New Delhi: Honda Motor Co. Ltd has directed its Indian unit to supply critical automobile parts to markets in Latin America and South-east Asia after the Japanese car maker’s Thailand unit had to suspend production because of floods.

“We have been exporting mainly press parts and some engine components to countries like Argentina, Brazil, Taiwan, Indonesia, Malaysia and Philippines," said Jnaneswar Sen, senior vice-president of marketing and sales at Honda Siel Cars India (HSCI). “Earlier, Thailand used to cater to the demands of these markets."

Supply crunch: A file photo of a Honda Siel plant in Surajpur, UP. The floods in Thailand have also limited the firm’s production capacity in India as it imports parts from its South-east Asian neighbour. Photo by Ramesh Pathania.

Thailand’s flooding crisis began in late July when the country was lashed by unusually heavy rainstorms triggered in part by the La Nina weather effect. Dangerously high reserves of water began accumulating in reservoirs and dams upstream while major river networks swelled from run-off in northern Thailand.

The floods forced Japanese auto makers, including Toyota Motor Corp. and Honda, to suspend production at their Thai plants in October. Honda’s assembly plant, located north of Bangkok, has been affected by flood waters.

The floods in Thailand have also limited the firm’s production capacity in India as it imports parts from its South-east Asian neighbour. Out of the five models that are produced in India, only the Accord and the Civic models are being manufactured currently.

The company said it has pending orders for at least 13,500 cars in India. Out of these, there are bookings of around 2,000 units of the City, 4,000 units of the Jazz and 7,500 units of the Brio.

“We have started production of the City this month," said Sen. “And, gradually, we will start producing the Jazz and the Brio in February."

Mint, on 27 October, had reported that the company had stopped taking bookings for the Jazz model because of a parts shortage that curbed production, coupled with the sudden popularity of the car following a price cut. Later, the floods in Thailand further impeded plans to step up output by Honda, forcing it to stop production of the Jazz and the new City. Honda India relies heavily on Thailand for parts.

“We have been staggering production volume and making some cars everyday so that the process orientation remains within manufacturing associates," Sen said, adding that this production glut has allowed the management to train its employees and keep them ready for “high production situation".

“As we are approaching a high-production situation, several constitutional improvements were carried out during this period for smoother transition from a low production volume to a higher one," he said. “We have been conducting multiple training programmes for manufacturing associates during non-production hours and increasing their knowledge base."

In the first nine months to December this fiscal, HSCI could only sell 32,771 units compared with 44,686 units in the same period last year because of parts shortages as a result of the tsunami in Japan and the Thai floods.

The situation may improve for the firm in 2012 with operations stabilizing in Japan and Thailand, said Yaresh Kothari, an analyst at Mumbai-based Angel Broking Ltd.

“Production glitch hit them more than the market dynamics, which shifted towards the diesel side," said Kothari. “People would still want to buy Honda cars considering their performance. But company needs to resume production at the earliest as there are customers who are already looking for other options."

amrit.r@livemint.com

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