Japanese automaker Honda has decided to cut monthly remuneration of its managers by 10 per cent from January 2009 as the auto industry is reeling under pressure due to the global economic slowdown.
"Bonuses for directors, corporate auditors and operating officers will be reassessed based on the business results of the current fiscal year ending March 31, 2009.
In addition, monthly remuneration of directors, corporate auditors and operating officers will be cut by 10 per cent for all directors starting January 2009," Honda said in a statement.
The abrupt change involving the global automobile industry from mid-September this year was triggered by the financial crisis, which forced all the automakers to change various plans over a very short period of time.
Honda has also revised its forecast for consolidated financial results for the fiscal year ending March 31, 2009.
According to the new forecast, the automaker expects a net sales and other operating revenue of 10,400 billion Japanese yen, a fall of 13.4 per cent from previous fiscal year.
Other major controlling measure adopted by the company include the reassessment of the priorities of all investment/development projects, new production facilities and capacity expansions.
Among other steps, the company has decided to withdraw from all Formula One activities, making 2008 the last season of participation.
Besides, Honda has decided to make an additional production adjustment of 54,000 units of automobiles in Japan during the current fiscal year.
"As we face the next year, while hoping for the earliest recovery of the global economy and the market situation, Honda will develop business plans based on an assumption that the situation will worsen next year and will navigate the company through this challenge," the statement added.
Honda defers expansion, cuts production: Honda said on Wednesday it has decided to defer capacity expansion at its second Indian plant in Rajasthan besides cutting production at the existing facility at Greater Noida, near Delhi.
The company, which runs its Indian operations through a joint venture with the Siel Group -- Honda Siel Cars India -- said it would postpone capacity enhancement and assembly operations at its second plant in Tapukara, Rajasthan.
Addition of new capacity, initially scheduled for Q4 of 2009, has been deferred in view of the current economic slowdown, which has impacted the automobile industry, resulting in a drop in demand, a senior offical of HSCI said.
"While work on shed is still continuing and structures will be ready, installation of equipment will not be happening," the official said.
The company had anounced an initial investment of Rs 1,000 crore (Rs 10 billion) at the Rajasthan plant, of which Rs 600 crore (Rs 6 billion) had already been used.
HSCI had planned to set up the second plant in Rajasthan with an initial capacity of 60,000 units, while it expanded capacity at it Greater Noida facility to one lakh unit per year.
The official said production at the Greater Noida facility would be reduced, without specifying quantum, in view of the negative growth in the Indian automobile industry and in the interest of maintaining lean operations.
"We are closely monitoring the market situation and will adjust monthly production volumes to respond promptly to market demands while ensuring operational efficiencies and low inventory levels," the official added.
Honda Motor Co president and CEO Takeo Fukui announced in Tokyo that expansion of automobile production capacity in some countries, including India, initially scheduled for 2010, and Turkey, initially scheduled for mid-2009, will be delayed considering the current market situations.
Asked if the plans would affect the company's planned roll out of its premium hatchback Jazz, the official replied in the negative.
"It is on track for June 2009 launch," the official said, however, adding that Honda would continue to assess the market situation to decide on the timing of the car roll-out.