June 13, 2008 / 9:42 AM / 12 years ago

Honda China car, engine production still disrupted

TOKYO, June 13 (Reuters) - Honda Motor Co (7267.T) said on Friday the disruption at its Chinese car factories remained unresolved due to patchy supplies of engines from a water-damaged engine plant in the southern city of Guangzhou. Japan’s No.2 automaker had intermittently suspended production at all four of its Chinese car assembly plants and an engine factory since June 3 after heavy rains flooded two of the facilities in Guangzhou.

A Honda spokeswoman said there had been no noticeable impact on sales from the disruption.

But Tatsuo Yoshida, an auto analyst at UBS Securities, said the suspension — now approaching 10 working days — was worrying since Honda did not know when it would return to normal and it would be unable to fully make up for the lost production by the end of the first fiscal quarter this month.

“It’s gone on longer than we’d imagined,” he said. “It’s not earth-shattering, but it is a concern.” Yoshida noted that Honda’s sales in its biggest U.S. market, meanwhile, were robust last month and looked set to stay that way in June.

One of the two lines at the 360,000-units-a-year engine factory, held jointly with Dongfeng Motor Corp (0489.HK), is still under repair, forcing all but two of its four car factories in China to remain shuttered.

Honda’s main car factories are owned in separate joint ventures with Dongfeng Motor and Guangzhou Automobile Group Co.

The Dongfeng Honda factory in Wuhan, central China, resumed normal production on Wednesday. It builds the CR-V sport utility vehicle and Civic sedan and procures only some engine parts from the engine factory in Guangzhou.

Production resumed on one of the engine plant’s two lines on Friday and will stay that way on Saturday — a scheduled work day — and Monday, the spokeswoman said.

The 120,000 units-a-year Guangzhou Honda car factory, which builds the Accord, Odyssey, Fit and City models, will resume full operations on Saturday and Monday, after working only the second shift on Friday. The other two car factories will be closed.

Honda’s four car factories, including an export-only site that supplies Europe, have a total production capacity of 530,000 vehicles a year and are a growing source of earnings. (Reporting by Chang-Ran Kim; Editing by Hugh Lawson)

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