Honda is looking to move production from Greater Noida plant to Tapukara Rajasthan, and likely to sell its land in Gujarat
A recent study has revealed a big setback for Honda in the Indian market. The Japanese car-making giant’s sales figures have halved compared to what they were 4 years ago. Thus, Honda Cars India is trying to cut down on cost, which will result in closing down of one of its two manufacturing plants.
Honda’s Greater Noida facility was its first manufacturing plant in India, however the manufacturer is looking to shift the major operations away from this unit to the Tapukara plant in Rajasthan. The Greater Noida plant has an annual manufacturing capacity of 1.2 lakh which is anyhow not being utilised.
Production has fallen down to around 2,500 units per month which means a capacity utilisation of less than 25%. Taking an example of the current-gen City, production of which has been largely shifted to the Rajasthan plant, and only 60 units are produced in a day at the Greater Noida facility, most of which are completely knocked down (CKD) units.
Contemplating a strong growth in sales, Honda had invested in land in Gujarat and Rajasthan between 2010 and 2015. However, the market has merely exceeded in terms of growth. Honda was left with no option but to slow down the rate of dealership expansion, including new customer interface as seen in other countries.
A senior management team led by the Chief of Asia Oceania operations, Honda, Mr. Masayuki Igarshi, along with his team from Thailand had visited India recently to analyse the future plans of the brand for the Indian market, considering the rapid decline in sales.
A spokesperson for Honda said in a statement, “The senior management’s visit was one of the periodic meetings where we discussed ways to enforce greater competitiveness in our future products and strategy. HCIL firmly believes in India’s future growth potential and we are committed to bringing the latest products and technologies for the highest level of customer satisfaction.”
“With over a couple of decades presence in the state, Honda cannot claim tax benefits anymore and where the plant is located is also becoming a residential town. The option to move manufacturing to Tapukara has been going on for the past two years; it is not a question of ‘if ’, but a question of ‘when and how’ – that’s what the management has been vigorously studying,”
The report further said when contacted, Honda Cars India’s spokesperson confirmed that the company is continuously optimising production volumes between the two plants in response to the ongoing sales crisis faced by the automotive industry and “it has nothing to do with shutting down of any plant”.
Between April to September of FY 2019-20, the carmaker’s sales have declined by 35% to just 60,000 units. Shockingly, Honda has lapsed out of the list of top five automakers in India for the first time in five years. The manufacturer has also decided to pull out of the biggest yearly automotive event of the country set to be held next year in February, the 2020 Auto Expo.