Honda to cut Japanese production by a quarter as domestic sales stagnate

Honda Motor plans to end production at its Sayama plant in Japan by 2022, cutting domestic capacity by around 24 percent as it shifts focus to electric cars (EVs) and other new technologies.

The automaker has seen stagnant domestic sales and said on Wednesday it was streamlining its Japanese operations as it takes a more nimble approach to development and manufacturing in the face of fierce competition from carmakers and technology companies to make EVs and self-driving cars.

“As we focus more on adopting electrification and other new technologies, we want to hone our vehicle manufacturing expertise in Japan and expand it globally,” CEO Takahiro Hachigo told a press conference.

Hachigo has been trying to revive a culture of innovation at Japan’s No. 3 automaker, after a number of major product recalls in recent years as well as lackluster product offerings, partly because it focused so much on increasing volumes and profit.

Honda said it would end production at the ageing Sayama plant in Saitama Prefecture north of Tokyo, consolidating output at its Yorii plant in the same prefecture by the end of the 2022 financial year. Most workers currently at Sayama would be transferred to the Yorii facility, it said.

The move would cut overall domestic annual production capacity to around 810,000 units, the same as Honda’s current output levels, which are around 76 percent of its current production capacity of 1.06 million vehicles.

“Domestic sales haven’t increased as much as we were expecting and it has become difficult to boost exports,” Hachigo said.

Following consolidation, Honda said the Yorii plant will produce EVs and serve as a major center for developing manufacturing technology for electric cars. It will also produce other vehicles including larger-sized global models.