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Old 25th April 2011, 18:48   #1
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Default Honda India to cut production by 50%

High-points

- Honda India announces a production cut at its Greater Noida plant by about 50% from May, 2011. The announcement comes following a production cut by Honda Motor at its plants in Japan, following a shortage of components due to the impact of the Tsunami on its parts suppliers.

- Mr. Jnaneswar Sen, Sr. Vice President Marketing & Sales said, “We are moving to single shift operations from May, 2011. ”

- The situation with parts supply in Japan remains fluid, production of component parts and vehicles at Honda plants is at approximately 50% of the original production plan.

- Most of Japan-based Honda suppliers are making progress to restart production, and many either have or are ready to resume parts production. However, there are a few suppliers that have yet to resolve the challenge to resume their production.
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Old 25th April 2011, 19:12   #2
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Default Re: Honda India to cut production by 50%

Tough luck for Honda. With the American and Korean auto giants gearing up for their revolutionary launches, Honda will very soon see the numbers on their sales chart dwindling.

IMO, the recent face lift of the jazz is very untimely and unwarranted. Very sad to see the hasty moves of HSCI Ltd. It is high time that the boys in the board room of HSCI Ltd. devise some path breaking strategy to revive its product line. They should do something to atleast retain their market share.
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Old 25th April 2011, 19:43   #3
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Default Re: Honda India to cut production by 50%

In this tough phase for Honda Siel, this production cut can infact create an artificial demand by increasing the waiting period for their cars which are struggling to get enough customers.
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Old 25th April 2011, 20:13   #4
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Default Re: Honda India to cut production by 50%

Honda is already having tough time here in Indian market and this production cut will only add to their woes. But what I don't understand is that why they are reducing production by that massive percentage? I mean isn’t that related to their lower sales figures also? Let’s see the coming month’s sales figures to know the real impact.

PS - Recently Toyota also announced that waiting period for their cars may increases due to the similar situation as Honda is facing.

Last edited by bluevolt : 25th April 2011 at 20:14.
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Old 25th April 2011, 21:02   #5
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Default Re: Honda India to cut production by 50%

I am not sure how the 50% is split between vehicle lines.
The right move would be to ensure that the City is not affected and stop the Jazz / Accord / Civic lines to ensure its balanced.

I mean the City is anyway the leader, it should make sure the City is unaffected, else with Verna and Ford coming up with new model, City would get affected even more.

I do understand its upto the supplier to decide, but it would be easier to negotiate with the supplier mentioning the vehicle lines that he has to concentrate on.
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Old 25th April 2011, 21:15   #6
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Default Re: Honda India to cut production by 50%

I think the production cut is also anticipating lesser demand for City in Q2 & Q3.

New Fiesta+Verna combo alongwith aggressive Vento (VW are appointing new dealers in smaller cities) will make City's life miserable anyway.

New Verna bookings have already started.

Since Jazz is fizzled out due to its higher pricing, only a well priced Brio can put Honda back in the volume track in India.
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Old 25th April 2011, 21:57   #7
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Default Re: Honda India to cut production by 50%

I think that Japan supply might have been only tip of ice berg, with low sales volumes and inventory piling, Honda saw a opportunity to reduce the production and blame it on supply from japan.
Yr on yr Honda sales are almost 50% and it would have caused increased inventory as production was same and so 4-5 month of reduced production will only help their balance sheet in clearing old stock.
The older the stock much more the discount dealer has to offer plus in these tough times dealers are leaving for more lucrative pastures so the company cannot put dealers under much pressure. VW, Ford and Nissan have been on aggressive expansion plan throughout india and dealers with low sales are shifting their loyalty.

Last edited by drsnt : 25th April 2011 at 21:58.
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Old 25th April 2011, 21:58   #8
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Default Re: Honda India to cut production by 50%

Just saw the news on NDTV Profit. It's not only Honda but Toyota and Nissan are also suffering. And according to the news report this will continue till the end of this year.

Quoting news from NDTV profit website

"Japan's leading automakers Toyota, Nissan and Honda said on Monday that their domestic production plummeted in March after the massive quake and tsunami, which damaged parts suppliers and nuclear power plants.Toyota, the world's biggest auto maker, said production in Japan plunged 62.7 percent year on year in March. Domestic output slumped to 129,491 vehicles while worldwide production fell 29.9 per cent to 542,465 vehicles.Nissan said production at home fell 52.4 per cent year on year in March due to effects of the quake and the termination of a government subsidy programme for environmentally-friendly vehicles.
The domestic picture was similar at Honda Motor, which reported that the output had plunged 62.9 per cent year on year in March while worldwide total production was down 19.2 per cent at 282,254 units.
"

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Old 25th April 2011, 22:07   #9
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Default Re: Honda India to cut production by 50%

Quote:
Originally Posted by xingamazon View Post
I am not sure how the 50% is split between vehicle lines.
The right move would be to ensure that the City is not affected and stop the Jazz / Accord / Civic lines to ensure its balanced.

