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Honda Cars India is thinking of restructuring India production operation in order to deal with the current slowdown in the auto industry. Up to five people with knowledge of the company's plans said that Honda was planning to shut down one of it's two production facilities.
According to Economic Times Auto, sales have nearly halved over the last four years, and Honda Cars India is considering closing its facility at Greater Noida, selling land it acquired at Gujarat, and moving all passenger vehicle production to it's Rajasthan facility.
The Greater Noida facility is Honda's first factory that was set up in the country. Both facilities have an annual production capacity of 2.8 lakh cars. The company's plan to shut down the Noida facility is most likely because of cost cutting.
The area around the Greater Noida facility has turned residential, production costs have increased, and Honda no longer receives tax benefits since the facility has been there for over 10 years.
The company plans to move all production to the Rajasthan facility. Honda Cars India also plans to sell land it acquired in Gujarat because they feel there isn't an immediate need to set up a third facility. Honda's is also planning to convert the Greater Noida facility in to a Research & Development facility, and a small CKD operations center.
A Senior Management team led by Mr Masayuki Igarshi, Chief of the Asia-Oceania region for Honda arrived from Thailand earlier this week to review mid-term plans for the Indian market, a plan that includes restructuring of manufacturing plans.
A spokesperson for Honda said, "While sales have suffered immensely, optimization of production volumes between the two plants is being done to match the sales situation, and has nothing to do with shutting down the plant completely."
Thoughts About Honda Cars India Restructuring India Operations
Well we did not see this coming. Honda Cars India is one of the biggest players in the country and we expected them to pull through the current crisis. The India Auto Industry is going through the biggest economic crisis of the decade at the moment and we can't help wonder if the Koreans are behind it. They're doing very well indeed!