INTERVIEW-Honda aims to lower Japan cost structure

TOKYO, Nov 4 - Honda Motor Co aims to improve its cost structure to be able to break even in Japan using just 70 percent of its capacity to build cars, a top official at Japan's second-biggest automaker said on Wednesday.

Honda last week nearly tripled its annual operating profit forecast to 190 billion yen ($2.1 billion), far above consensus projections and despite lowering its dollar rate assumption to a tougher 85 yen for the second half from 90 yen.

Its Japanese operations are expected to stay in the red, but Chief Financial Officer Yoichi Hojo said Honda was shaving costs on internally developed components and looking for cheaper sources of components around the world with the aim of erasing the losses even at the current depressed level of domestic production.

"We can't get there right away, but the final step is to become profitable at the current level of production in Japan," Hojo told Reuters in an interview.

With the dollar falling 10 percent against the yen in April-September from the year before, Honda's exports from Japan fell by 64 percent during that period.

For the year to March, it plans to produce 910,000 cars in Japan, or 70 percent of its overall capacity of 1.3 million units.