Honda to close 'mother factory' as it moves to all-electric future

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Honda to close 'mother factory' as it moves to all-electric future
Japanese carmaker's domestic production capacity down 40% from peak
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A ceremony was held in December at Honda's plant in Saitama Prefecture to mark the end of production of finished cars at the facility. (Photo by Kotaro Abe)

KOTARO ABE, Nikkei staff writerFebruary 6, 2022 17:00 JST

TOKYO -- Honda Motor is getting ready to switch off its engines.

As part of a radical restructuring leading to an all-electric future, Honda has cut its domestic auto production capacity to slightly over 800,000 vehicles a year, down by around 40% from its 2002 peak.

Most of the retrenchment has come by halting production of finished cars at its plant in Sayama, Saitama Prefecture, northwest of Tokyo, at the end of last year. Honda also announced other cost-cutting steps last year, including adopting a new vehicle development system and pulling the plug on its Formula One racing program.
The company is retooling its manufacturing operations in line with its vision for the future. It has announced that its entire lineup of cars will be electric by 2040.

On Dec. 27 last year, a "line-off ceremony" was held at the Sayama plant to mark the end to production of finished cars. "Like you, I will miss it all," President Toshihiro Mibe told those present.

Only a few executives attended the ceremony due to COVID-19 restrictions. But it was livestreamed to allow workers in different parts of the plant to watch the proceedings. Mibe showed up in an old Honda and spoke of being mentored by exacting senior employees during his time at the plant, where he worked as a young engineer developing engines. "We will continue making automobiles that meet the needs of consumers at home and abroad," he said.
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The Sayama plant once served as Honda's "mother factory," instructing other factories on new production processes and technologies. © Reuters

The Sayama plant, which opened in 1964, rolled out cars that defined the company, including the Civic, with its innovative low-emission engine, and the Accord, Honda's flagship sedan.

The facility will remain open for now, making parts, but will close completely in two to three years. Its operations will be transferred to Honda's Yorii plant, also in Saitama, to lower Honda's fixed costs and raise operating rates. Many of the workers from the Sayama plant will be reassigned to Yorii and elsewhere. The company has yet to decide what to do with the site after the Sayama plant shuts down.

The factory could once turn out 250,000 cars a year. Until the end of 2021, Honda had a domestic production capacity of around 1 million finished cars annually, all told, at its three Japanese plants in Sayama, Yorii and another in Suzuka, in central Japan's Mie Prefecture. The company's total capacity has since shrunk to slightly more than 800,000 vehicles a year, at Yorii, Suzuka and Honda Auto Body in Yokkaichi, Mie Prefecture.

In the early 2000s, Honda could crank out more than 1.3 million cars a year. The company actually produced 840,000 vehicles in Japan in 2019, before the COVID-19 pandemic took hold. That is slightly more than the automaker's capacity for this year. But Honda appears able to ramp up to around 900,000 vehicles, if necessary. It is now focused on improving productivity by raising the operating rate of its factories as high as possible.

Toyota Motor, by contrast, has no plan to sharply reduce its capacity in Japan, sticking to its policy of maintaining domestic production of more than 3 million cars a year. Nissan Motor's capacity in Japan remains around 1.34 million vehicles, according to Fourin, a research company specializing in the auto industry. Honda's capacity is now far below that of its two rivals.

One factor behind Honda's relatively small-scale manufacturing in Japan is that the Japanese market makes up a smaller share of its global sales compared with its competitors. In fiscal 2018, Honda sold 740,000 vehicles in Japan, or 14% of its global sales. Toyota's domestic sales of 2.29 million vehicles accounted for 22% of its global total.

On the other hand, Honda sold 1.61 million vehicles in the U.S. market, or 30% of its overall sales, and 1.46 million cars in China, or 28%. Because of the large proportion of overseas sales, Honda has a more globalized production system: Cars sold in Japan are not necessarily manufactured in the country. It makes the Accord in Thailand, for example.
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A robot assembles a Honda Fit car at the newly built Yorii plant. The Yorii factory will take over the Sayama plant's manufacturing functions. © Reuters

"Ending production of finished cars at the Sayama plant could leave Honda with much smaller domestic capacity to manufacture such midsize or large vehicles as the Accord and the Odyssey, which used to be made at the plant," said Seiji Sugiura, a senior analyst at Tokai Tokyo Research Institute.

The importance of the U.S. and Chinese markets to Honda's global sales has spurred the automaker to phase out production of combustion engine cars by 2040. Japanese carmakers have been relatively slow to electrify because the network of charging stations is underdeveloped in Japan, and renewables make up a small share of the country's energy supply.

Consumers will remain reluctant to embrace electric vehicles as long as charging facilities are not widely available. Switching to EV technology to cut greenhouse gas emissions does not make much sense if the electricity is generated with fossil fuels.

