Honda Vietnam may ease manufacturing due to COVID-19 impacts

Honda Vietnam said the company plans to shift from manufacturing to importing vehicles due to manufacturing interruptions and market stagnation caused by the COVID-19 pandemic, VNS reported.

Jennifer Tran

May 09, 2020 | 08:48

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honda vietnam may ease manufacturing due to covid 19 impacts

In a document recently submitted to the Ministry of Planning and Investment, Honda Vietnam CEO Keisuke Tsuruzono said the company’s manufacturing output is expected to drop 30 per cent for cars in 2020 and 43 per cent for motorbikes from April to June. As a result, the company’s revenue would decrease significantly.

The market saw a year-on-year drop of 32 per cent in car sales in the first three months this year. The motorbike market has been affected since early April. The document also mentioned the social distancing order imposed between April 1-22 as one of the reasons for the fall.

Due to the long-term effect of the COVID-19, it’s hard for the company to restore its production as planned.

According to Tsuruzono, the manufacturing stagnation was partly due to a shortage of spare parts supplied by several nations which were under lockdown due to the COVID-19 pandemic. In addition, the company had to suspend operation from April 1 to 22 and sale agents suspended business under social distancing measures.

Honda Vietnam proposed measures to continue removing difficulties for motorbike and car manufacturers by extending deadlines for their tax and land leasing payments.

The company also made proposals on reducing value-added taxes and registration fees for customers while reducing interest rates by 5-6 per cent for spare parts manufacturers.

Answering the press, representatives of Honda Vietnam said:

"In the Official Correspondence that Honda Vietnam sent in response to the Ministry of Planning and Investment on April 29th 2020, Honda Vietnam reported the operation situation and proposed specific solutions to overcome difficulties for the company due to the COVID-19 pandemic. In the report on the operation situation, the company assessed the development opportunities of the automobile-motorcycle market in general under the impact of the COVID-19 pandemic. With the possibility of the disease lasting through the following years, the whole market will continue to have difficulties in restoring production and it might be possible that the business model of automobile manufacturing companies shift from manufacturing to importing. We did not specify that: “Honda Vietnam might change the business model from manufacturing to importing”.

"During current context, Honda Vietnam continues to follow the general direction of the Government in focusing on developing domestic production. Specifically, in the above-mentioned correspondence of Honda Vietnam, the company has proposed to the Government several solutions in order to support the market, to cooperate with the companies to overcome difficulties, for the sake of the development of the automobile market in the future."

Earlier, Honda Motor Co Ltd announced it would stop Philippine production starting March.

Honda's factory closure in the Philippines affected about 2,000 employees. In addition to 400 regular employees at the factory, many workers at six component suppliers also lost their jobs.

Meanwhile, Honda Automobile Factory in Vietnam has about 400 employees, along with thousands of laborers in the value chain such as transport, suppliers of materials and components

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