Honda to relocate factory from India to Indonesia – expansion plans to include an electrified vehicle model

Honda is set to relocate a factory from India to Indonesia, although it has not been disclosed as to when this will occur. CNN Indonesia reports that the country’s minister of industry, Agus Gumiwang, revealed these plans following a meeting with Honda principals during a visit to Japan last week.

Agus said that that Honda has pledged a strong commitment to investing in Indonesia. “Honda is committed to increasing investment until 2024 of around 5.2 trillion rupiah (RM1.49 billion), including the development of new models being carried out in Indonesia,” he said. He added that the automaker is planning to build a new electrified model in the republic, but its identity was not revealed, nor was it disclosed if it would be a hybrid.

He said that the company will be looking to increase its export activities, in the form of vehicles as well as components, with “car components produced in Indonesia being sent to become part of the global value chain.”

Previously, Honda Prospect Motor (HPM) had said that the automaker was looking at new investments in Indonesia, but did not mention that the investment was related to factory relocation. At the time, HPM said that the investment was not for the development of electric and hybrid cars, but would focus on conventional car strategies according to market needs as well as localisation.

Currently, HPM has two assembly plants in Karawang, West Java, with an installed annual capacity of 200,000 units. Local assembly products include the CR-V, HR-V, BR-V, Mobilio and Brio.

The news of a possible production facility relocation to Indonesia comes three months after the automaker said it was halting production at one of its two car manufacturing plants in India, which together have a combined production capacity of 280,000 units.

In December, Honda announced that it stopped producing cars at its plant in Greater Noida, close to New Delhi, and was moving all vehicle and component production in the country to its 180,000 unit-capacity Tapukara plant in the state of Rajasthan. In the fiscal year ending March 31, 2020, the carmaker sold 102,000 units in India and exported 4,000 units.

This realignment of its manufacturing operations is a natural step, given that production capacity is heavily under-utilised. Last July, Honda had announced plans to make India a strategic export hub for left-hand drive units to Europe by the end of the 2020 as a means to offset the slowing local demand.

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