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Old 11th October 2011, 12:37   #1
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Default Floods in Thailand - Honda factories submerged - Will it affect India?

Folks,

Honda factories are submerged due to the major floods going on in Thailand and its gonna get worse.

Here's a link from WSJ mentioning about Honda -
Thailand Floodwaters Inundate Industrial Zones - WSJ.com

The last I knew lots of Honda parts used to get imported from Thailand due to the free trade agreement.

Any updates on what is the latest import situation to India for Honda from Thailand.

Any chance this will affect Honda India?

Cheers

Last edited by sahakar : 11th October 2011 at 12:38.
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Old 11th October 2011, 13:32   #2
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

Yes you're right sahakar, HSCI imports almost 30-50% of the parts of their cars from Thailand for the cars they manufacture here.
However this might've reduced with the recent localization exercises for Jazz & City.
But still critical components & many body/chassis parts are Imported for Honda cars, as one Jazz also owner pointed out in Ownership thread.
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Old 11th October 2011, 13:36   #3
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

Hmm so this will be like the earthquake situation happening all over again for Honda but maybe on a smaller scale.

Already they are back logged on the Jazz and probably maybe on the Brio too.

One thing that Honda will need to learn from this is that there is no other option but to go for 90%+ localization.

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Old 11th October 2011, 14:02   #4
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

Well then , this might mean that the face lifted version of the new city expected out next month might also witness a delay.
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Old 11th October 2011, 15:01   #5
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

AutocarIndia has tweeted that Honda will be INCREASING production of Jazz to 1000 units a month from November.

The flood situation does not seem to be dampening the production at Honda. Way back in August i had been told by my dealer that Jazz productions would increase by November and they may have zero waiting periods come Jan/Feb.

it remains to be seen how far that prediction is going to go.

I am not sure if this production increase will be at the expense of production cut in other models or a true production increase.
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Old 11th October 2011, 15:25   #6
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

They have been running at a relaxed one shift per day pace, so scaling up production by adding another shift should be easy. The bigger question will be increasing the supply of parts.
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Old 11th October 2011, 15:30   #7
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

Quote:
Originally Posted by funkyp View Post
AutocarIndia has tweeted that Honda will be INCREASING production of Jazz to 1000 units a month from November.
That's not going to help them. The price cut made the Jazz a VFM product and now the demand is high, they should atleast increase it to 3k level to give a competition to the premium hatchback segment.
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Old 11th October 2011, 15:33   #8
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

I second that , increasing it to 1000 will help but not reduce the waiting periods down to the level which is more feasible for consumers , and they should not be reluctant either , its a great buy and the market should consume the step up in production easily for a while atleast.


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That's not going to help them. The price cut made the Jazz a VFM product and now the demand is high, they should atleast increase it to 3k level to give a competition to the premium hatchback segment.
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Old 11th October 2011, 15:41   #9
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

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Originally Posted by wildon View Post
That's not going to help them. The price cut made the Jazz a VFM product and now the demand is high, they should atleast increase it to 3k level to give a competition to the premium hatchback segment.
Completely agree with you on this. But there are couple of things that honda might be considering before deciding on the production:

1. The supply side of course. Depending on how well the japanese suppliers have recovered, 1000 might be the max they can do now.

2. Once bitten, they want to be cautious with the production and may not want to hold a lot of inventory. I dont think its as easy for them to vary production on monthly basis. (not sure abt this)

3. They are waiting for Brio to pick up and do not want Jazz to cannablize the brio sales in any way.
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Old 11th October 2011, 16:10   #10
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

Honda seems to be caught in a Brio or Jazz nut cracker.

They want to keep Jazz production low so as to shift people to the Brio. But it makes more sense for us to buy the lowest spec Jazz than buying the top end Brio.

Also, I feel Eon may kill the Brio, if its roomy enough and compares favorably with the i10.

As for the floods issue, we will know in a month's time if there is any impact to Honda India. I guess they have Japan as an optional location to get stuff shipped from but maybe much more expensive.

