             |  |                |        |   |      |   |         |  |   |        
|                                                                                             |  | ¥              | 68,433 |   |      | ¥ | 113,422 |  | ¥ | 115,519
|                                                                                             |  |                |        |   |      |   |         |  |   |        



The Company is subject
to a national corporate tax of 30%, an inhabitant tax of between 5.19% and 6.21% and a deductible business tax between 9.60% and 10.08%, which in the aggregate resulted in a statutory income tax rate of approximately 41% for the year ended March 31,
2003 and 2004. On March 24, 2003, the Japanese Diet approved the Amendments to Local Tax Law, which reduced standard business tax rates from 9.60% to 7.68% as well as additionally levying business tax based on corporate size. The change in business
tax rate was effective for fiscal years beginning on or after April 1, 2004. Consequently, the statutory income tax rate was lowered to approximately 40% for deferred tax assets and liabilities expected to be settled or realized on or after April 1,
2004. The foreign subsidiaries are subject to taxes based on income at rates ranging from 16% to 40%.



The effective tax rate for Honda for each of the years in the three-year period ended March 31, 2005 differs from the Japanese statutory income tax rate
for the following reasons:

|
|

|                                                                                             |  |      |   |  |      |   |  |      |  
|-------------------------------------------------------------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|                                                                                             |  | 2003 |   |  | 2004 |   |  | 2005 |  
|Statutory income tax rate                                                                    |  | 41.0 | % |  | 41.0 | % |  | 40.0 | %
|Valuation allowance provided for current year operating losses of subsidiaries               |  | 0.8  |   |  | 2.6  |   |  | 0.5  |  
|Difference in statutory tax rates of foreign subsidiaries                                    |  | (2.1 | ) |  | (1.4 | ) |  | (1.9 | )
|Reversal of valuation allowance due to utilization of operating loss carryforwards           |  | (0.6 | ) |  | (1.6 | ) |  | (1.1 | )
|Research and development credit                                                              |  | (1.6 | ) |  | (3.8 | ) |  | (2.3 | )
|Adjustments to deferred tax assets and liabilities for enacted changes in tax laws and rates |  | (0.4 | ) |  | 0.5  |   |  |     |  
|The prior year income taxes*                                                                 |  |     |   |  |     |   |  | 1.8  |  
|Other                                                                                        |  | 3.1  |   |  | 2.1  |   |  | 3.6  |  
|                                                                                             |  |      |   |  |      |   |  |      |  
|Effective tax rate                                                                           |  | 40.2 | % |  | 39.4 | % |  | 40.6 | %
|                                                                                             |  |      |   |  |      |   |  |      |  

---

|* | The prior year income taxes in 2005 are due to assessment by the Japanese tax authorities as a result of their transfer pricing audit relating to the Companys motorcycle
business in Brazil.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



The tax effects of temporary differences that give rise to significant portions of the deferred tax
assets and deferred tax liabilities at March 31, 2004 and 2005 are presented below:



|                                                            |  |                |          |   |      |   |          |  
|----------------------------------------------------------- |  | -------------- | -------- | - | ---- | - | -------- | -
|                                                            |  | Yen (millions) |         
|                                                            |  | 2004           |          |   | 2005 |  
|Deferred tax assets:                                        |  |                |          |   |      |   |          |  
|Inventory valuation                                         |  | ¥              | 24,051   |   |      | ¥ | 24,475   |  
|Allowance for dealers and customers                         |  |                | 130,514  |   |      |   | 131,262  |  
|Foreign tax credit                                          |  |                | 10,166   |   |      |   | 11,565   |  
|Operating loss carryforwards                                |  |                | 73,772   |   |      |   | 58,697   |  
|Minimum pension liabilities adjustment                      |  |                | 167,224  |   |      |   | 152,036  |  
|Other accrued pension liabilities                           |  |                | 89,263   |   |      |   | 99,471   |  
|Other                                                       |  |                | 141,723  |   |      |   | 131,233  |  
|                                                            |  |                |          |   |      |   |          |  
|Total gross deferred tax assets                             |  |                | 636,713  |   |      |   | 608,739  |  
|Less valuation allowance                                    |  |                | 71,726   |   |      |   | 59,737   |  
|                                                            |  |                |          |   |      |   |          |  
|Net deferred tax assets                                     |  |                | 564,987  |   |      |   | 549,002  |  
|                                                            |  |                |          |   |      |   |          |  
|Deferred tax liabilities:                                   |  |                |          |   |      |   |          |  
|Inventory valuation                                         |  |                | (13,658  | ) |      |   | (14,322  | )
|Depreciation and amortization, excluding lease transactions |  |                | (50,100  | ) |      |   | (63,614  | )
|Lease transactions                                          |  |                | (268,461 | ) |      |   | (328,554 | )
|Undistributed earnings of subsidiaries and affiliates       |  |                | (22,737  | ) |      |   | (34,252  | )
|Net unrealized gains on marketable equity securities        |  |                | (26,934  | ) |      |   | (25,266  | )
|Other                                                       |  |                | (53,995  | ) |      |   | (82,129  | )
|                                                            |  |                |          |   |      |   |          |  
|Total gross deferred tax liabilities                        |  |                | (435,885 | ) |      |   | (548,137 | )
|                                                            |  |                |          |   |      |   |          |  
|Net deferred tax asset                                      |  | ¥              | 129,102  |   |      | ¥ | 865      |  
|                                                            |  |                |          |   |      |   |          |  



Deferred income taxes
at March 31, 2004 and 2005 are reflected in the consolidated balance sheets under the following captions:



|                                     |  |                |          |   |      |   |          |  
|------------------------------------ |  | -------------- | -------- | - | ---- | - | -------- | -
|                                     |  | Yen (millions) |         
|                                     |  | 2004           |          |   | 2005 |  
|Current assets-Deferred income taxes |  | ¥              | 222,179  |   |      | ¥ | 214,059  |  
|Other assets                         |  |                | 162,323  |   |      |   | 129,162  |  
|Other current liabilities            |  |                | (210,944 | ) |      |   | (273,795 | )
|Other liabilities                    |  |                | (44,456  | ) |      |   | (68,561  | )
|                                     |  |                |          |   |      |   |          |  
|Net deferred tax asset               |  | ¥              | 129,102  |   |      | ¥ | 865      |  
|                                     |  |                |          |   |      |   |          |  



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 considered 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 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, 2004 and 2005.



