‘Trade war, Covid-19 behind Honda closure’
Credit to Author: Tyrone Jasper C. Piad| Date: Wed, 26 Feb 2020 17:32:13 +0000
THE global economic slowdown resulting from the prolonged trade war between the United States and China and the coronavirus disease 2019 (Covid-19) outbreak pushed Honda Cars Philippines Inc. (HCPI) to close its manufacturing plant in Sta. Rosa City, Laguna province, Trade Secretary Ramon Lopez said on Wednesday.
In a statement, the chief of the Department of Trade and Industry (DTI) said the “closure of [the facility’s] operations in the country was a global decision by Honda HQ (headquarters),” adding that “Philippine operations were not involved in” that decision.
The statement comes after the department met with the local unit of the Japanese car maker on Monday, two days after the latter announced the closure to improve cost efficiency.
It clarified, however, that it would still sell cars in the country and continue after-sales services.
According to Lopez, HCPI also flagged concerns over competition in the industry.
“This forced [companies] to consolidate and select operations with [the] least cost and with a more favorable market position and volume of operation,” the Trade chief explained.
“There are many new players in the auto industry in the country that definitely resulted in greater competition for auto makers,” he said. “This development offers new possibilities for alternative car assemblers in the country, especially those which will realize the need to diversify production resources.”
Honda has been rationalizing operations since last year, beginning with its headquarters in the United Kingdom, Turkey, Argentina and Mexico.
HCPI has also been dealing with challenges over cost competitiveness, the Trade department said, noting that it only produced 8,000 units of City and BR-V models annually. This was lower than Honda Thailand’s yearly output of 200,000 units.
With the Laguna plant’s closure, Lopez said the department was pushing to review the imposition of safeguard duty on vehicle imports to protect local assemblers.
Honda saw its sales drop by 12.7 percent to 20,338 units last year from 23,294 in 2018. HCPI has a 5.5-percent share of the market in 2019.
The DTI has said Honda motorcycles, which is managed separately by Honda Philippines Inc., will continue to be produced and sold here.
“The motorcycle business is the segment that is growing for Honda. This shows that the Philippines is a strong market for the products and price points of Honda motorcycles,” Lopez said.