Honda Cars scales down operations with another VRS round

Honda Cars India Ltd (HCIL) is clearly going lean and mean on its workforce front.

The Japanese automaker recently carried out its third VRS (voluntary retirement scheme) exercise in September 2021, which saw nearly 100 executives above the assistant manager level opting for it. According to top sources, the VRS largely focused on senior management personnel across key operations such as purchasing, quality development, manufacturing and marketing. 

While confirming the September VRS, a spokesperson told Autocar Professional that HCIL is in the process of reconstituting itself and scaling down operations to a profitable level. In the run up to ceasing production at the Greater Noida plant, the company had already kicked off a VRS in January 2020 with the second round coming in July last year. 

Sources say nearly 1,500 employees, including over 950 manufacturing associates, exited the company with hefty compensations. It is estimated that close to 500 employees have left the company over the last year since the closure of operations at Greater Noida was announced.

HCIL now operates out of a single facility in Rajasthan which is home to the City, Amaze, Jazz and the WR-V from its Tapukara facility in Rajasthan.

The news of the VRS also comes at a time when the company has seen a high profile exit in Rajesh Goel, Senior VP and director, Marketing & Sales, who stepped down after a 25-year tenure. He had been with HCIL since the time of its inception and indicated that he was quitting for personal reasons.

Apart from Goel, other prominent exits include Navneet Kaur, Head of Brand & Marketing Communications, who joined Citroen India in October as the head of Marketing & PR.  Vineet Mishra, Assistant General Manager, Purchasing Operations, moved over to Suzuki Motorcycle India as AVP role. Both Kaur and Mishra worked in HCIL for nearly two decades.

The industry grapevine is abuzz that more and more employees are looking for new opportunities with brands like Ola Electric, Citroen India and MG Motor India believed to be among the top recruiters. It is likely that the exits of top names may have rattled the remaining workforce but that should not necessarily mean that HCIL is contemplating something drastic on the lines of Ford or General Motors. 

The automaker maintains that there is a definite product pipeline for the future including a new SUV which will hit the market by 2023. The problem is that it will have to contend with aggressive competition from the Korean duo of Hyundai and Kia as well as Maruti Suzuki and MG Motor which are going all out with a slew of new products at breakneck speed. 

Between April and October 2021, HCIL sold 47,976 units, up 34 percent from 35,700 units in the same period last year. The City remains the key volume driver, clocking 20,717 units (11,810 last year), while the Amaze, at 18,682 units (16,675) is the second best-selling model.