NEW DELHI: Japanese carmaker Honda Cars (HCIL) has stopped production at its manufacturing facility in Greater Noida. According to people familiar with the development, the carmaker was forced to take the decision due to the poor market situation.
Honda, however, will continue operations at its Tapukara (Rajasthan) plant. The Greater Noida facility was HCIL’s first plant in India, beginning operations in 1997 with an initial capacity of 30,000 units per year, later increased to 100,000 units.
Honda’s Alwar plant, meanwhile, has an annual capacity of 180,000 units. Honda employed about 2,000 workers in the Great Noida facility. It is learnt that most of its workforce here have opted for a voluntary retirement scheme (VRS) initiated earlier this year.
The facility had been used to produce popular models such as the City, CR-V, and the Civic. Industry sources say, however, that the plant will continue to house Honda’s corporate head office, spare parts division, and research and development (R&D) Centre, among other functions. Honda did not respond to queries with an official statement.
The plant closure comes at a time when passenger vehicle manufacturers have raised concerns regarding future prospects in the market, even though reported healthy festive season sales.
But from January 2021, most carmakers are hiking prices to offset input cost increases and industry analysts say this will likely act as a drag on demand.
Fitch Ratings on Thursday had said that the automakers’ plans to pass on higher commodity prices to customers will “dim the prospects for a demand recovery after December”.