Sections

ideals
Business Essentials for Professionals

As Domestic Sales Stagnate, Japanese Production To Be Cut By A Quarter By Honda


10/05/2017


As Domestic Sales Stagnate, Japanese Production To Be Cut By A Quarter By Honda
As Honda Motor Co shifts focus to electric cars (EVs) and other new technologies, it domestic capacity by around 24 percent and the Japanese car maker plans to end production at its Sayama plant in Japan by 2022.
 
In the face of fierce competition from carmakers and technology companies to make EVs and self-driving cars, the car maker is taking more nimble approach to development and manufacturing and hence it was streamlining its Japanese operations because it has seen stagnant domestic sales, the company said.
 
“As we focus more on adopting electrification and other new technologies, we want to hone our vehicle manufacturing expertise in Japan and expand it globally,” CEO Takahiro Hachigo told a press conference.
 
Partly because it focused so much on increasing volumes and profit, after a number of major product recalls in recent years as well as lackluster product offerings, Hachigo has been trying to revive a culture of innovation at Japan’s No. 3 automaker.
 
Consolidating output at its Yorii plant in the same prefecture by the end of the 2022 financial year, it would end production at the ageing Sayama plant in Saitama Prefecture north of Tokyo, Honda said. It said that most workers currently at Sayama would be transferred to the Yorii facility.
 
At present, Honda is utilizing around 76 percent of its current production capacity of 1.06 million vehicles and the move would cut overall domestic annual production capacity to around 810,000 units, the same as Honda’s current output levels.
 
“Domestic sales haven’t increased as much as we were expecting and it has become difficult to boost exports,” Hachigo said.
 
Serving as a major center for developing manufacturing technology for electric cars and production of EVs would be the main function of the Yorii plant following the consolidation, Honda said. Including larger-sized global models, it will also produce other vehicles.
 
It plans to open a new plant by 2019 in China, where it has seen explosive growth while the automaker cuts capacity at home. The company said that remaining largely unchanged at around 5.06 million units would be the overall global annual production.
 
Facing stiff competition from popular offerings including Toyota Motor Corp’s Prius gasoline hybrid and Nissan Motor Co.’s, Note compact hatchback, Honda has struggled to expand sales at home in the past few years.
 
Noting almost the same number as in the previous year, it sold 668,000 units domestically in the year ended March 2017.
 
Producing the Accord sedan, the CR-V SUV crossover and other models, the Sayama plant opened in 1964 and is one of Honda’s oldest plants with an annual production capacity of 250,000 units.
 
With an annual production capacity of 250,000 units, the Yorii plant began production in 2013. The Fit compact hatchback and the Civic sedan are included in the models manufactured there.
 
For final vehicle inspection for the Japanese market, Honda was following proper procedures, Hachigo also said he was confident.
 
After Nissan said on Monday it would recall 1.2 million vehicles due to procedural irregularities with its final inspection processes, the company was complying with a request from Japan’s transport ministry for inspection records he said.
 
(Source:www.reuters.com)