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Honda inventory down but OK
Local dealership says it can withstand production cuts
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For the second time this year, Honda has been forced to cut U.S. and Canadian factory production by 50 percent.

Three months of flooding in Thailand means car parts essential to many Honda models — except for the Fit, Insight and Hybrids — aren’t being made. And it’s having an impact on local Honda dealerships.

“This year we’ve had the tsunami and earthquake that slowed production,” said Mark Boggs, new car manager at Milton Martin Honda in Gainesville. “We’ve fared pretty well through the summer months.”

Fewer vehicles on the lot could cause car prices to increase if the sold vehicles aren’t replaced.

“Most Honda dealerships don’t have inventory to 100 percent. Our inventory is 80 percent. Eighty to 90 percent full inventory will be able to weather the storm,” Boggs said.

The cuts, which came just as Honda was recovering from the March 11 earthquake and tsunami in Japan, will run from Wednesday at least through Nov. 10 as Honda tries to find alternate sources for microprocessors that are made in Thailand.

Local dealerships have faith that parts production will begin again soon.

“I don’t look for a long delay. They’re gonna get them right back in the pipelines,” Boggs said.

The flooding, which began in July and has forced many auto parts plants to close, also affected Toyota Motor Co., which cut overtime for production in North America through the end of this week.

Honda Motor Co.’s announcement comes the same day the Japanese automaker announced that its quarterly profit tumbled 56 percent, battered by the strong yen and production disruptions from the March tsunami disaster.

The automaker, which makes the Accord and Civic sedans, said Monday that net profit for the July-September fiscal second quarter fell to $788 million.

Quarterly sales sank 16.3 percent from a year earlier to $24.6 billion, with sales in North America falling the most — 22.3 percent.

Flooding in Thailand, where Honda has parts suppliers and assembly lines, made it too difficult to forecast earnings for the full fiscal year through March 2012. A projection will be announced when it becomes available, the company said.

Honda also said it will stop all production in the U.S. and Canada on Nov. 11, and all Saturday overtime work will be canceled through November. Spokesman Ed Miller said it’s too early to tell if there will be a repeat of model shortages that occurred during the summer and early fall due to parts shortages from the earthquake and tsunami.

The company also said in a statement that the December sale date for the 2012 version of the popular CR-V crossover vehicle could be delayed by several weeks. Honda says it will announce the sale date in the near future.

Last year, 87 percent of the Honda and Acura luxury vehicles sold in the U.S. were made in North America, the company said. Most of the parts are produced here, but a few critical electronic parts such as engine control modules come from Thailand and other countries, Honda said.

Miller said the company is trying to find other sources for the parts made in Thailand, but production of newer models such as the Civic compact and CR-V will be most affected by the parts shortages.

Honda said it will not lay off any workers at its U.S. and Canadian auto plants. The company has 21,000 U.S. factory workers and 10 U.S. and Canadian auto factories in Ohio, Alabama, Georgia, Indiana and Alliston, Ontario.

The Thailand floods began in late July and were fed by unusually heavy monsoon rains and a string of tropical storms.

They have killed 381 people and affected more than a third of the country’s provinces. The water has destroyed millions of acres (hectares) of crops and forced thousands of factories to close.

Officials said Monday they hoped seven submerged industrial estates would be running again in about three months. The parks house the factories of global companies including Honda, Toshiba and Western Digital.

Associated Press contributed to this report.

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