F-25



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



The net change in the total valuation allowance for the years ended March 31, 2003 and 2004 was an
increase of ¥3,911 million and ¥6,686 million, respectively, and for the year ended March 31, 2005 was decrease of ¥11,989 million. The valuation allowance primarily relates to valuation allowance for deferred tax assets associated with
net operating loss carryforwards incurred by certain foreign subsidiaries. The Company has performed an analysis for each of these subsidiaries to assess their ability to realize such deferred tax assets, taking into consideration projections for
future taxable income, historical performance, tax planning strategies, market conditions and other factors, as appropriate. Considering these factors, management believes it is more likely than not that these subsidiaries will realize their
respective deferred tax assets (principally net operating loss carry forwards), net of existing valuation allowance within the foreseeable future.



At March 31, 2005, certain of the Companys subsidiaries have operating loss carryforwards for income tax purposes of ¥173,603 million, which are
available to offset future taxable income, if any. Periods available to offset future taxable income vary in each tax jurisdiction and range from one year to an indefinite period as follows:



|                   |  |               |        
|------------------ |  | ------------- | -------
|                   |  | Yen(millions)
|Within 1 year      |  | ¥             | 2,629  
|1 to 5 years       |  |               | 5,128  
|5 to 15 years      |  |               | 21,820 
|Indefinite periods |  |               | 144,026
|                   |  |               |        
|                   |  | ¥             | 173,603
|                   |  |               |        



At March 31, 2004 and
2005, Honda did not recognize deferred tax liabilities of ¥31,193 million and ¥47,340 million, respectively, for certain portions of the undistributed earnings of the Companys foreign subsidiaries because such portions were considered
permanently reinvested. At March 31, 2004 and 2005, the undistributed earnings not subject to deferred tax liabilities were ¥1,557,268 million and ¥1,895,285 million, respectively.



(10) Dividends and Legal Reserves



The Japanese Commercial Code provides that earnings in an amount equal to at
least 10% of appropriations of retained earnings that are paid in cash shall be appropriated as a legal reserve until an aggregated amount of capital surplus and the legal reserve equals 25% of stated capital. Certain foreign subsidiaries are also
required to appropriate their earnings to legal reserves under the laws of the respective countries.



Cash dividends and appropriations to the legal reserves charged to retained earnings during the years in the three-year period ended March 31, 2005
represent dividends paid out during those years and the related appropriations to the legal reserves. Cash dividends per share for each of the years in the three-year period ended March 31, 2005 were ¥31, ¥35 and ¥51, respectively. The
accompanying consolidated financial statements do not include any provision for the dividend of ¥37 per share aggregating ¥34,220 million to be proposed in June 2005.



F-26



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



(11) Pension and Other Postretirement Benefits



The Company and its subsidiaries have various pension plans covering substantially all of their employees in Japan and in
certain 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 listed equity securities and bonds.



Retirement
benefits for directors, excluding certain benefits, are provided in accordance with management policy. There are occasions where officers other than directors receive special lump-sum payments at retirement. Such payments are charged to income as
paid since amounts vary with circumstances and it is impractical to compute a liability for future payments.



In January 2003, the Emerging Issues Task Force (EITF) reached a final consensus on Issue No. 03-2 Accounting for the Transfer to the Japanese
Government of the Substitutional Portion of Employee Pension Fund Liabilities (EITF 03-2). EITF 03-2 addresses accounting for a transfer to the Japanese government of a substitutional portion of an Employees Pension Fund
(EPF) plan, which is a defined benefit pension plan established under the Welfare Pension Insurance Law. EITF 03-2 requires employers to account for the separation process of the substitutional portion from the entire EPF plan (which
includes a corporation portion) upon completion of the transfer to the government of the substitutional portion of the benefit obligation and related plan assets. The separation process is considered the culmination of a series of steps in a single
settlement transaction. Under this approach, the difference between the fair value of the obligation and the assets required to be transferred to the government should be accounted for and separately disclosed as a subsidy.



As stipulated in the Japanese Welfare Pension Insurance Law, the Honda
Employees Pension Fund (Confederated Welfare Pension Fund) of which the Company and a part of its domestic subsidiaries are members, obtained an approval from the Minister of Health, Labor and Welfare for exemption from benefits
obligations related to future employee service in respect of the substitutional portion on April 1, 2004. The Company and a part of its domestic subsidiaries are currently in the process of transferring past service liabilities to the government.
The aggregate effect of this separation will be determined based on their total pension benefits obligation as of the date the transfer is completed and the amount of plan assets required to be transferred. The Company has not yet determined the
effect of the adoption on Hondas consolidated financial position and results of operations as the fair value of plan assets and the pension benefit obligation to be transferred, determined pursuant to a government formula, will not be
determined until the transfer of such assets and obligation is completed.



