Economic Times: Honda stops production of City, Brio to be next

Honda stops production of City, Brio to be next - The Economic Times NEW DELHI: Supply constraints due to floods in Thailand is wreaking havoc at Honda's Indian operations and has forced the company to shut down production of the City Sedan and Brio Compact. It has also cut back the output of the Jazz hatchback to a few hundred units. To tackle the problem of shortage of parts, Honda is making emergency arrangements to source components from locations in China and Japan to normalise output. Executive said the company will have to slash output by around 95% in December and only a few hundred units will be produced to keep the plant running and maintain manpower. The company's average production is about 6,000 units after the launch of the Brio. Jnaneswar Sen, senior V-P at Honda Siel Cars India (HSCI), confirmed that output would be badly hit in December , adding that arrangements are being made to tap other areas for sourcing critical parts. "We are looking at China and Japan very keenly. We hope to firm up things soon and return to normalcy in the coming months, though nothing can be confirmed as of now," Sen said. Sources said while production of the City has already been stopped, the Brio will be discontinued from next month. Jazz will have a skeletal production, around 250 units, and a few hundred units of the Civic and Accord sedans will also be made. Honda has stopped taking new bookings for the Jazz at its dealerships due to the uncertainty and the model has a waiting list of over six months. The Brio too has been facing a long queue at dealerships. "The situation is very bad and December could perhaps be one of the worst months for Honda in India," the sources said. The company has already started informing the customers about the delay in delivery due to the Thailand crisis. The Brio, which has sold 1,500 units so far, faces a backlog of 6,000 cars. On the Jazz, the pending bookings run up to 4,000 units. Dealer and vendor sources, however,said the situation on the City could improve by the middle of January and on the Jazz and Brio by mid-February. Honda gets a variety of electronic components and underbody parts from Thailand. The damaging floods came at a time when the company appeared to be coming out of tough times after a massive price correction on the Jazz and the City and launch of the Brio, its lowest-priced car in India. Thailand was the first market where the Brio was manufactured and India followed later. A lot of the car's key parts are being sourced from Thailand with which India also has a trade agreement - known as the early harvest scheme - as a part of which components can be imported at lower duty rates. An official spokesperson said India is not the only market to face production halt due to disruption of supplies from Thailand. Honda's plants in Philippines, Indonesia and Vietnam are already shut due to supply crunch. Honda's current supply constraint comes after a similar problem earlier this year when Japan was hit by a tsunami and quake. Supply of components was also impacted then, leading to a cut in output.

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