Honda Postpones New Brazil Plant Until Local Economy Recovers

  • Delay is second one for Itirapina factory due to recession
  • Automaker expects to sell 18% fewer cars in country this year

Honda Motor Co. doesn’t plan on opening a plant the company is building in Brazil until there are signs of recovery in Latin America’s largest economy.

Japan’s third-largest automaker already has spent $250 million on the Itirapina factory, which will help double production capacity in Brazil to 240,000 vehicles a year. Even so, the company will wait for the country to get out of its political and economic crises to add employees for the operation, Roberto Akiyama, Honda’s vice president for South America, said in a telephone interview.

Honda decided “to avoid hiring workforce and then running into problems such as a potential layoff,’’ Akiyama said. While the Tokyo-based company doesn’t “have a date set for the operations to start,’’ it won’t be in the first half of this year as previously anticipated. The automaker will take at least six months to hire and train people to run the plant.

Honda forecasts sales in Brazil to plunge 18 percent this year to 125,000 vehicles because of the recession and the company’s transition to an upgraded Civic. That’s a steeper decline from the national automakers association’s expectations that total car sales will fall at least 7.5 percent.

Looks Worse

The carmaker’s outlook looks worse in part because last year it was able to post a gain while the market as a whole dropped 27 percent. Honda boosted sales 11 percent in 2015 by entering the compact SUV market and offering higher-end models that attract customers who aren’t as dependent on car loans.

Honda’s only operating Brazilian plant, in Sumare, is working full time with two daily shifts. Honda didn’t have to let any workers go because of the economic slowdown. It just cut extra hours, Akiyama said.

The plant, which assembles the Civic and three other models, opened in 1997 producing only 20 cars a day with 400 employees, and now its 3,500 employees can make 620 a day, according to the company’s website.

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