F-27



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



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 |  
|                                                                             |  | 2004           |            |   | 2005          |   |            | 2004 |  |   | 2005     |  
|Change in benefit obligations:                                               |  |                |            |   |               |   |            |      |  |   |          |   |  |   |          |  
|Benefit obligations at beginning of year                                     |  | ¥              | (1,537,055 | ) |               | ¥ | (1,618,402 | )    |  | ¥ | (185,645 | ) |  | ¥ | (212,393 | )
|Service cost                                                                 |  |                | (49,309    | ) |               |   | (40,963    | )    |  |   | (13,022  | ) |  |   | (17,560  | )
|Interest cost                                                                |  |                | (30,741    | ) |               |   | (32,368    | )    |  |   | (12,164  | ) |  |   | (14,445  | )
|Plan participants contributions                                             |  |                | (7,487     | ) |               |   | (352       | )    |  |   | (811     | ) |  |   | (681     | )
|Actuarial gain (loss)                                                        |  |                | (7,626     | ) |               |   | 18,383     |      |  |   | (19,748  | ) |  |   | (42,687  | )
|Benefits paid                                                                |  |                | 29,339     |   |               |   | 32,109     |      |  |   | 1,814    |   |  |   | 2,501    |  
|Amendment                                                                    |  |                | (15,523    | ) |               |   |           |      |  |   | 54       |   |  |   | (8,684   | )
|Foreign exchange translation                                                 |  |                |           |   |               |   |           |      |  |   | 17,129   |   |  |   | (7,430   | )
|                                                                             |  |                |            |   |               |   |            |      |  |   |          |   |  |   |          |  
|Benefit obligations at end of year                                           |  |                | (1,618,402 | ) |               |   | (1,641,593 | )    |  |   | (212,393 | ) |  |   | (301,379 | )
|                                                                             |  |                |            |   |               |   |            |      |  |   |          |   |  |   |          |  
|Change in plan assets:                                                       |  |                |            |   |               |   |            |      |  |   |          |   |  |   |          |  
|Fair value of plan assets at beginning of year                               |  |                | 625,240    |   |               |   | 794,543    |      |  |   | 140,482  |   |  |   | 194,849  |  
|Actual return on plan assets                                                 |  |                | 132,336    |   |               |   | 33,559     |      |  |   | 37,688   |   |  |   | 28,743   |  
|Employer contributions                                                       |  |                | 58,819     |   |               |   | 46,197     |      |  |   | 34,169   |   |  |   | 29,058   |  
|Plan participants contributions                                             |  |                | 7,487      |   |               |   | 352        |      |  |   | 811      |   |  |   | 681      |  
|Benefits paid                                                                |  |                | (29,339    | ) |               |   | (32,109    | )    |  |   | (1,814   | ) |  |   | (2,501   | )
|Foreign exchange translation                                                 |  |                |           |   |               |   |           |      |  |   | (16,487  | ) |  |   | 6,335    |  
|                                                                             |  |                |            |   |               |   |            |      |  |   |          |   |  |   |          |  
|Fair value of plan assets at end of year                                     |  |                | 794,543    |   |               |   | 842,542    |      |  |   | 194,849  |   |  |   | 257,165  |  
|                                                                             |  |                |            |   |               |   |            |      |  |   |          |   |  |   |          |  
|                                                                             |  |                |            |  
|Funded status                                                                |  |                | (823,859   | ) |               |   | (799,051   | )    |  |   | (17,544  | ) |  |   | (44,214  | )
|Unrecognized actuarial loss                                                  |  |                | 662,232    |   |               |   | 607,399    |      |  |   | 49,317   |   |  |   | 81,240   |  
|Unrecognized net transition obligations                                      |  |                | 6,761      |   |               |   | 5,726      |      |  |   | 374      |   |  |   | 332      |  
|Unrecognized prior service cost (benefit)                                    |  |                | (68,002    | ) |               |   | (62,089    | )    |  |   | 3,995    |   |  |   | 6,764    |  
|                                                                             |  |                |            |   |               |   |            |      |  |   |          |   |  |   |          |  
|Net amount recognized                                                        |  |                | (222,868   | ) |               |   | (248,015   | )    |  |   | 36,142   |   |  |   | 44,122   |  
|                                                                             |  |                |            |   |               |   |            |      |  |   |          |   |  |   |          |  
|Adjustments to recognize additional minimum liabilities (note 8):            |  |                |            |   |               |   |            |      |  |   |          |   |  |   |          |  
|Intangible assets                                                            |  |                |           |   |               |   |           |      |  |   | (1,056   | ) |  |   | (311     | )
|Amount included in accumulated other comprehensive income (loss)             |  |                | (410,570   | ) |               |   | (377,864   | )    |  |   | (8,121   | ) |  |   | (2,949   | )
|                                                                             |  |                |            |   |               |   |            |      |  |   |          |   |  |   |          |  
|Prepaid (accrued) pension cost recognized in the consolidated balance sheets |  | ¥              | (633,438   | ) |               | ¥ | (625,879   | )    |  | ¥ | 26,965   |   |  | ¥ | 40,862   |  
|                                                                             |  |                |            |   |               |   |            |      |  |   |          |   |  |   |          |  
|Pension plans with accumulated benefit obligations in excess of plan assets: |  |                |            |   |               |   |            |      |  |   |          |   |  |   |          |  
|Projected benefit obligations                                                |  | ¥              | (1,613,967 | ) |               | ¥ | (1,630,982 | )    |  | ¥ | (87,498  | ) |  | ¥ | (52,334  | )
|Accumulated benefit obligations                                              |  |                | (1,424,689 | ) |               |   | (1,460,030 | )    |  |   | (67,494  | ) |  |   | (33,749  | )
|Fair value of plan assets                                                    |  |                | 790,951    |   |               |   | 833,539    |      |  |   | 63,984   |   |  |   | 29,685   |  
|                                                                             |  |                |            |   |               |   |            |      |  |   |          |   |  |   |          |  



F-28



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



Pension expense for each of the years in the three-year period ended March 31, 2005 included the
following:



|                                               |  |                |         |   |      |   |         |      |  |   |         |  
|---------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                               |  | Yen (millions) |        
|                                               |  | 2003           |         |   | 2004 |   |         | 2005 | 
|Japanese plans:                                |  |                |         |   |      |   |         |      |  |   |         |  
|Service cost-benefits earned during the year   |  | ¥              | 44,733  |   |      | ¥ | 49,309  |      |  | ¥ | 40,963  |  
|Interest cost on projected benefit obligations |  |                | 34,142  |   |      |   | 30,741  |      |  |   | 32,368  |  
|Expected return on plan assets                 |  |                | (31,711 | ) |      |   | (32,041 | )    |  |   | (33,589 | )
|Net amortization and deferral                  |  |                | 23,223  |   |      |   | 38,058  |      |  |   | 27,921  |  
|                                               |  |                |         |   |      |   |         |      |  |   |         |  
|                                               |  | ¥              | 70,387  |   |      | ¥ | 86,067  |      |  | ¥ | 67,663  |  
|                                               |  |                |         |   |      |   |         |      |  |   |         |  
|Foreign plans:                                 |  |                |         |   |      |   |         |      |  |   |         |  
|Service cost-benefits earned during the year   |  | ¥              | 12,663  |   |      | ¥ | 13,022  |      |  | ¥ | 17,560  |  
|Interest cost on projected benefit obligations |  |                | 10,944  |   |      |   | 12,164  |      |  |   | 14,445  |  
|Expected return on plan assets                 |  |                | (9,593  | ) |      |   | (12,947 | )    |  |   | (17,418 | )
|Net amortization and deferral                  |  |                | (1,781  | ) |      |   | 2,069   |      |  |   | 2,576   |  
|                                               |  |                |         |   |      |   |         |      |  |   |         |  
|                                               |  | ¥              | 12,233  |   |      | ¥ | 14,308  |      |  | ¥ | 17,163  |  
|                                               |  |                |         |   |      |   |         |      |  |   |         |  



Weighted-average
assumptions used to determine benefit obligation at March 31, 2004 and 2005 were as follows:



|                        |  |         |   |  |         |  
|----------------------- |  | ------- | - |  | ------- | -
|                        |  | 2004    |   |  | 2005    |  
|Japanese plans:         |  |         |   |  |         |  
|Discount rate           |  | 2.0     | % |  | 2.0     | %
|Rate of salary increase |  | 2.3     | % |  | 2.3     | %
|                        |  |        
|Foreign plans:          |  |         |   |  |         |  
|Discount rate           |  | 5.8~6.8 | % |  | 5.4~6.3 | %
|Rate of salary increase |  | 4.3~6.7 | % |  | 3.5~6.7 | %



