Honda Cars India Ltd has cited operational efficiency as the reason for shutting down its oldest plant in Greater Noida. Company sources said it is shifting all production to its newer Tapukara plant at Alwar, Rajasthan.

The company, however, declined to comment.

The Tapukara plant has an annual capacity of 1,80,000 units and makes the City, the Jazz, the W-RV and the Amaze.

“The Noida facility will continue to operate as it accommodates the head office of HCIL, the research and development centre and the spare parts operations,” said a source in the company.

The Greater Noida plant of HCIL used to manufacture its best selling sedan the City, the SUV CR-V and the Civic and had an annual capacity of 1,00,000 vehicles.

“The Greater Noida plant manufactured lesser number of units than the Tapukara plant. Most of the workers have taken VRS while some have been transferred to Tapukara,” the source said.

Faced with a pandemic situation, the Japanese company decided to stop production at its old plant, which has about 1000 employees.

The Greater Noida plant was the Japanese carmaker's first manufacturing facility in India, which began operations in 1997. The initial capacity of the plant was 30,000 unit per year, which was later increased to 50,000 cars on a two-shift basis. By 2008, the company increased its manufacturing capacity to 100,000 units annually, which remained unchanged to date.

Though the company has witnessed a 55 per cent growth in sales in November this year having sold 9,990 units as compared to 6459 units which were sold in the corresponding month last year. The Japanese carmaker witnessed this surge in sales specifically because of the festive season and lucrative deals. On the other hand, the company saw a Month-on-Month (MoM) decline of around 8 per cent, as compared to 10,836 units sold in the month of October 2020. When asked about its December sales, with the company offering year-end discounts, the source said: “We are witnessing good sales in December too. The sales trend has been good.”

The company had resumed production in mid-June and slowly ramped up. By September, the company was on pre-Covid level production. However, the company has suffered reverses in sales in recent years having resisted the diesel route for a long time and then not being able to bring new products in time.