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The Honda Brio is the Japanese carmaker"s smallest and cheapest small car sold in India. It has been a fairly decent success but sales have been hampered by low availability. Production has been severely affected after the supply of parts was disrupted due to the floods in the Thailand. Honda had announced last week that it was stopping production of the Brio as parts supply completely dried up. But it has not stopped taking bookings.
We had earlier reported that Honda was severely troubled by the floods in Thailand. Its main plant was submerged by flood waters and production was stopped indefinitely. This not only affected production in Thailand, but also production in several locations across the globe. Honda"s plant in Thailand was also one of the major suppliers of parts for Honda Siel Cars India (HSCI). HSCI was looking at other sources for parts and it appears to have succeeded.
Honda Siel Cars India will soon begin getting parts from China. Honda has a large Chinese operation and with sales slowing down in China too, there is no huge demand for parts. Making use of this reduced demand, HSCI wants to compensate the deficit in parts from Thailand through Chinese supply.
HSCI has held talks with its Chinese and Japanese counterparts and production using Chinese parts will begin by 2012. The Brio is not the only car that has seen production being disrupted. Honda will stop production of the Jazz and has already closed its bookings too. However the first car that will get Chinese parts will be the soon to be launched version of the city sedan. The 2012 City as it will be called is not a new model. Instead it is just a face lifted model that will have some design changes in the front and rear.
HSCI has been suffering the wrath of nature since the past year. Production had been affected severely after the earthquake and Tsunami in Japan. Production was cut to 50 per cent in India after that. This was followed by the floods in Thailand. HSCI has not been as lucky as Toyota which has been able to divert parts from other countries to India.
With the Thai plant not being operational for the next six months, Honda Siel must ensure it has sufficient supply of parts or risk seeing its sales and market share take a tumble. There are several alternatives for Honda"s cars in the market and buyers might opt to buy other models. If HSCI does not increase local sourcing of parts it might have to face a lot of difficulty in the future.