Weighted-average
assumptions used to determine net periodic benefit cost for each of the years in the three-year period ended March 31, 2005 were as follows:



|                                  |  |         |   |  |         |   |  |         |  
|--------------------------------- |  | ------- | - |  | ------- | - |  | ------- | -
|                                  |  | 2003    |   |  | 2004    |   |  | 2005    |  
|Japanese plans:                   |  |         |   |  |         |   |  |         |  
|Discount rate                     |  | 2.5     | % |  | 2.0     | % |  | 2.0     | %
|Rate of salary increase           |  | 2.5     | % |  | 2.3     | % |  | 2.3     | %
|Expected long-term rate of return |  | 4.0     | % |  | 4.0     | % |  | 4.0     | %
|                                  |  |         |  
|Foreign plans:                    |  |         |   |  |         |   |  |         |  
|Discount rate                     |  | 5.5~7.5 | % |  | 5.5~7.0 | % |  | 5.8~6.8 | %
|Rate of salary increase           |  | 4.0~6.0 | % |  | 4.0~6.7 | % |  | 3.5~6.7 | %
|Expected long-term rate of return |  | 6.5~9.0 | % |  | 6.8~8.5 | % |  | 6.8~8.5 | %



Honda determines the
expected long-term rate of return based on the expected long-term return of the various asset categories in which it invests. Honda considers the current expectations for future returns and the actual historical returns of each plan asset category.



F-29



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



Measurement date



Honda uses a March 31 measurement date for their plans excluding certain foreign subsidiaries which use a December 31 measurement date for their plans.



Plan Assets



Hondas domestic and foreign pension plan weighted-average asset
allocations at March 31, 2004 and 2005, by asset category are as follows:

|
|

|                  |  |      |   |  |      |  
|----------------- |  | ---- | - |  | ---- | -
|                  |  | 2004 |   |  | 2005 |  
|Japanese plans:   |  |      |   |  |      |  
|Equity securities |  | 38   | % |  | 37   | %
|Debt securities   |  | 26   | % |  | 23   | %
|Other             |  | 36   | % |  | 40   | %
|                  |  |      |   |  |      |  
|                  |  | 100  | % |  | 100  | %
|                  |  |      |   |  |      |  
|Foreign plans:    |  |      |   |  |      |  
|Equity securities |  | 68   | % |  | 68   | %
|Debt securities   |  | 25   | % |  | 24   | %
|Other             |  | 7    | % |  | 8    | %
|                  |  |      |   |  |      |  
|                  |  | 100  | % |  | 100  | %
|                  |  |      |   |  |      |  



Honda investment
policies for the domestic and foreign pension benefit are designed to maximize total returns are available to provide future payments of pension benefits to eligible participants under accepted risks. Honda sets target assets allocations for the
individual asset categories based on the estimated returns and risks in the long future. Plan assets are invested in individual equity and debt securities using the target assets allocation.



Obligations



The accumulated benefit obligation for all domestic defined benefit plans at March 31, 2004 and 2005 were ¥1,427,769
million and ¥1,468,115 million, respectively. The accumulated benefit obligation for all foreign defined benefit plans at March 31, 2004 and 2005 were ¥162,079 million and ¥225,853 million, respectively.



Cash flows



Honda expects to contribute ¥41,433 million to its domestic pension plans and ¥24,956 million to its foreign pension
plans in the year ending March 31, 2006.



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



Estimated future benefit Payment



The following table presents estimated future gross benefit payments:



|          |  |                |         |              |   |       
|--------- |  | -------------- | ------- | ------------ | - | ------
|          |  | Yen (millions)
|          |  | Japaneseplans  |         | Foreignplans
|2006      |  | ¥              | 37,054  |              | ¥ | 2,799 
|2007      |  |                | 41,377  |              |   | 3,295 
|2008      |  |                | 49,362  |              |   | 3,836 
|2009      |  |                | 53,366  |              |   | 4,429 
|2010      |  |                | 57,974  |              |   | 5,487 
|20112015 |  |                | 327,654 |              |   | 47,504



Certain of the
Companys subsidiaries in North America provide certain health care and life insurance benefits to retired employees. Such benefits have no material effect on Hondas financial position and results of operations.



(12) Supplemental Disclosures of Cash Flow Information



|                               |  |                |         |      |   |         |  |   |        
|------------------------------ |  | -------------- | ------- | ---- | - | ------- |  | - | -------
|                               |  | Yen (millions)
|                               |  | 2003           |         | 2004 |   | 2005   
|Cash paid during the year for: |  |                |         |      |   |         |  |   |        
|Interest                       |  | ¥              | 100,368 |      | ¥ | 91,207  |  | ¥ | 99,475 
|Income taxes                   |  |                | 173,697 |      |   | 203,029 |  |   | 159,041



During the year ended
March 31, 2004, the Company reissued certain of its treasury stock at fair value of ¥603 million to the minority shareholder of subsidiary, upon which the Company merged with the subsidiary. During the fiscal year ended March 31, 2005, the
Company retired shares totaling 46,000,000 shares at a cost of ¥216,371 million by offsetting with capital surplus of ¥190 million and unappropriated retained earnings of ¥216,181 million based on the resolution of board of directors.



(13) Other Comprehensive Income (Loss)



Other comprehensive income (loss) consists of changes in adjustments for
foreign currency translation, changes in fair value of available-for-sale marketable equity securities, and changes in minimum pension liabilities adjustment, and is included in the consolidated statements of stockholders equity.



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HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



Changes in accumulated other comprehensive income (loss) for each of the years in the three-year
period ended March 31, 2005 are as follows:



