Honda Cars India Ltd (HCIL) on Wednesday formally announced closure of manufacturing operations at its Greater Noida facility in Uttar Pradesh.
The automaker said the decision to cease production at the plant, which came up in 1997, has been taken as part of realignment of manufacturing operations with the goal of improving business efficiency.
With the closure of Greater Noida facility, HCIL has also discontinued CR-V and Civic models in the country. Both the models were being manufactured at the plant.
"To maintain sustainability of operations by leveraging production and supply chain efficiencies, the company has decided to consolidate the manufacturing operations for vehicles and components at its Tapukara plant in Rajasthan with immediate effect for all domestic sales and exports", HCIL said in a statement.
All head office functions, India R&D centre and spare parts operations (including warehouse) for automobile, two wheeler and power product business would however continue to operate from Greater Noida location, it added.
"Despite an uptick in sales in the last three months, the current market conditions remain unpredictable for the industry at large. The impact of COVID-19 has pressed us to strengthen our constitution, and to achieve the same, HCIL has decided to consolidate its manufacturing operations by making the Tapukara plant a unified manufacturing base," HCIL President and CEO Gaku Nakanishi said.
The company continues to believe in the resilience of the Indian economy and hope for a quicker recovery of the market, he added.
"India is an extremely important market in Honda's global strategy and HCIL is committed to bring its latest and advanced technology models including electrified vehicles in future," Nakanishi noted.
The Greater Noida plant had an installed production capacity of one lakh units per annum. On the other hand, Tapukara facility, which employs around 5,500 people, can roll out 1.8 lakh units per year.
Elaborating further, HCIL Senior Vice-President and Director (Sales and Marketing) Rajesh Goel said the development is a very strong statement from the company in the direction that it is there in the country for a long haul.
"It shows that depending upon market circumstances we can take actions as required to make business sustainable," he said.
Commenting on the end of road for CR-V and Civic models in India, Goel said: "It is a difficult decision for us to stop production of CR-V and Civic as both are popular global models. It has been done as Tapukara plant was conceived as a high efficiency facility for small and mid-sized cars.
Cars above a certain size cannot be manufactured there unless you make certain investments there," he said.
Goel added that making such investments would further lead to increase in the prices of such models making them out of reach of the customers.
"We will however keep supporting our customers who own these vehicles for the next 15 years," he noted.
HCIL has shifted production of its mid-sized sedan City to Tapukara facility. The model was earlier being produced at both the plants.
The company portfolio now comprises four models - Amaze, City, WR-V and Jazz. The company has already stopped sale of BR-V and Accord Hybrid in the country.
When asked about workers employed at Greater Noida facility, Goel said many of the employees opted for a voluntary retirement scheme (VRS) which was floated by the company across multiple locations.
"There have been no layoffs at the facility.
We were able to reduce the headcount with VRS and some were also shifted to Tapukara," he noted.
When asked if the lack of SUV models in the company's portfolio was hurting its performance in the country, Goel said: "We have admitted earlier as well that our SUV line up is not as strong and we need to do something. We are cognizant of the situation and hopefully we should be able to come back."
The automaker noted that with the resumption of operations after the COVID-19 led lockdown, it has been able to ramp-up its daily production volume to pre-COVID level from September 2020 and has been consistently witnessing monthly sales growth for the last three months.
The company witnessed good recovery in the festive period and it expects to sustain this sales momentum during the coming months, it added.