Honda Motor Co., Japan’s second- largest carmaker, expects full-year vehicle sales in India and Thailand to exceed forecasts, the company’s head of Asia operations said.

Sales in Thailand this calendar year may reach last year’s level, compared with a forecast for a 20 percent decline, while sales in India will fare better than the estimated 20 percent to 30 percent drop, Fumihiko Ike, president of Asian Honda Motor Co., said in an interview in Tokyo yesterday.

“Compared with Europe and the U.S., recovery of these Asian economies has been slightly faster,” Ike said. “Banks started loosening credit relatively early, which has helped because a high ratio of people buy cars and motorcycles on credit.”

Economic recoveries in India and Thailand are boosting sales of Honda’s Jazz and City compact cars. India’s economic growth may accelerate to as much as 7.8 percent this year as the U.S. economy shows signs of “bottoming out” and harvests benefit from monsoon rains, the finance ministry said July 2.

Thailand’s economy is “sure” to grow this quarter for the first time in a year as government spending and improving global demand spur the nation’s expansion, Finance Minister Korn Chatikavanij said Oct. 5.

Honda rose 1 percent to 2,650 yen as of 10:06 a.m. in Tokyo trading.

Small-Car Plans

Tokyo-based Honda started selling the Jazz compact in India in June. The company also plans to introduce a small car targeting India and Thailand, which will be smaller than the Jazz, within two to three years, Ike said. It may export the car from Thailand to other countries in the region, he added.

“There is a huge income disparity gap in these countries, and our new product will meet untapped demand,” he said.

The car, with an engine of less than 1.2 liters, will qualify for Thailand’s “eco car project.” The government offers tax breaks to automakers and consumers for cars that get at least 20 kilometers per liter (47 mpg). The car would be sold in India at a price equivalent to the average annual salary, Ike said.

Ike said Honda has no plans to bring out a car that competes with Tata Motors Ltd.’s Nano, the world’s cheapest car, which is five times cheaper than the Jazz.

“Japanese carmakers just can’t make a car like that, nor do they want to,” he said.