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Honda to streamline Japan output amid shift toward electrified vehicles

Automaker focuses on honing production technologies

President Takahiro Hachigo laid out the consolidation plan at a press conference Wednesday.

TOKYO -- Honda Motor will consolidate domestic output as part of efforts to mold a highly efficient production model that can be replicated abroad while sharpening its focus on new electrified vehicle technologies.

The automaker announced the consolidation plan Wednesday. The Sayama automobile plant in Saitama Prefecture will halt production around fiscal 2021, with its operations to be taken over by the Yorii plant, also in Saitama.

The Sayama plant opened in 1964 when Honda began making automobiles. Today it assembles such models as the Odyssey minivan. Its 4,600 or so workers will be retained and reassigned to Yorii and other sites.

"With changing circumstances and slower-than-expected growth in domestic sales, exports did not increase" as hoped, President Takahiro Hachigo explained at a news conference in Tokyo.

Capacity cut below benchmark

Honda has focused on increasing local production around the world, across six regions -- Europe, the U.S., South America, Japan, China, and elsewhere in Asia. In fiscal 2014, it exported some 30,000 vehicles from Japan, accounting for less than 1% of Honda's global output. The company has become more resilient to foreign exchange fluctuations, but difficulty of adjusting output in line with demand has left surplus supply capacity in Japan.

The consolidation reduces Honda's domestic auto output capacity by more than 20%, from 1.06 million units a year to 810,000 units. This is a more "competitive number" that matches the total of recent domestic sales and export volume from Japan, Hachigo said.

Honda has long sought to maintain a capacity of 1 million vehicles in Japan, so the latest move marks a reversal of that stance. The company has been the third-largest producer domestically, after Toyota Motor and Nissan Motor. But the consolidation will reduce capacity below Suzuki Motor's 1 million units and Mazda Motor's 980,000 units.

Honda also announced Wednesday a plan to turn a plant of subsidiary Yachiyo Industry in Yokkaichi, Mie Prefecture, into a wholly owned unit. This site assembles low-volume models such as commercial vehicles, on behalf of Honda.

The consolidation will reduce Honda's auto assembly plants in Japan from four to three, including the Suzuka plant in Mie Prefecture that makes minicars and compacts.

Japan to be cradle of new technologies

The new focus will be "to strengthen Japanese manufacturing once again," Hachigo said. In sync with the industry trend toward electrified vehicles around the world, Honda seeks to make such vehicles, including hybrids, account for two-thirds of its global sales by 2030.

The Yorii plant, opened in 2013, will drive this effort, by developing production technologies with thoroughly maximized efficiency to be introduced to plants in other countries.  Engineers from the around the world will gather at Yorii to devise technologies for new types of vehicles, for instance. Honda will actively adopt modular technologies that take advantage of standardized design and production operations. By using common parts across multiple vehicle types, the automaker hopes to forge a shared way of thinking at its plants around the world.

With major rivals heightening focus on electric vehicles, Honda plans to roll out its own versions in China next year and in Europe in 2019.

"Manufacturing front lines in Japan must lead the world when coping with new technologies," Hachigo said.

(Nikkei)

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