Honda Cars has noted market share dip from 7 percent in FY15 to just 3 percent as on date
Honda Cars India Ltd (HCIL) has two car production plants in India. One located in Greater Noida, Uttar Pradesh (one of the first car plants in India, setup in 1998) and second in Tapukara, Rajasthan – which started production in 2014. Both plants produce Honda cars in India for India as well as for exports. Now, a new report by ET Auto states that Honda has shut down its production unit at Greater Noida. It was from this production unit that cars such as the City, Civic and CR-V were produced.
All car production has been stalled since the start of December from the Greater Noida plant. It will continue to house company’s corporate office and R&D department. Honda cars will now be exclusively produced at the Tapukara plant in Rajasthan.
It was early last year that the news was first reported about the company plan to shut down one of its manufacturing units in India as a part of its restructuring program. Sales have been on the ebb over the past several months since COVID struck and even as festive sales recovered marginally, market share has dipped to 3 percent.
From being the third largest automaker in India a few years, Honda has now slipped to No 7 in car sales. Honda is now behind car brands like Tata, Kia, Mahindra and Renault. The company that once commanded a 7 percent market share in April-June 2015 has now skid to 3 percent.
Shift of Production to Tapukara Plant
The Honda Greater Noida plant has been in operation since the past two decades. It had initial production capacity of 30,000 units which was increased to 1,00,000 units and employed around 2,000 workers in its manufacturing processes.
The plant currently has 1,000 permanent employees, most of who have opted for voluntary retirement scheme – VRS, effective from 28th January 2020, while others have moved base to Tapukara. The Greater Noida plant had seen production operations stalled earlier this year since the plant location was near a red zone which had the highest number of COVID-19 cases.
Overall production dipped to around 2,500 units per month which led to capacity utilization of less than 25 percent. The company was continuously optimizing production between the two plants in view of the slowdown, but has reportedly decided to shut down the Greater Noida plant permanently. The Tapukara plant has annual capacity of 1,80,000 units and is from where the current gen Honda City is produced.
HCIL commenced operations in 1997 along with Usha International of the Sriram Group. Initially known as Honda Siel Cars India, it was in 2012 that the name changed to Honda Cars India Limited after opting out of the JV. Investments to the tune of Rs.9,000 crores was made into the two plants