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03 November, 2011 Honda’s production has been “severely” impacted because of the floods in Thailand, a major parts sourcing hub, said a top company official. The company, which is planning to source parts from alternative locations like China and Japan, is now working on informing its customers about possible delay in the delivery of booked cars.
The worst affected will be the company’s new launch Brio and the newly price-refurbished Jazz. Honda is currently sitting on fairly significant bookings, 6,000 units for the Brio and another 4,000 for the Jazz. Honda has, however, decided not to halt production but make do with whatever parts available in its inventory till the alternative supplies kick in.
Jnaneswar Sen, senior vicepresident, Honda Siel Cars India said, “All our models have been hit (by the floods in Thailand) and it’s a pretty serious development. We are facing severe shortage of parts which is unfortunate because the demand is very good for all our models right now. But we have decided not to stop production; we’re looking at a strategy to handle the situation.”
Honda’s strategy, he said, would be to “limit production” to match the parts available till “alternative locations” can be found for the sourcing of affected parts. Honda primarily sources underbody parts and electronic components from Thailand. “We are looking at sourcing from China and Japan to make up for the parts shortfall,” said Sen.
“Honda is not looking at sourcing from Indian vendors because it will not be possible in the short-term. Localisation is top priority for HSCI and had it been possible we would have localised those parts and not imported them,” explained Sen. Although company officials admit the situation is fairly fluid right now, October was a normal month for Honda despite the floods in Thailand which started early last month.
While HSCI has been scouting for alternative locations to source parts in short supply since then, it’s pretty clear that its despatches will be hit in the immediate term.
“We have delivered 1,000 units of the Brio but we know that we will not be able to fulfill our original commitment to our customers on delivery schedules. So we will do the best we can but we will also communicate to our customers about a delay and request them to bear with us,” said Sen.
This is the second time this year that Honda has had to face production shortages due to a force majeure situation . Earlier this year the earthquake and tsunami that devastated Japan create severe production snags for HSCI along with other Japanese companies. Thailand is a major parts sourcing hub for many Japanese auto majors including Honda and Toyota.
