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Automobiles

Honda to halt car production in the Philippines

Plant had operated since 1992, but was running under a fourth of capacity

Honda's assembly plant in Thailand: The Japanese automaker is aiming to optimize the allocation of its production bases worldwide.   © Reuters

MANILA -- Honda Motor will stop manufacturing cars in the Philippines next month, the company said Saturday, in a move that comes amid the Japanese automaker's global restructuring.

Honda Cars Philippines, which produces passenger vehicles BR-V and City at its Santa Rosa plant south of Manila, will continue its sales and after-sales service operations, it said.

Honda said that it had been considering "efficient allocation and distribution of resources" to offer "reasonably priced and good quality products" to the Philippine customer. "After consideration of optimization efforts in the production operations in Asia and Oceania region, Honda decided to close the manufacturing operations" of the Philippine unit, the company said.

The company began manufacturing in the Philippines in 1992 and currently has 650 employees. It produced, however, only 7,000 units in 2019, far smaller than its production capacity of 30,000 units a year.

It said sales in the country will be continued "through the utilization of Honda's Asia and Oceania regional network," switching from locally produced models to imported vehicles.

Honda has larger production bases in Thailand and Indonesia in Southeast Asia.

The automaker last year announced a global restructuring move as part of its efforts to optimize global capacity and allocation of production bases. It had so far announced to halt car productions in the U.K., Turkey and Argentina.

In the Philippines, Honda has grappled with an industrywide sales slowdown after the government imposed tax on car purchases in 2018. Honda sold 20,338 units in the Philippines last year, down by 12.7%. 

Honda in 2012 ended the Philippine production of its Civic model, opting instead to import from Thailand.

Honda Cars Philippines has a capitalization of 1.9 billion pesos ($37 million). Its local partners Ayala-led AC Industrial Technology Holdings and Rizal Commercial Banking each own 12.9% of the company, according to Honda.

Additional reporting by Jun Endo in Manila.

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