The Honda CR-V and Civic have been witnessing poor demand and hence do not justify the additional investment needed to shift their assembly to Tapukara
Honda Cars India Ltd (HCIL) is closing its old Noida car plant and shifting its entire production operation to its Tapukara plant in Rajasthan. The shifting process leaves no room for CKD assembly of the premium offerings CR-V and Civic and hence Honda has decided to discontinue them with immediate effect.
Honda CR-V and Civic in India
The CR-V has been in India for several years now and it once managed to create a small niche for itself. Despite crossovers of all shapes and sizes are being welcomed by the Indian audience, the latest CR-V continued to witness dwindling sales. In October, only 31 units were sold.
The Honda Civic on the other had returned after a long sabbatical but the aforementioned rise of crossovers meant D-segment is no longer a hospitable place for a sedan no matter how competent the overall package is. While the Civic has been doing slightly better than CR-V in terms of monthly sales, the volumes simply don’t justify installing a new CKD assembly line at Tapukara which is designed to manufacture mass-market mid-size cars.
While enthusiasts will miss the Civic nameplate, Honda wont be missing much with the discontinuation of its premium crossover and sedan. Below are the sales numbers for the two Honda cars, Civic and CR-V for the last 6 months in India.
Honda’s rational behind shutting Noida facility
HCIL says that the decision to realign its manufacturing operations was taken to improve business efficiency. According to the automaker, shift to Tapukara will leverage production and supply chain efficiencies.
While production operations at Noida have been ceased with immediate effect, the company’s head quarters, the R&D center and spare parts operations will continue to be based in Noida.
Speaking about the move, Gaku Nakanishi, president and CEO of HCIL stated that the uncertainty in market conditions brought about my the COVID-19 crisis has prompted the company to consolidate its operations by making Tapukara its unified manufacturing base in India. He went on to say that India will continue to be one of Honda’s important markets and plans are afoot to introduce electric vehicles in the future.
Meanwhile, production at Tapukara plant as resumed to pre-COVID levels since September 2020 as the company has been witnessing consistent growth in demand for the last three months. Honda remains confident about maintaining the growth momentum into 2021 as the market is showing signs of recovery from the previous slowdown as well as the pandemic crisis. We may see similar restructuring my other OEMs as they scramble to cut costs and improve efficiencies to weather out the pandemic-driven economic crisis.