Honda faces sales hit

A desperate need to put cars on showroom floors is forcing Honda to take a hit on profits by importing the popular Jazz and Civic small cars from Japan from early next year. 

Honda's Thailand plant - responsible for building about 80 per cent of the cars sold here - was inundated in the recent floods and the company this week gained access to the plant for the first time since October 4.

It is predicting an April start-up at the site but in the interim Honda Australia is sourcing stock from wherever it can and juggling low stock volumes. 

Company spokesman Lindsay Smalley admits the move to import cars from the Suzuka plant will affect profits but adds it is necessary to provide vehicles for its customers and dealers. 

"The rising value of the yen and the fact our Thai-built cars benefit from the free trade agreement obviously will have an impact," he notes. 

"We are fortunate that Honda New Zealand already takes cars from Suzuka, so the cars are being built to ADR (Australian Design Rule) standards." 

"We still need to have them approved for local sale and that process is happening now." Honda Australia director and sales and marketing head Stephen admits that at times this year it has only had around 200 examples of some models in the country. 

"When you spread that number around our 107 dealers, we've had to be fairly careful in dealing with stock but we've managed it as best we can and there's finally an upside," he says. "It's been a tough year and it's fair to say we're looking forward to 2012." 

Honda sales in Australia are down more than 25 per cent on last year at 25,882 and Collins says the final 2011 figure will be around 35,000. Collins forecasts 40,000 sales next year and Smalley says it will take three years to return to Honda's 2007 heyday when the company sold more than 60,500 vehicles. 

"At natural growth it will take around three years, but sometimes car companies can do things to accelerate that," he says, implying Honda will aggressively cut prices and add features when production returns to normal. 

Smalley also says equipment to rebuild the Thailand factory has already been ordered. "I think the speed we recovered from the earthquake and tsunami in Japan shows the resilience and dedication of our workers and that will be the same in Thailand," he says.