|                                                                            |  |                |          |   |      |   |          |      |  |   |          |  
|--------------------------------------------------------------------------- |  | -------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                                            |  | Yen (millions) |         
|                                                                            |  | 2003           |          |   | 2004 |   |          | 2005 | 
|Adjustments from foreign currency translation:                              |  |                |          |   |      |   |          |      |  |   |          |  
|Balance at beginning of year                                                |  | ¥              | (300,081 | ) |      | ¥ | (469,472 | )    |  | ¥ | (665,413 | )
|Adjustments for the year                                                    |  |                | (169,391 | ) |      |   | (195,941 | )    |  |   | 40,476   |  
|                                                                            |  |                |          |   |      |   |          |      |  |   |          |  
|Balance at end of year                                                      |  |                | (469,472 | ) |      |   | (665,413 | )    |  |   | (624,937 | )
|                                                                            |  |                |          |   |      |   |          |      |  |   |          |  
|Net unrealized gains on marketable equity securities:                       |  |                |          |   |      |   |          |      |  |   |          |  
|Balance at beginning of year                                                |  |                | 8,730    |   |      |   | 14,820   |      |  |   | 36,066   |  
|Realized (gain) loss on marketable equity securities                        |  |                | 7,137    |   |      |   |         |      |  |   | 1,346    |  
|Increase (decrease) in net unrealized gains on marketable equity securities |  |                | (1,047   | ) |      |   | 21,246   |      |  |   | (3,668   | )
|                                                                            |  |                |          |   |      |   |          |      |  |   |          |  
|Balance at end of year                                                      |  |                | 14,820   |   |      |   | 36,066   |      |  |   | 33,744   |  
|                                                                            |  |                |          |   |      |   |          |      |  |   |          |  
|Minimum pension liabilities adjustment:                                     |  |                |          |   |      |   |          |      |  |   |          |  
|Balance at beginning of year                                                |  |                | (187,824 | ) |      |   | (308,513 | )    |  |   | (225,226 | )
|Adjustments for the year                                                    |  |                | (120,689 | ) |      |   | 83,287   |      |  |   | 22,485   |  
|                                                                            |  |                |          |   |      |   |          |      |  |   |          |  
|Balance at end of year                                                      |  |                | (308,513 | ) |      |   | (225,226 | )    |  |   | (202,741 | )
|                                                                            |  |                |          |   |      |   |          |      |  |   |          |  
|Total accumulated other comprehensive income (loss):                        |  |                |          |   |      |   |          |      |  |   |          |  
|Balance at beginning of year                                                |  |                | (479,175 | ) |      |   | (763,165 | )    |  |   | (854,573 | )
|Adjustments for the year                                                    |  |                | (283,990 | ) |      |   | (91,408  | )    |  |   | 60,639   |  
|                                                                            |  |                |          |   |      |   |          |      |  |   |          |  
|Balance at end of year                                                      |  | ¥              | (763,165 | ) |      | ¥ | (854,573 | )    |  | ¥ | (793,934 | )
|                                                                            |  |                |          |   |      |   |          |      |  |   |          |  



F-32



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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-taxamount |          |   | Tax(expense) or benefit(note 9) |   |         | Net-of-taxamount | 
|2003:                                                          |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Adjustments from foreign currency translation                  |  | ¥                | (179,332 | ) |                                 | ¥ | 9,941   |                  |  | ¥ | (169,391 | )
|Unrealized gains (losses) on marketable equity securities:     |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Unrealized holding gains (losses) arising during the year      |  |                  | (2,002   | ) |                                 |   | 955     |                  |  |   | (1,047   | )
|Reclassification adjustments for losses realized in net income |  |                  | 12,135   |   |                                 |   | (4,998  | )                |  |   | 7,137    |  
|                                                               |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Net unrealized gains (losses)                                  |  |                  | 10,133   |   |                                 |   | (4,043  | )                |  |   | 6,090    |  
|                                                               |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Minimum pension liabilities adjustment                         |  |                  | (200,434 | ) |                                 |   | 79,745  |                  |  |   | (120,689 | )
|                                                               |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Other comprehensive income (loss)                              |  | ¥                | (369,633 | ) |                                 | ¥ | 85,643  |                  |  | ¥ | (283,990 | )
|                                                               |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|                                                               |  |                  |         
|2004:                                                          |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Adjustments from foreign currency translation                  |  | ¥                | (219,372 | ) |                                 | ¥ | 23,431  |                  |  | ¥ | (195,941 | )
|Unrealized gains (losses) on marketable equity securities:     |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Unrealized holding gains (losses) arising during the year      |  |                  | 35,069   |   |                                 |   | (13,823 | )                |  |   | 21,246   |  
|Reclassification adjustments for losses realized in net income |  |                  |         |   |                                 |   |        |                  |  |   |         |  
|                                                               |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Net unrealized gains (losses)                                  |  |                  | 35,069   |   |                                 |   | (13,823 | )                |  |   | 21,246   |  
|                                                               |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Minimum pension liabilities adjustment                         |  |                  | 136,515  |   |                                 |   | (53,228 | )                |  |   | 83,287   |  
|                                                               |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Other comprehensive income (loss)                              |  | ¥                | (47,788  | ) |                                 | ¥ | (43,620 | )                |  | ¥ | (91,408  | )
|                                                               |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|                                                               |  |                  |         
|2005:                                                          |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Adjustments from foreign currency translation                  |  | ¥                | 39,469   |   |                                 | ¥ | 1,007   |                  |  | ¥ | 40,476   |  
|Unrealized gains (losses) on marketable equity securities:     |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Unrealized holding gains (losses) arising during the year      |  |                  | (6,104   | ) |                                 |   | 2,436   |                  |  |   | (3,668   | )
|Reclassification adjustments for losses realized in net income |  |                  | 2,114    |   |                                 |   | (768    | )                |  |   | 1,346    |  
|                                                               |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Net unrealized gains (losses)                                  |  |                  | (3,990   | ) |                                 |   | 1,668   |                  |  |   | (2,322   | )
|                                                               |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Minimum pension liabilities adjustment                         |  |                  | 37,878   |   |                                 |   | (15,393 | )                |  |   | 22,485   |  
|                                                               |  |                  |          |   |                                 |   |         |                  |  |   |          |  
|Other comprehensive income (loss)                              |  | ¥                | 73,357   |   |                                 | ¥ | (12,718 | )                |  | ¥ | 60,639   |  
|                                                               |  |                  |          |   |                                 |   |         |                  |  |   |          |  



