Big Sales Drop: Honda Cuts Production by 15-20% in India

Honda Cuts Production by 15-20% in India (Big Sales Drop): India’s largest scooter manufacturer, Honda has implemented the biggest-ever production cut since the introduction of the brand in India. The decrease in the demand of scooters in the Indian market has forced the brand to initiate 15-20% of production cut in the June Quarter, as reported by four of the HMSI suppliers.

The brand’s total domestic production was 5.89 million in the FY2018-19 and 66% of them were scooters, for which a decline of 4.85% has been witnessed as compared to the last financial year. Honda 2-Wheelers is witnessing a tough time as their monthly sales dropped to 2,22,325 units in March 2019, which is 46.7% down in comparison to the sales figure in the same month last year.

Reporting the production cut, the first supplier initially stated: “HMSI shares an annual vehicle production manual with its suppliers. The document lists out its production forecasts for the said period. It is a three-month plan that we are given.” The supplier also reported Honda’s over-reliance on scooters as one of the reasons for the production cut in India.

In addition to this, the suppliers also stated: “Secondly, the company does not have its own financial arm in India to finance its own scooters and motorcycles like its rivals Hero MotoCorp and Bajaj Auto do. Availability of attractive financing schemes is an influential factor in boosting demand for two-wheelers in the domestic market.”

Responding to their final decision, HMSI said in a statement: “Increased insurance premium in September 2018 dampened the festival sentiments, and pre-festival stock buildup was converted into high inventories for the two-wheeler industry. Recognizing this situation early, we realigned our supply with the domestic demand to correct inventories and support our business partners.”

Source