MANILA, Philippines - Honda Cars Philippines Inc. (HCPI) has discontinued assembly of its popular sedan, the Civic, saying it is no longer competitive to produce it here.
HCPI president Tatsuya Natsume said the company will relocate its Civic production to Thailand, its key production hub in Asia, due to economies of scale.
Honda's operations in Thailand have a combined annual capacity of about 240,000 vehicles compared to the 9,000 to 10,000 of its Philippine plant in Sta. Rosa, Laguna.
"It's a matter of scale of economies. The capacity of Thailand is 240,000 per year so it is more efficient," Natsume said.
Natsume added it would be cheaper to just import from Thailand due to zero tariffs under the ASEAN free trade scheme.
The official said the decision was also prompted by the fact that sales of compact car, City, is now much higher than the flagship model Civic, which used to be HCPI's bestseller.
In previous years, Civic was selling a record 9,000 per month, which is now the average sales of the City.
Natsume noted, however, that they will keep their Sta. Rosa plant in the Philippines. "Though we are discontinuing the Civic, we will keep our employees and our factory. The City will fill up the capacity left by the Civic. It's better to concentrate on one model."
HCPI has resumed this week the full production of the City, which would be the sole model to be assembled locally.
Natsume said they would begin sourcing from Thailand once supply situation in the country normalizes following disruptions brought about by heavy flooding last year.
There is no timeline for the resumption of Honda's operations there. In the meantime, Natsume said they will import some models from Japan while Thailand is in the process of restoring its manufacturing capability.
Honda launched on Thursday the 9th generation Civic, which was sourced from Japan.
The new Civic replaces the 2006 model and will retail at P1.074 million, 6% more expensive than its predecessor.