Honda defers capacity expansion plan

New Delhi: Honda Motor Co said that it had deferred its capacity expansion and assembly operations plans at its second plant in Rajasthan.

Honda Siel Cars India, the joint venture between Japanese automaker Honda and Siel Ltd, was to commence production in the last quarter of 2009.

The company also said that the postponement of production at the second plant in Rajasthan would not impact the launch of Jazz as it would be produced from the Greater Noida facility.

The President of Honda Motor Co, Mr Takeo Fukui, said, “In view of the current economic slowdown, which has impacted the automobile industry, addition of new capacity that was initially scheduled for the last quarter of 2009 has been deferred.”

The Rajasthan plant was being set up with an investment of Rs 1,000 crore with an initial capacity to produce its premium hatchback Jazz. The company had inaugurated the plant in September and had started engine assembly operations.

When asked about the retrenchment of the workers at the plant, a Honda spokesperson said: “We had employed a workforce of 270, which we are maintaining as the press shop and engine assembly line operations are still on.”

The company also said that with demand slackening, it was cutting production at its Greater Noida plant without giving details on the precise cut.

During April-November, Honda Siel sold 28,419 cars, 22 per cent less than the same period the previous year.

“HSCI is closely monitoring the market situation and will adjust monthly production volumes to respond promptly to market demands while ensuring operational efficiencies and low inventory levels,” said a company statement.