Meanwhile, in the U.S., a number of competitive EV makers have emerged, such as Tesla and Rivian Automotive. President Joe Biden's administration is promoting the development of EVs.

The Chinese government has also lavished subsidies on manufacturers as it tries to build an EV industry from scratch. As a result, Chinese drivers can now buy small EVs for around 500,000 yen ($4,300). With its solid presence in both the U.S. and Chinese markets, Honda is in a better position than other Japanese carmakers to shift to EVs.

The Sayama plant once served as Honda's "mother factory," introducing a range of state-of-the-art technologies. Engineers at the plant were sent around the world to help get new Honda production lines up and running.

Now the Yorii plant, which came on stream in 2013, will fulfill this role. The plant has been at the forefront of the company's EV ambitions. It makes the Honda e, the company's first all-electric vehicle available commercially.
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Honda Motor CEO Toshihiro Mibe, at a news conference last April, said the company's entire lineup of cars in Japan will be electric by 2030. © Reuters

The biggest story for Honda in 2021 was its commitment to an all-electric future. But the automaker also pushed through a drastic reform of its car business. That had become less profitable, posting a dismal operating profit margin of 1% in the year through March 2021. The weak numbers prompted Honda to revamp its manufacturing worldwide, including at the Sayama plant.

The company's global capacity is projected to fall to 5.14 million vehicles for the year ending March, down from 5.59 million cars a year earlier, due in part to the closure of plants in the U.K. and Turkey.
The end of production of finished cars at the Sayama plant is a milestone in Honda's restructuring of its automobile business. The realignment of its global network of factories smooths the way into the second phase: becoming a highly efficient and competitive EV manufacturer. This will likely call for still more cost-cutting and efficiency.


https://asia.nikkei.com/Business/Au...er-factory-as-it-moves-to-all-electric-future
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firsttruck

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Some interesting info about Honda but the article author still had to add FUD about EVs

Honda to close 'mother factory' as it moves to all-electric future
Japanese carmaker's domestic production capacity down 40% from peak

.....
Consumers will remain reluctant to embrace electric vehicles as long as charging facilities are not widely available. Switching to EV technology to cut greenhouse gas emissions does not make much sense if the electricity is generated with fossil fuels.
NO, that is false. Even if EV is charged by 100% fossil fuel electric power plant that is better tan burning it directly in ICE vehicles. Burning the fossil fuels in massive powerplant that is higher efficiency and has more pollution controlled is better than burning the fuel in millions of less efficient and more polluting ICE cars.

.....
The importance of the U.S. and Chinese markets to Honda's global sales has spurred the automaker to phase out production of combustion engine cars by 2040.

I have owned several Honda cars over the years and most were some of the best I ever owned.

Too bad about their current bad leadership team.

Looks like Honda has been losing in domestic Japanese market for a long time.

Well, Honda will shortly be in even bigger trouble because the Chinese & EU countries are going to stop buying ICE real soon. Honda does not have time until 2040. Probably don't have time to 2030.
 

firsttruck

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.....
Japanese carmakers have been relatively slow to electrify because the network of charging stations is underdeveloped in Japan, and renewables make up a small share of the country's energy supply.

https://asia.nikkei.com/Business/Au...er-factory-as-it-moves-to-all-electric-future
Another thing about this article and many others about there being a slower EV vs ICE change in Japan is how they always slant the resource usage to be negative for EVs but not never ICE.

Japan has very little domestic oil resources. Almost all crude oil has always been imported.

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November 7, 2013
Japan is the second largest net importer of fossil fuels in the world
https://www.eia.gov/todayinenergy/detail.php?id=13711

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December 23, 2021
3 Economic Challenges Facing Japan in 2022
By Panos Mourdoukoutas
.....
While rising food and energy prices are a problem for every country, it's even more severe for Japan, which is highly dependent on oil imports for its energy needs. High oil prices take a big chunk of household budgets, depressing further consumer spending, the primary factor behind the country's three-decade-old stagnation.

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Some War II & military historians say one of the big reasons Japan attacked U.S. at Pearl Harbor was because of U.S. interfering with Japan's oil supply import relationship with suppliers.

Today these EV vs ICE articles never mention this huge negative aspect of ICE for domestic Japan. Its financial costs, dependence on Middle Eastern nations, and vulnerability of fossil fuel logistics supply lines to the Japanese nation.

When fully utilized, Japanese resources for solar , wind, geothermal renewables might be larger than Japanese domestic fossil fuel resources.
 

Crissa

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Japan even uses oil for domestic electricity, something no longer done by other non-oil-producing nations. Very little us electricity is made with oil (coal and gas are used instead).

So they have high electricity prices, too. They're in a tight spot.

-Crissa
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