Honda is feeling the pinch from Malaysia's extended lockdown
Honda Malaysia sales from May to July 2021 plummet 52 percent year-on-year
Honda Malaysia has reported a 52 percent year-on-year decline in car sales from May to July 2021. The Japanese carmaker sold 5,700 units during this three-month period compared to 12,000 units sold in the period last year when the Conditional and Recovery Movement Control Orders were in effect.
Honda insists it still fully supports the Malaysian governments efforts to curb the ongoing Covid-19 pandemic. However, extended business closures are not without their repercussions, even for a company as big as Honda.
The cascading effect of prolonged closure
Having closed its plant in Melaka, sales office and dealer showrooms since the start of the Full Movement Control Order (FMCO) in June 2021, Honda Malaysia's new model plans and overall supply chain have taken a notable hit.
According to Madoka Chujo (inset), Managing Director and CEO of Honda Malaysia: "The prolonged business closure has also impacted Honda Malaysia’s new model production due to no testing conducted in the manufacturing facility. Furthermore, the Company’s supply chain and exportation of parts are also affected.
"The automotive industry supports a wide network of local components and parts suppliers that comprises a few tiers. These suppliers might not be able to sustain their operations and this will subsequently affect the overall supply chain. The current extended lockdown and no visibility on business resumption timeframe have impacted planning and overall investment of the automotive marques."
The greater concern for the company at this point of time is how its 101 authorised dealers will weather the storm given their reliance on the sale of new cars, especially sales advisors dependent on sales commissions.
Light at the end of the tunnel?
To mitigate the situation, Honda Malaysia has started registering its associates under the Public-Private Partnership Industrial Covid-19 Immunisation Programme (PIKAS) to expedite the vaccination of the affected workforce.
"Honda Malaysia targets to achieve 100% of first dose vaccination for all its associates by mid-August 2021. As Malaysia has one of the world’s fastest vaccination rates, the Company hopes to achieve its vaccination target and subsequently the nationwide vaccination programme will help create a safer environment for Malaysians," Chujo added.
In helping speed up the rate of inoculation among its associates, Honda is hoping that its business network, from manufacturing to sales is primed to hit the ground running once the automotive sector is allowed to resume, presumably under strict SOPs and guidelines set by the government. The company hopes there will be no long-term impact requiring retrenchment of employees and closure of businesses involved in its supply chain.
