Honda India may close a plant, turning the site into an R&D operation and small CKD kit assembly operation, a local report said.
Citing anonymous sources, the Economic Times of India said with annual volume likely to drop to almost 100,000 units in FY20, Honda Cars India may move production from Greater Noida to the Rajasthan plant and sell the land acquired in Gujarat a few years back.
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Production at the Greater Noida plant, which has an annual capacity of 120,000 units, has come down to almost 2,500 units month – capacity utilisation of less than 20-30%. And even cumulative production capacity is expected to drop to as low as 40%.
The report said a large senior management team led by Masayuki Igarshi, chief of Honda’s Asia and Oceania region for Honda, and a team from Thailand – which designs many Honda cars made in India and helps with parts supply – visited India earlier this week to review the mid-term plan for India, which included restructuring of manufacturing plans.
A Honda Cars spokesman told the Times in the current market scenario where auto sales have declined sharply this financial year, the company has been continuously optimising production volumes between the two plants to match the sales situation, and it has nothing to do with shutting down of any plant.
“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,” said the spokespman.
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By GlobalDataBut a source told the paper: “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 new-generation City has been largely moved to the Tapukara plant and production in Greater Noida had come down to just 60 units a day and that mostly of completely knocked down (CKD) units, the paper added.
