Honda Malaysia’s Sales & Production Operations Affected By Lockdown

Although Honda Malaysia is fully supportive of the Malaysian government’s efforts to curb the spread of COVID-19, it is nonetheless taking a hit. Sticking to the official Standard Operating Procedures (SOPs) of the various lockdowns have affected its bottom line. The company had closed its business operations comprising Honda Malaysia’s plant in Pegoh, Melaka, sales office and dealer showrooms since June 2021 to comply with the implementation of Full Movement Control Order (FMCO) by the government due to the significant increase in COVID-19 cases.

During this period, only the aftersales services are allowed to operate at dealerships but with minimal manpower. Furthermore, it was only allow to provide selected aftersales services, and by appointment only. As showrooms were shut and sales and enquiries conducted online, Honda experienced a drop in vehicle sales. Between May and July 2021, the company recorded a sale of 5,700 cars which is a 52% year-on-year decline.

“With only certain after-sales services allowed and sales and manufacturing operations on halt, it is no surprise that sales have plunged. Honda Malaysia saw a decline of 52% in car sales for the year-on-year period of May to July 2021. We sold about 5,700 units in this period compared to close to 12,000 units sold in the same period last year when the country was under Conditional Movement Control Order (CMCO) and Recovery Movement Control Order (RMCO),” commented Honda Malaysia Managing Director and Chief Executive Officer, Ms. Madoka Chujo.

The extended lockdown periods have also affected the company’s business plans, including the introduction of new models. This is due to the restrictions on its production facility as well as its local vendors, which ultimately affects its dealerships.

“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,” Ms. Chujo said.

The overall effect gets filtered down to the 101 authorised dealerships across Malaysia. The prohibition of showroom sales activities has impacted dealer revenue and the employees. Sales advisors largely depend on earned commission as income.

“Honda Malaysia understands the hardship that the dealers and Honda associates are going through, and hence, the Company is trying to do its best to assist them during the difficult times. One of the efforts is by registering Honda associates under the Public-Private Partnership Industrial COVID-19 Immunisation Programme (PIKAS) to expedite the country’s rate of vaccination. The Company 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,” Ms. Chujo added.

Further, Honda Malaysia hopes that with the accelerated vaccination effort, the automotive sector be allowed to resume activities under strict SOPs and guidelines set by the government. “Honda Malaysia is appreciative of the hard work of all the frontliners who have been working tirelessly to help fight the pandemic,” Ms. Chujo said. It also hopes that there will be no long-term impact such as retrenchment of employees or potential business closure among the supply chain.

At this moment, Honda is only able to provide a limited set of aftersales services to its customers. And to ensure it is done with minimum contact, Honda Malaysia is encouraging its customers to use the HondaTouch mobile application to make their appointment.