Former president and CEO of Honda Cars India Yoichiro Ueno (R) poses in front of the newly launched Honda City 2017 in New Delhi on February 14, 2017. Photo: AFP

Japanese carmaker Honda’s Indian unit is closing one of its two manufacturing plants as it looks to discontinue production of certain models and streamline its operation.

Honda Cars India Ltd’s manufacturing facilities are located in Greater Noida, near New Delhi and Tapukara in Rajasthan state. It plans to shut down the Greater Noida plant, which was established in 1997, and discontinue production of the CR-V and Civic models that were being manufactured at this plant. The company assured that it will provide customer support for these vehicles for the next 15 years.

The Greater Noida location will continue to function as Honda’s head office and house its research and development center. Company officials said the workers employed at the Greater Noida facility were provided with a voluntary retirement scheme and some were shifted to the Tapukara plant. They clarified that there were no layoffs.

The Tapukara facility has the capacity to roll out 180,000 units a year and employs over 5,000 employees. Honda India now offers four models – Amaze, City, WR-V and Jazz. The company earlier stopped the sale of the multi-utility vehicle BR-V and the Accord Hybrid in the country.

The automaker noted that after the government eased the lockdown measures, it has been able to ramp-up its daily production volume to pre-Covid levels from September and its monthly sales has sequentially grown in the last three months. It had a good recovery in the festive period and expects to sustain the sales momentum for the coming months.

Honda Cars India president and CEO Gaku Nakanishi said, “The impact of Covid-19 has pressed us to strengthen our constitution, and to achieve the same, HCIL has decided to consolidate its manufacturing operations by making the Tapukara plant a unified manufacturing base.”

However, even before the coronavirus pandemic, there were reports of the Greater Noida plant facing closure due to declining sales. In the past four years, Honda’s sales volume has almost halved, and in FY20 it had slipped out of the top five carmakers in the country.

One of the drawbacks of Honda’s portfolio is the absence of sub-compact sports utility vehicles. This segment has grown despite the Covid-19 slowdown in the industry, with models like the Kia Sonet, Hyundai Venue and Maruti Suzuki Brezza registering double-digit growth. The company’s senior vice president and director (sales and marketing), Rajesh Goel, admitted that its SUV line up was weak. “We are cognizant of the situation and hopefully we should be able to come back,” he said.

Last October, a large senior management team led by Masayuki Igarshi, chief of the Asia Oceania region for Honda, visited India to review the mid-term plan for the country, which included the restructuring of manufacturing plans, Economic Times reported.

A few years ago, Honda had acquired 380 acres at Vithalapur in Gujarat state to build its third assembly line. But now it is reportedly planning to sell the land.