Cheers
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Old 11th October 2011, 16:30   #11
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

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Originally Posted by sahakar View Post
Honda seems to be caught in a Brio or Jazz nut cracker.

Also, I feel Eon may kill the Brio, if its roomy enough and compares favorably with the i10.
What i dont understand is why does Honda want people to buy the Brio? if a brio buyer shifts to the Jazz, isnt that equally profitable(if not more) for Honda? Or is it that they have designed Brio to be priced lower and hence have higher margins?

I dont think Eon will have anything to do with Brio sales. Its like saying Brio will not sell because of Alto. Eon is likely to be priced below the Santro/Replace the santro. In my opinion, anyone looking at Brio will definitely not consider the Eon. an i10 maybe, but not the Eon for sure.
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Old 12th October 2011, 11:46   #12
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

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Originally Posted by funkyp View Post
I dont think Eon will have anything to do with Brio sales. Its like saying Brio will not sell because of Alto. Eon is likely to be priced below the Santro/Replace the santro. In my opinion, anyone looking at Brio will definitely not consider the Eon. an i10 maybe, but not the Eon for sure.
Hmm from a bunch of acquaintances who are looking to buy a small car, this is the impression I got.

"They are all waiting for the Eon to be released and will decide on Eon or Brio.

Nobody among them really likes the Brio first up and would rather compare with Eon and then decide.

Basically, rather than segments people are looking at fresh releases and wouldn't mind going down a segment or up.

Anybody who buys a Eon means a possible Brio sale is lost."

Cheers
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Old 12th October 2011, 12:18   #13
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

It might not be about margins being higher or lower but purely a play on numbers - Honda might be setup to have massive numbers of Brio's coming out thus giving them cost advantages when it comes to points such as economies of scale etc and while this can only be to some degree an educated guess on my part , maybe there are hindrances in terms of supply step up for the jazz.

Ofcourse , i am not saying the margins are not relevant here - the Brio could give them higher margins , add to that higher numbers and the importance is visible.



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Originally Posted by funkyp View Post
What i dont understand is why does Honda want people to buy the Brio? if a brio buyer shifts to the Jazz, isnt that equally profitable(if not more) for Honda? Or is it that they have designed Brio to be priced lower and hence have higher margins?

I dont think Eon will have anything to do with Brio sales. Its like saying Brio will not sell because of Alto. Eon is likely to be priced below the Santro/Replace the santro. In my opinion, anyone looking at Brio will definitely not consider the Eon. an i10 maybea, but not the Eon for sure.
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Old 12th October 2011, 17:34   #14
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

Quote:
Originally Posted by funkyp View Post
AutocarIndia has tweeted that Honda will be INCREASING production of Jazz to 1000 units a month from November.

The flood situation does not seem to be dampening the production at Honda. Way back in August i had been told by my dealer that Jazz productions would increase by November and they may have zero waiting periods come Jan/Feb.
Do they really have 1000 customers a month? Highest they have sold this year is 600 a month. Are they planning another price cut or a new model with a price drop?

Maybe in Aug they though they would have greater off take after the price tweaks but have not crossed 600. I dont see them getting much further.
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Old 12th October 2011, 17:47   #15
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Default Re: Floods in Thailand - Honda factories submerged - Will it affect India?

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Do they really have 1000 customers a month? Highest they have sold this year is 600 a month. Are they planning another price cut or a new model with a price drop?

Maybe in Aug they though they would have greater off take after the price tweaks but have not crossed 600. I dont see them getting much further.
i beg to differ on this one. The numbers havent been high because of the supply constraint from Honda which is leading to waiting periods being quoted in excess of 4-5 months at all dealers.

If Honda were to normalize supply to dealers, the Jazz numbers could easily touch 2k if not more. As far as i know, most dealers have a order backlog of about 75-100 cars, atleast in the metros.

then there are quiet a numbers of buyers (some of the forum itself) who want to pick the Jazz but are shying away due to the huge waiting.

We need to wait until November atleast to see what the Jazz can do. If Honda manages to sell all that can produce, i would say the price cut has been immensely successful.
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