Honda's pon-pon used a WWII surplus generator engine made by Mikuni Shoko and a belt-drive to power the rear wheel.

This engine had rotary valves, a stepped-diameter piston and a tall extension to the cylinder head that caused it to be nicknamed the 'chimney'.

[8]: 117 The D-Type featured an air-cooled two-stroke single-cylinder engine like that of the C-Type but with displacement increased to 98 cc (6.0 cu in) and power at 3 hp (2.2 kW) at 5000 rpm.

[13] The bike came with a full lighting system, an upright seating position, and a rear luggage rack.

[16] The most commonly reported story is that at a party to celebrate the completion of the D-Type an employee spontaneously remarked "It's like a dream!

"[18] Honda felt that the D-Type was a step on the path to fulfilling his own aspirations, and made the bike's official name "Dream Type D".

[14]: 40 [21] Shortly afterwards the effects of the United States' occupationary General Headquarters (GHQ) program of fiscal austerity called the Dodge Line began pushing Japan's economy into recession and putting pressure on Honda.

[11]: 68  In August 1949 Honda met with Takeo Fujisawa at the home of mutual friend Hiroshi Takeshima.

[19]: 67–68  Fujisawa was threatened physically because of this policy, and Honda lost some distributors because of it, but this also opened new sales areas for the company.

The Korean war broke out on 25 June 1950, and the US military's special procurement purchases for the conflict boosted the economy in general and Honda's fortunes specifically.

[11]: 72  In Autumn 1950 Honda bought a former sewing machine plant in Kita ward in Tokyo, outfitted it for production of D-Types and installed a conveyor system to speed assembly.

[11]: 72 [19]: 69  Honda received a Bicycle Industry Grant of ¥400,000 from Japan's Ministry of International Trade and Industry (MITI) in October 1950 and an additional ¥100,000 Bicycle Innovation Grant in December, which enabled Honda to increase production of the D-Type to 167 units per month by the end of the year and 300 units per month after that.

[16]: 2  Also, while tube-framed bikes were liable to break on Japan's poor roads of the time, they were considered better looking than the pressed-steel D-Type.