Honda Siel to cut Noida plant output by 50%

Honda Siel Cars India (HSCI) will halve production at its Greater Noida plant from May because of a shortage of parts in the wake of earthquake and tsunami in Japan.

“We are experiencing gaps in our supply chain due to the situation in Japan, resulting in production cuts. We are moving to single shift operations from May, 2011,” said Jnaneswar Sen, senior vice-president, marketing & sales, HSCI.

The production cut is likely to continue for at least three months. It is expected to cause a production loss of 7,500 units, as the plant operates at 60 per cent of its installed capacity of 100,000 units a year.

Last week, Toyota Kirloskar Motor had announced a 70 per cent cut in production at its two plants in Bidadi, Karnataka, for 40 days from on Monday.

Honda Motor, the parent company, has already announced a production cut at its plants in Japan following a shortage of components due to the impact of tsunami on its parts suppliers. “The situation with parts supply in Japan remains fluid, production of component parts and vehicles at Honda plants is at approximately 50 per cent of the original production plan. Honda will carefully monitor the situation and manage its operations accordingly,” the company said in a release.

The waiting period for HSCI’s premium entry level sedan, City, is expected to go up to two months, from the current two weeks, in a few weeks. HSCI sells 3,500-4,000 units of the City a month. But it will not affect the company badly, as the model enjoys ‘strong loyalty’ locally without much competition in this segment, say analysts.

Most of Japan-based Honda suppliers are making progress to restart production, and many either have or are ready to resume parts production. However, there are a few suppliers that have yet to resolve the challenge to resume their production, according to the company’s statement.

Honda is trying to work with its suppliers to help re-establish their operations, while evaluating other possible sources for those parts in the supply chain. “Honda is making every effort to work towards a full recovery after July to reduce inconvenience to customers,” the statement said.