F-33



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



(14) Fair Value of Financial Instruments



The estimated fair values of significant financial instruments at March 31, 2004 and 2005 are as follows:



|                                     |  |                 |            |   |                      |   |            |                 |  |   |                      |   |  |   |            |  
|------------------------------------ |  | --------------- | ---------- | - | -------------------- | - | ---------- | --------------- |  | - | -------------------- | - |  | - | ---------- | -
|                                     |  | Yen (millions)  |           
|                                     |  | 2004            |            |   | 2005                 |  
|                                     |  | Carrying amount |            |   | Estimated fair value |   |            | Carrying amount |  |   | Estimated fair value |  
|Finance subsidiaries-receivables (a) |  | ¥               | 2,112,139  |   |                      | ¥ | 2,141,746  |                 |  | ¥ | 2,433,240            |   |  | ¥ | 2,407,745  |  
|Marketable equity securities         |  |                 | 98,300     |   |                      |   | 98,300     |                 |  |   | 93,004               |   |  |   | 93,004     |  
|Convertible preferred stocks         |  |                 |            |   |                      |   |            |                 |  |   |                      |   |  |   |            |  
|Host contracts                       |  |                 | 5,954      |   |                      |   | 5,954      |                 |  |   | 7,791                |   |  |   | 7,791      |  
|Embedded derivatives                 |  |                 | 12,785     |   |                      |   | 12,785     |                 |  |   | 19,685               |   |  |   | 19,685     |  
|                                     |  |                 |            |   |                      |   |            |                 |  |   |                      |   |  |   |            |  
|                                     |  |                 | 18,739     |   |                      |   | 18,739     |                 |  |   | 27,476               |   |  |   | 27,476     |  
|Convertible notes                    |  |                 |            |   |                      |   |            |                 |  |   |                      |   |  |   |            |  
|Host contracts                       |  |                 | 6,176      |   |                      |   | 6,176      |                 |  |   | 7,038                |   |  |   | 7,038      |  
|Embedded derivatives                 |  |                 | 43,583     |   |                      |   | 43,583     |                 |  |   | 58,882               |   |  |   | 58,882     |  
|                                     |  |                 |            |   |                      |   |            |                 |  |   |                      |   |  |   |            |  
|                                     |  |                 | 49,759     |   |                      |   | 49,759     |                 |  |   | 65,920               |   |  |   | 65,920     |  
|Debt                                 |  |                 | (2,616,008 | ) |                      |   | (2,624,657 | )               |  |   | (2,863,919           | ) |  |   | (2,878,341 | )
|                                     |  |                 |            |  
|Foreign exchange instruments (b)     |  |                 |            |   |                      |   |            |                 |  |   |                      |   |  |   |            |  
|Asset position                       |  | ¥               | 43,847     |   |                      | ¥ | 43,847     |                 |  | ¥ | 28,030               |   |  | ¥ | 28,030     |  
|Liability position                   |  |                 | (2,062     | ) |                      |   | (2,062     | )               |  |   | (14,018              | ) |  |   | (14,018    | )
|                                     |  |                 |            |   |                      |   |            |                 |  |   |                      |   |  |   |            |  
|Net                                  |  | ¥               | 41,785     |   |                      | ¥ | 41,785     |                 |  | ¥ | 14,012               |   |  | ¥ | 14,012     |  
|                                     |  |                 |            |   |                      |   |            |                 |  |   |                      |   |  |   |            |  
|                                     |  |                 |            |  
|Interest rate instruments (c)        |  |                 |            |   |                      |   |            |                 |  |   |                      |   |  |   |            |  
|Asset position                       |  | ¥               | 166        |   |                      | ¥ | 166        |                 |  | ¥ | 27,353               |   |  | ¥ | 27,353     |  
|Liability position                   |  |                 | (23,149    | ) |                      |   | (23,149    | )               |  |   | (2,550               | ) |  |   | (2,550     | )
|                                     |  |                 |            |   |                      |   |            |                 |  |   |                      |   |  |   |            |  
|Net                                  |  | ¥               | (22,983    | ) |                      | ¥ | (22,983    | )               |  | ¥ | 24,803               |   |  | ¥ | 24,803     |  
|                                     |  |                 |            |   |                      |   |            |                 |  |   |                      |   |  |   |            |  

---

|(a) | The carrying amounts of finance subsidiaries-receivables at March 31, 2004 and 2005 in the table exclude ¥1,529,819 million and ¥1,716,130 million of direct financing
leases, net, classified as finance subsidiaries-receivables in the consolidated balance sheets, respectively. The carrying amounts of finance subsidiaries-receivables at March 31, 2004 and 2005 in the table also include ¥426,351 million and
¥504,345 million of finance receivables classified as trade receivables and other assets in the consolidated balance sheets.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | The fair values of foreign currency forward contracts, foreign currency option contracts and foreign currency swap agreements are included in other assets and other current
assets/liabilities in the consolidated balance sheets as follows (see note 7):
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                          |  |                |        |   |      |   |         |  
|------------------------- |  | -------------- | ------ | - | ---- | - | ------- | -
|                          |  | Yen (millions) |       
|                          |  | 2004           |        |   | 2005 |  
|Other current assets      |  | ¥              | 9,761  |   |      | ¥ | 643     |  
|Other assets              |  |                | 34,086 |   |      |   | 27,387  |  
|Other current liabilities |  |                | (2,062 | ) |      |   | (14,018 | )
|                          |  |                |        |   |      |   |         |  
|                          |  | ¥              | 41,785 |   |      | ¥ | 14,012  |  
|                          |  |                |        |   |      |   |         |  



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HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



|(c) | The fair values of interest rate swap agreements are included in other assets/liabilities and other current assets/liabilities in the consolidated balance sheets as follows (see
note 7):
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                          |  |                |         |   |      |   |        |  
|------------------------- |  | -------------- | ------- | - | ---- | - | ------ | -
|                          |  | Yen (millions) |        
|                          |  | 2004           |         |   | 2005 |  
|Other current assets      |  | ¥              | 166     |   |      | ¥ | 161    |  
|Other assets              |  |                |        |   |      |   | 27,192 |  
|Other current liabilities |  |                | (23,048 | ) |      |   | (2,462 | )
|Other liabilities         |  |                | (101    | ) |      |   | (88    | )
|                          |  |                |         |   |      |   |        |  
|                          |  | ¥              | (22,983 | ) |      | ¥ | 24,803 |  
|                          |  |                |         |   |      |   |        |  



The estimated fair
value amounts 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 value amounts.



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 term loans to dealers were
estimated by discounting future cash flows using the current rates for these instruments of similar remaining maturities. Given the short maturities of wholesale receivables, the carrying amount of such receivables approximates fair value.



Marketable equity securities



The fair value of marketable equity securities was estimated using quoted
market prices.



Convertible Notes and Convertible Preferred Stock Investment



Honda investments in convertible instruments are
bifurcated into two investments for accounting purposes. The note and preferred stock portions of these convertible instruments are treated as available-for-sale and are marked-to-market through other comprehensive income (loss). The fair value is
determined based on an analysis of interest rate movements and an assessment of credit worthiness. The embedded derivative is marked-to-market through the statement of income and fair value is estimated using a trinomial convertible bond pricing
model.



Debt



The fair values of bonds and notes were estimated based on the quoted market
prices for the same or similar issues. The fair value of long-term loans was estimated by discounting future cash flows using rates currently available for loans of similar terms and remaining maturities. The carrying amounts of short-term bank
loans and commercial paper approximate fair values because of the short maturity of these instruments.



