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Thursday, August 25, 2022

Honda Now Looking Outside China For Parts Supply

Similar to Mazda, Honda is the next Japanese car manufacturer looking to building a supply chain base that would reduce their dependency on China.

The Sankei (via Reuters) reports that China’s strict zero tolerance over COVID has snarled production at various parts production hubs in the country. This has resulted in the lack of parts, causing Japanese companies, many of them carmakers, to suspend production.

Honda has refused to comment on the report, but it did confirm that in general, they have been “working on reviewing and risk-hedging its supply chain in general.”

Automakers typically maintain ongoing reviews of risks in their supply chains, particularly in Japan where natural disasters such as earthquakes and floods have caused severe disruptions in parts deliveries.

The Japanese government had previously offered companies incentives to bring production back to Japan, although uptake appeared to be subdued, with some executives and analysts saying it would be difficult for Japan to suddenly move away from a market where it had steadily built production and logistics hubs.

Honda produces about 40 percent of its vehicles by volume in China.

Nevertheless, some of companies have already sought to reduce dependence on China following strict COVID-19 lockdowns that affected major Chinese cities such as Shanghai.

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