Honda Philippines – Taking A Rain Check!

Last month, Honda Cars Philippines made an announcement that surprised most of us – the unexpected closure of its manufacturing plant at Sta. Rosa.

The decision to close was probably a tough call considering the almost 3-decade legacy of the manufacturing facility, which started operations in 1992. The facility, in its early days, produced the fifth-generation Civic and in the recent years, the City and BR-V.

Question remains though, what really triggered the decision to close the Honda factory despite of it successfully overcoming several challenges in past? What brought Honda to its decision to shut down? There are several speculations as to what may have led Honda to such decision. Some say it may be due to the tax reform program by the government coupled by the increasing inflation rates. Others say it may be because of the intense competition in the market today. In the end, it’s a business decision that they were forced to take, considering all these factors and mainly because the sales volume has not been enough to justify the cost of operations.

In the past few years, Honda has been the third best-selling brand in the country securing almost 14 percent of the automotive market in the Philippines, according to the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI).

The plant has a 30,000-production capacity but produced only about a third in actual. Company sales have been dropping, at least in the last two years, – down by 26.7 percent in 2018 with 23,294 units sold and further by close to 13 percent in 2019 with 20,338 units sold.

With a more intense competition happening both local and global, it has become more difficult to even just maintain a current market share. The declining sales made it even more difficult to justify the cost of production. This move to close is, therefore, inevitable. The next best thing to do is focus the effort in making more efficient use of the company resources, like maximizing their other production facilities abroad to cover the Philippines market as well, like how other automotive companies do.

As it stands, it is probably a long, if not impossible, journey to bring back locally produced units. While it is a very difficult situation for the company and for the affected employees, one has to move forward. So, what’s next for Honda Cars? Every company faces ups and downs and Honda is no exception. But success stories of how these down moments can be turned around are also real. Being self-aware is often the first step to bounce back. Focus on what matters. Focus on customers. Instead of getting beaten down by the current situation, it is even more important to listen to customers and make innovative and bold changes that will excite employees and customers alike. Understand the customer journey and work to improve it step-by-step. Be part of that journey and leave a print that customers would remember. Today’s battlefield goes beyond just selling products, building relationships and commitment to excellence is the new culture for success. Investing in customer experience can drive sales, engage more customers and boost loyalty.

The automotive industry in need for assistance and at Differential Asia Oceania we have helped many to become efficient and profitable with our patented products. Please feel free to reach out to our Philippines Country Manager –
Sigfred Doloroso
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