Foreign exchange and interest rate instruments



The fair values of foreign currency forward contracts and foreign currency option contracts were estimated by obtaining quotes from banks. The fair values of currency swap agreements and interest rate swap agreements
were estimated by discounting future cash flows using rates currently available for these instruments of similar terms and remaining maturities.



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HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



(15) Risk Management Activities and Derivative Financial Instruments



The Company and certain of its subsidiaries are parties to derivative
financial instruments in the normal course of business to reduce their exposure to fluctuations in foreign exchange rates and interest rates. Currency swap agreements are used to convert long-term debt denominated in a certain currency to long-term
debt denominated in other currencies. Foreign currency forward contracts and purchased option contracts are normally used to hedge 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 convert 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 does not expect any counterparty to default on its obligations and, therefore, does not expect to incur any losses due to counterparty default. Honda generally does not require
or place collateral for these financial instruments.



Foreign
currency forward contracts and currency swap agreements are agreements to exchange different currencies at a specified rate on a specific future date. Foreign currency option contracts are contracts that allow the holder of the option the right but
not the obligation to exchange different currencies at a specified rate on a specific future date. Foreign currency forward contracts, foreign currency option contracts and currency swap agreements outstanding at March 31, 2004 were ¥562,698
million, ¥121,143 million and ¥402,256 million, respectively and totaled ¥1,086,097 million. At March 31, 2005, foreign currency forward contracts, foreign currency option contracts and currency swap agreements outstanding were
¥692,841 million, ¥214,211 million and ¥505,272 million, respectively and totaled ¥1,412,324 million.



Interest rate swap agreements generally involve the exchange of fixed and floating rate interest payment obligations without the exchange of the
underlying principal amount. At March 31, 2004 and 2005, the notional principal amounts of interest rate swap agreements were ¥2,556,179 million and ¥3,227,405 million, respectively.



(16) Commitments and Contingent Liabilities



At March 31, 2005, Honda had commitments for purchases of property, plant
and equipment of approximately ¥40,145 million.



Honda has
entered into various guarantee and indemnification agreements. At March 31, 2004 and 2005, Honda has guaranteed approximately ¥77,426 million and ¥69,574 million of bank loan 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 were approximately ¥77,426 million and ¥69,574
million, respectively, at March 31, 2004 and 2005. As of March 31, 2005, 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 vehicles for specific periods of time. Product warranties
vary depending upon the nature of the product, the geographic location of its sale and other factors.



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HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



The changes in provisions for those product warranties for each of the years in the two-year period
ended March 31, 2005 are as follow:



|                                                                     |  |                |          |   |      |   |          |  
|-------------------------------------------------------------------- |  | -------------- | -------- | - | ---- | - | -------- | -
|                                                                     |  | Yen (millions) |         
|                                                                     |  | 2004           |          |   | 2005 |  
|Balance at beginning of year                                         |  | ¥              | 239,798  |   |      | ¥ | 278,153  |  
|Warranty claims paid during the period                               |  |                | (112,810 | ) |      |   | (138,368 | )
|Liabilities accrued for warranties issued during the period          |  |                | 161,406  |   |      |   | 124,892  |  
|Changes in liabilities for pre-existing warranties during the period |  |                | 2,407    |   |      |   | (3,770   | )
|Foreign currency translation                                         |  |                | (12,648  | ) |      |   | 7,522    |  
|                                                                     |  |                |          |   |      |   |          |  
|                                                                     |  | ¥              | 278,153  |   |      | ¥ | 268,429  |  
|                                                                     |  |                |          |   |      |   |          |  



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 reserves.
Punitive damages are claimed in certain of these lawsuits. Honda is also subject to potential liability under other various lawsuits and claims. After consultation with legal counsel, and taking into account all known factors pertaining to existing
lawsuits and claims, Honda believes that the overall results 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 and results of
operations.



(17) Leases



Honda has several operating leases, primarily for office and other
facilities, and certain office equipment.



Future minimum lease
payments under noncancelable operating leases that have initial or remaining lease terms in excess of one year at March 31, 2005 are as follows:



|                             |  |                |        
|---------------------------- |  | -------------- | -------
|Years ending March 31:       |  | Yen (millions)
|2006                         |  | ¥              | 25,151 
|2007                         |  |                | 18,455 
|2008                         |  |                | 13,664 
|2009                         |  |                | 10,518 
|2010                         |  |                | 9,832  
|After five years             |  |                | 41,303 
|                             |  |                |        
|Total minimum lease payments |  | ¥              | 118,923
|                             |  |                |        



Rental expenses under
operating leases for each of the years in the three-year period ended March 31, 2005 were ¥46,877 million, ¥43,441 million and ¥44,619 million, respectively.



F-37



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HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



(18) Allowances for Trade receivable and finance subsidiaries-receivables



The allowances for trade receivable and finance subsidiaries-receivables for
the years ended March 31, 2003, 2004 and 2005 are set forth in the following table:



