Reuters quoted Mr Yoichi Hojo CFO of Honda Motor Co as saying that automakers need for a stable supply of steel meant negotiating prices with steelmakers every quarter was out of the question.

It may be noted that Japans steel an_d car makers, which usually set prices for one year around the beginning of the business year in April, are in heated negotiations over pricing as global miners press steel mills to move to more market sensitive quarterly pricing.

Honda last week issued what most analysts said was a conservative forecast for a 10% rise in operating profit to JPY 400 billion in the year to end March 2011, saying projecting the year ahead was more difficult than usual due to uncertainty over input prices.

Mr Hojo said that "There are materials we can buy at market prices, lik_e platinum an_d aluminum. But there are others that we cant buy directly from the market, an_d for those products, such as steel or tyres, we need a certain level of stability. Otherwise, we couldnt be in this manufacturing business. Its not logical to negotiate on a quarterly basis."

In April 2010, Honda reported a 12.5% rise in US sales, under performing a 22.7% rise in the overall market as its incentives trailed Toyotas (7203.T) by some USD 700 per vehicle.

But Mr Hojo said that was due to difficult comparisons from the year before, when Honda offered a round of generous incentives timed with the retirement of former executive vice president of American Honda Motor, Mr Richard Colliver.

He added that "Our market share was 11.6% in April, which was the highest in seven or eight months, since it shot up with the cash for clunkers program."

Mr Hojo said that Honda planned to keep its sales incentives at around USD 1,400 per vehicle in the United States, flat from last year but at least 40% higher than what it used to spend about a decade ago.

In Europe, Honda expected its 250,000 units a year UK factory to work at about 55% of capacity, up from 40% in 2009, with production reaching 137,000 cars.