Honda to cut production as sales stagnate
TOKYO: Honda Motor Co said yesterday that it would close one of its car factories near Tokyo due to weak domestic demand and focus on developing electric vehicles and other new technology.
According to Honda, production at its Sayama plant in Saitama Prefecture will cease in fiscal 2021 and the roughly 4,600 workers will be moved mainly to the nearby Yorii plant, which will act as a global hub for research and development of cuttingedge technology including EVs and autonomous driving.
The ageing Sayama plant, in operation since 1964, produces the Step WGN and Odyssey minivans, while the Yorii plant, which went online in 2013, assembles models such as the Fit subcompact.
The factory closing will reduce Honda’s annual production capacity in Japan from 1.06 million vehicles currently to 810,000, of which 700,000 units will be sold domestically.
“Domestic demand did not grow as we had anticipated,” chief executive officer Takahiro Hachigo told a press conference at the company’s headquarters in Tokyo yesterday.
“The auto industry is going through an era of rapid technological advancement and unprecedented change. We have to step up development of electric-powered vehicles to grow in the global market,” he said.
Honda also said it had entered talks with subsidiary Yachiyo Industry Co to acquire its assembly lines for vehicles with engines no larger than 660 cc.
The automaker’s sales in Japan are in decline as the population shrinks and fewer young people feel the need to purchase cars, leading to excess production capacity at domestic factories.
Meanwhile, Honda has invested heavily in expanding production abroad, beginning construction of a new factory in China last December amid strong demand in the world’s biggest car market.
Other automakers are also stepping up development of EVs as China, Britain and France eye banning the sale of cars running on fossil fuels.
Toyota Motor Corp and Mazda Motor Corp in August announced a capital tie-up to jointly develop battery-powered cars, while Nissan Motor Co, Volvo Car Corp, and Volkswagen Group have all unveiled plans to greatly expand their EV line-ups.