|                                              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|--------------------------------------------- |  | ------------------------------ | ----------------------------- | --------- | --------------------- | ---------- |  | ----------------------------------------- | ------ |  | -------------------------- | ------- | - | ------------------------ | - | ------ | - |  | - | -------
|                                              |  | Yen (millions)                
|                                              |  | Balance at beginning of period |                               | Additions |                       | Deductions |  | Net increase (decrease) inunearned income |        |  | Trans- lation dif- ference |         |   | Balance at end of period
|                                              |  |                                | Charged to costs and expenses |           | Bad debts written off |            |  |                                          
|March 31, 2003:                               |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|Trade receivable                              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|Allowance for doubtful accounts               |  | ¥                              | 9,417                         |           | ¥                     | 1,700      |  | ¥                                         | 1,117  |  | ¥                          |        |   |                          | ¥ | (758   | ) |  | ¥ | 9,242  
|                                              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|Finance subsidiaries-receivables              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|Allowance for credit losses                   |  | ¥                              | 12,018                        |           | ¥                     | 22,972     |  | ¥                                         | 16,419 |  | ¥                          |        |   |                          | ¥ | (970   | ) |  | ¥ | 17,601 
|Allowance for losses on lease residual values |  |                                | 12,560                        |           |                       | 16,284     |  |                                           | 5,347  |  |                            |        |   |                          |   | (1,142 | ) |  |   | 22,355 
|Unearned interest income and fees             |  |                                | 174,336                       |           |                       |           |  |                                           |       |  |                            | 33,184  |   |                          |   | (3,918 | ) |  |   | 203,602
|                                              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|                                              |  | ¥                              | 198,914                       |           | ¥                     | 39,256     |  | ¥                                         | 21,766 |  | ¥                          | 33,184  |   |                          | ¥ | (6,030 | ) |  | ¥ | 243,558
|                                              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|March 31, 2004:                               |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|Trade receivable                              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|Allowance for doubtful accounts               |  | ¥                              | 9,242                         |           | ¥                     | 3,760      |  | ¥                                         | 1,877  |  | ¥                          |        |   |                          | ¥ | (206   | ) |  | ¥ | 10,919 
|                                              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|Finance subsidiaries-receivables              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|Allowance for credit losses                   |  | ¥                              | 17,601                        |           | ¥                     | 28,965     |  | ¥                                         | 19,924 |  | ¥                          |        |   |                          | ¥ | (2,231 | ) |  | ¥ | 24,411 
|Allowance for losses on lease residual values |  |                                | 22,355                        |           |                       | 16,972     |  |                                           | 10,989 |  |                            |        |   |                          |   | (2,214 | ) |  |   | 26,124 
|Unearned interest income and fees             |  |                                | 203,602                       |           |                       |           |  |                                           |       |  |                            | (27,963 | ) |                          |   | 2,165  |   |  |   | 177,804
|                                              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|                                              |  | ¥                              | 243,558                       |           | ¥                     | 45,937     |  | ¥                                         | 30,913 |  | ¥                          | (27,963 | ) |                          | ¥ | (2,280 | ) |  | ¥ | 228,339
|                                              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|March 31, 2005:                               |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|Trade receivable                              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|Allowance for doubtful accounts               |  | ¥                              | 10,919                        |           | ¥                     | 693        |  | ¥                                         | 2,121  |  | ¥                          |        |   |                          | ¥ | 219    |   |  | ¥ | 9,710  
|                                              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|Finance subsidiaries-receivables              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|Allowance for credit losses                   |  | ¥                              | 24,411                        |           | ¥                     | 33,365     |  | ¥                                         | 27,575 |  | ¥                          |        |   |                          | ¥ | 725    |   |  | ¥ | 30,926 
|Allowance for losses on lease residual values |  |                                | 26,124                        |           |                       | 17,273     |  |                                           | 10,156 |  |                            |        |   |                          |   | 784    |   |  |   | 34,025 
|Unearned interest income and fees             |  |                                | 177,804                       |           |                       |           |  |                                           |       |  |                            | 2,029   |   |                          |   | 2,922  |   |  |   | 182,755
|                                              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        
|                                              |  | ¥                              | 228,339                       |           | ¥                     | 50,638     |  | ¥                                         | 37,731 |  | ¥                          | 2,029   |   |                          | ¥ | 4,431  |   |  | ¥ | 247,706
|                                              |  |                                |                               |           |                       |            |  |                                           |        |  |                            |         |   |                          |   |        |   |  |   |        



F-38



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##### Table of Contents

HONDA MOTOR CO., LTD. AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)



In 2005, Honda reclassified the above allowances and unearned interest and fees of finance
receivables related to sales of inventory. Reclassifications have been made to prior years consolidated financial statements to conform to the presentation used for the year ended March 31, 2005.



(19) Selected Quarterly Financial Data (Unaudited and Not Reviewed) *



Quarterly financial data for the years ended March 31, 2004 and 2005 are set
forth in the following table:



|                           |  |                                     |           |                 |   |           |  |                                 |         |  |   |       
|-------------------------- |  | ----------------------------------- | --------- | --------------- | - | --------- |  | ------------------------------- | ------- |  | - | ------
|                           |  | Yen (millions)                      |           | Yen            
|                           |  | Net sales andother operatingrevenue |           | OperatingIncome |   | Netincome |  | Basic netincome percommon share
|Year ended March 31, 2004: |  |                                     |           |                 |   |           |  |                                 |         |  |   |       
|First quarter              |  | ¥                                   | 2,008,228 |                 | ¥ | 159,465   |  | ¥                               | 101,819 |  | ¥ | 106.02
|Second quarter             |  |                                     | 2,017,203 |                 |   | 158,431   |  |                                 | 137,359 |  |   | 143.33
|Third quarter              |  |                                     | 1,992,245 |                 |   | 169,328   |  |                                 | 151,050 |  |   | 158.66
|Fourth quarter             |  |                                     | 2,144,924 |                 |   | 112,920   |  |                                 | 74,110  |  |   | 78.47 
|                           |  |                                     |           |                 |   |           |  |                                 |         |  |   |       
|                           |  |                                     | 8,162,600 |                 |   | 600,144   |  |                                 | 464,338 |  |   | 486.91
|                           |  |                                     |           |                 |   |           |  |                                 |         |  |   |       
|Year ended March 31, 2005: |  |                                     |           |                 |   |           |  |                                 |         |  |   |       
|First quarter              |  | ¥                                   | 2,073,153 |                 | ¥ | 159,993   |  | ¥                               | 114,262 |  | ¥ | 121.65
|Second quarter             |  |                                     | 2,093,578 |                 |   | 172,932   |  |                                 | 127,122 |  |   | 135.70
|Third quarter              |  |                                     | 2,133,820 |                 |   | 157,636   |  |                                 | 150,760 |  |   | 161.78
|Fourth quarter             |  |                                     | 2,349,554 |                 |   | 140,359   |  |                                 | 94,053  |  |   | 101.43
|                           |  |                                     |           |                 |   |           |  |                                 |         |  |   |       
|                           |  |                                     | 8,650,105 |                 |   | 630,920   |  |                                 | 486,197 |  |   | 520.68
|                           |  |                                     |           |                 |   |           |  |                                 |         |  |   |       

---

|* | All quarterly financial data is unaudited and also has not been reviewed by our independent registered public accounting firm.
|- | ------------------------------------------------------------------------------------------------------------------------------



F-39



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##### Table of Contents

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/    TAKEO FUKUITakeo Fukui President and Representative DirectorDate:    July 11, 2005Tokyo, Japan




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##### Table of Contents

INDEX OF EXHIBITS





|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|              | 
|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)                                                                                                                                                                                                                                                                                                                                  
|              | 
|8.1           |  | List of Significant Subsidiaries (See Organizational Structure in Item 4.C. of this Form 20-F)                                                                                                                                                                                                                                                                                                                                                                
|              | 
|11.1          |  | Code of Ethics (4)                                                                                                                                                                                                                                                                                                                                                                                                                                              
|              | 
|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                                                                                                                                                                                                                                                                                                                                                                                 

---

|(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 registrants annual report on Form 20-F filed on July 9, 2004.
|--- | -----------------------------------------------------------------------------------------------