AutoBeta(AutoBeta.net)08/27 Report--

Chip shortages and supply chain disruptions continue to interfere with the normal operation of car companies. Honda announced on its website that Honda is again facing production cuts due to shortages of semiconductors and other components, the spread of the COVID-19 epidemic and stagnant logistics. Honda plans to cut production at its Japanese plants by up to 40 per cent in early September.

Honda said two production lines at the Suzuki plant in western Japan would cut production by about 30 per cent in early September, while the Saitama plant north of Tokyo would also cut production by about 40 per cent in early September. Affected by this, Honda's production of a number of models, including Feido, Civic, Vezel SUV, Stepwgn minivan and so on, has been affected to varying degrees. Honda also said that due to the epidemic and semiconductor shortages caused by parts reception and logistics delays, Suzuki and Saitama prefecture plants will reduce production by about 30% and 10% respectively for the rest of this month.

In mid-June this year, Honda resumed production as planned, but Honda had to cut its original production plan after July due to unstable parts procurement and stagnant logistics. Honda announced on its website on July 21 that as a result of these factors, the Suzuki plant in western Japan will suspend production on two production lines and cut production by about 10% in July, and production at the plant in early August will be about 30% lower than previously planned. The plant in Saitama prefecture north of Tokyo will also cut production by about 10% in early August.

Supply chain problems have affected Japanese car companies for a long time, from the current situation of Honda Motor, so far, this problem has not been alleviated. By contrast, Toyota, which is also a Japanese car company, has seen a marked recovery in production.

On Aug. 10, Toyota announced global production of about 850000 vehicles in September, the highest level in a single month. Among them, there are about 250000 vehicles in the domestic market in Japan and about 600000 vehicles overseas. Judging from the September shutdown plan, out of a total of 28 production lines at Toyota's 14 factories in Japan, only three production lines at Toyota's Wancho plant have been suspended, and it should not be difficult to achieve global production of 850000 vehicles in September.

According to the original plan, Toyota's average production plan from August to October was 850000 vehicles per month. In view of the fact that production capacity was not achieved in some months due to the chip shortage and supply chain disruptions in the first half of this year, Toyota raised its average production plan from September to November to 900000 vehicles, and the full-year production plan for fiscal year 2022 (April 2022 to March 2023) remained unchanged at about 9.7 million vehicles.

Back to Honda, in addition to production cuts in Japan's home market, Honda's Chinese market has also closed factories due to high-temperature power cuts. On August 16, the relevant departments of the Chongqing Municipal Government announced the launch of a first-level power consumption plan to expand the "transfer" time of industrial enterprises from August 17 to 24, a total of 8 days. In response to the power shortage crisis caused by hot weather, the Chongqing municipal government said on Aug. 23 that it would extend the factory power restriction until further notice. Honda's plant in Chongqing will remain closed this week under power cuts, and a Honda spokesman said all manufacturers in Chongqing were bound by the order and had not yet decided when to cancel it. The previous directive expires on August 25.

In addition, Honda is considering establishing a separate supply chain to reduce its dependence on the Chinese supply chain, according to Japan's Sankei Shimbun. Honda plans to transfer Chinese parts supplies to Southeast Asia, India, North America and other regions, according to Honda's internal work instructions. It is understood that Honda was forced to make this adjustment based on capacity considerations.

Honda relies more on Chinese parts than Toyota. Data show that 40% of Honda's production in the last fiscal year came from the Chinese market. Honda's parts supply chain was disrupted in March due to the closure of the epidemic, leading to frequent production cuts at factories in China and Japan. Among them, in the Japanese market, on April 21 this year, due to multiple uncertain factors such as long-term shortage of semiconductors and the epidemic, Honda announced that some of Honda's Japanese factories would reduce production capacity by about 50% in early May. Guangzhou Auto Honda also saw some production lines shut down and semi-stopped production in the Chinese market. The production cut at Honda's Japanese plant also shows that the supply of spare parts still interferes with the normal operation of Honda's production capacity. Industry insiders pointed out: "Honda's adjustment of China's parts supply chain will lead Japanese cars and even the manufacturing industry to re-examine their strategy in China."

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