Honda Malaysia’s May-July 2021 sales fell 52% y-o-y, business chain affected by extended Covid lockdown

The automotive industry has been severely affected by the lockdowns imposed to curb the spread of Covid-19. There are many levels in the supply chain, and with factories closed, car manufacturers, parts suppliers and dealerships are all lying idle. They can’t make the cars, and the showrooms have no cars to sell.

Honda Malaysia (HM) has big operations in Malaysia, with a sizeable factory in Pegoh. Since the FMCO started in June, the Melaka plant has been closed along with the sales office in Petaling Jaya, Selangor, as well as all dealerships to comply with the government’s SOPs. Only selected after-sales services are allowed to run with minimal manpower and by appointment.

It’s no surprise then that sales have plunged. According to HM’s MD and CEO Madoka Chujo, sales fell by 52% for the year-on-year period of May to July 2021. That’s around 5,700 units compared to almost 12,000 units in the same period last year, when Malaysia was under the CMCO and RMCO periods.

Poor sales aside, there are many other business aspects that are affected. “The prolonged business closure has also impacted Honda Malaysia’s new model production due to no testing conducted in the manufacturing facility. Furthermore, the company’s supply chain and exportation of parts are also affected,” said Chujo, who started her stint here in April.

“The automotive industry supports a wide network of local components and parts suppliers that comprises a few tiers. These suppliers might not be able to sustain their operations and this will subsequently affect the overall supply chain. The current extended lockdown and no visibility on business resumption timeframe have impacted planning and overall investment of the automotive marques,” she explained.

As we detailed last month, the dealerships and their employees are feeling it the most. Honda’s 101 dealerships nationwide are facing financial difficulties and the uncertainty of employment for sales and service advisors, HM says. SAs, whose income largely depend on commissions, have been severely impacted.

“Honda Malaysia understands the hardship that the dealers and Honda associates are going through, and hence, the company is trying to do its best to assist them during the difficult times. One of the efforts is by registering Honda associates under the Public-Private Partnership Industrial Covid-19 Immunisation Programme (PIKAS) to expedite the country’s rate of vaccination,” Chujo said.

Honda is targeting 100% of first dose vaccination for all its associates by the middle of this month. The company is hoping for a resumption of the automotive sector under strict SOPs and guidelines set by the government, which will prevent long-term impact such as retrenchment of employees and potential business closures within the supply chain.

With a full range of CKD locally assembled models from the Accord to the Jazz, Honda Malaysia might be more affected by start-stop production and lockdowns than many other OEMs, but it is by no means the only victim of Covid-19 – the entire industry is hurting now. More on this topic here.

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