The Greater Noida plant, with a capacity of 1 lakh units annually, has been one of the oldest car plants in India and was set up 1997. The cash-strapped company is facing a tough time in managing costs and is taking this step to save money and cut unnecessary expenditure.
Honda sells cars such City, Amaze, WRV and Jazz, and will now manufacture vehicles at its Alwar plant, which has an annual capacity of 1.8 lakh units, much higher than the near 1 lakh units the company sold in the domestic market in 2019-20.
Honda’s exit from Greater Noida comes months after the company offered a lucrative VRS to a large section of its employees as it started taking steps to cut its dependence on the factory. When contacted, Honda officials refused to give answers to a detailed questionnaire. Sources said, while the production will be halted at the 150-acre facility, a large amount of official work and other activities will be carried out from the location.
“Honda will continue to have its R&D set-up, corporate office and spare parts operations at the Greater Noida location. Functions such as purchase, finance, service, marketing and sales, PR and HR would also continue from the location,” a source said.
Giving reasons for the company’s poor performance, industry analysts said Honda has “generally been late in responding to competition and changing market needs”, which has led to the brand facing a difficult period. The company, which had several top-management rejigs in the past, was initially late in introducing diesel engines and vehicles in India that had impacted its business severely.