I mean the City is anyway the leader, it should make sure the City is unaffected, else with Verna and Ford coming up with new model, City would get affected even more.

I do understand its upto the supplier to decide, but it would be easier to negotiate with the supplier mentioning the vehicle lines that he has to concentrate on.
+1. Since there are parts shared by multiple cars, they should let the low sales car take the hit and try and maximize the production for City. That should help them retain some of the customers from running away.

Quote:
Originally Posted by Skyline GT-R View Post
I think the production cut is also anticipating lesser demand for City in Q2 & Q3.

New Fiesta+Verna combo alongwith aggressive Vento (VW are appointing new dealers in smaller cities) will make City's life miserable anyway.

New Verna bookings have already started.

Since Jazz is fizzled out due to its higher pricing, only a well priced Brio can put Honda back in the volume track in India.
I think they should launch Brio only once the crisis is over. If they price this car well, I am sure it will set the sales chart on fire and they cannot afford huge waiting periods since the consumers have lots of options in this segment.

PS: I strongly feel that City's life is already miserable looking at last month's sales report. Dont think the lesser sales had anything to do with the supplier issues.
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Old 25th April 2011, 22:11   #10
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Default Re: Honda India to cut production by 50%

Honda may blame it on Tsunami but the fact is Honda IS taking a beating from competitors. Lack of diesel engine is making matters worse. With petrol prices sky-rocketing and another round of petrol-price hike round the bend, more and more people are migrating towards diesels.
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Old 25th April 2011, 22:27   #11
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Default Re: Honda India to cut production by 50%

Quote:
Originally Posted by bluevolt View Post
Just saw the news on NDTV Profit. It's not only Honda but Toyota and Nissan are also suffering. And according to the news report this will continue till the end of this year.
Good point! I wonder why only Honda should be singled out.

Given this fact, if Honda sales are affected, we can compare the effect on Toyota and Nissan sales in order to judge whether it is the Tsunami in Japan or new launches in India by other manufacturers that have caused it.
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Old 25th April 2011, 22:54   #12
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Default Re: Honda India to cut production by 50%

Well well i guess that means the new Civic will be delayed. Also, it seems like they delayed the China unveiling of the JDM Civic because of the parts issue.
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Old 25th April 2011, 23:22   #13
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I guess Honda should put the Jazz facelift on hold now and concentrate more on the cars which are in demand i.e. City and civic to an extent.
Production of the City especially should be increased a bit to prevent waiting periods in future because if a customer would have to wait more then he will obviously consider other newer options like the Fiesta, Verna or Vento.
The tide will surely go against Honda and only an aggressively-priced Brio may help Honda to get back its customer base.
Let's see what happens.
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Old 25th April 2011, 23:55   #14
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Default Re: Honda India to cut production by 50%

I thought Honda produces most of its items in their plants in Thailand and other SE Asian countries. Which are the items coming directly from Japan? Is the engine coming from Japan or some other country?

If they are bringing items from other countries, then a problem in Japan shouldn't affect them, right?
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Old 26th April 2011, 00:19   #15
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Default Re: Honda India to cut production by 50%

Quote:
Originally Posted by vnabhi View Post
Good point! I wonder why only Honda should be singled out.

Given this fact, if Honda sales are affected, we can compare the effect on Toyota and Nissan sales in order to judge whether it is the Tsunami in Japan or new launches in India by other manufacturers that have caused it.
Toyota has already announced parts shortage and have given a heads up on the extended wait times in India also. There is a separate thread running with the details. I think their LIVA & Etios D launches might be delayed.

Quote:
Originally Posted by ajman28 View Post
I thought Honda produces most of its items in their plants in Thailand and other SE Asian countries. Which are the items coming directly from Japan? Is the engine coming from Japan or some other country?

If they are bringing items from other countries, then a problem in Japan shouldn't affect them, right?
I guess there are multiple parts for Honda cars supplied by the vendors from Japan. Also I believe its a global phenomenon and not only India is affected.
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