Honda on Friday said the production of a version of its Fit [Jazz] subcompact car in China was on schedule, but added it may need to delay the launch if the deadly SARS virus is not contained, Reuters reported.
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The company was responding to a report in Japan’s Nihon Keizai Shimbun newspaper that the spread of the Severe Acute Respiratory Syndrome (SARS) virus had forced it to postpone the start of production by one to two months from the originally planned date of July, due to the return home of Japanese engineers and trouble procuring parts, Reuters said.
The paper said Honda may have to put off production even longer if the epidemic continued to spread, the report added.
“We said we were going to begin production in summer and there has been no change to our plans,” Honda spokesman David Iida told Reuters.
“Of course nobody knows what is going to happen with SARS and there may come a time when we have to reconsider our plans but at this stage there has been no change,” he reportedly added.
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By GlobalDataReuters noted that, in early April, Honda banned its staff from travelling to China, leading to the cancellation of business trips by 20 employees. A spokeswoman said it had no immediate plan to lift that ban.
At a Japan Automobile Manufacturers Association (JAMA) gathering a day earlier, Honda President Hiroyuki Yoshino told a small group of reporters that there were currently no changes to its production plans in China, but conceded that the travel ban would inevitably upset a smooth execution of the plans, Reuters said.
But ING Securities analyst Kurt Sanger told the news agency that any short-term delay would have little impact on Honda’s bottom line, and might even be positive for profits.
According to Reuters, Sanger noted that the Fit would be built on the same production line as the Accord sedan and Odyssey minivans, meaning that if the launch of the Fit is delayed, Honda would simply build more of the popular Accords to meet a backlog of orders, estimated at two to three months.
“We would expect that as long as the backlog of orders for the Accord exists, Honda would have concentrated production on the Accord anyway,” Sanger told Reuters.
“Indeed, that might in fact have a positive impact on earnings,” he added, noting that the Accord was a more profitable model than the Fit.
Reuters said that, late last month, Honda reported bumper profits for the year ended in March, unveiling a record operating profit of 689.45 billion yen ($5.92 billion), and plans to produce 70,000 Accords — up from 45,000 units in 2002 — 20,000 Odysseys and 20,000 Fits at the Guangzhou plant in China.
