Workers Squeezing Honda With Especially Costly Strike
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FOSHAN, China ? In going on strike at a transmission factory, workers here have Honda by the jugular, although it was not entirely clear at the employees’ dormitory on Friday that they realized this.
Transmission factories are the most expensive auto plants of all to build, because they are huge and highly automated. Each costs as much as $1 billion, more than twice the cost of an assembly plant, and typically supplies several assembly plants. The factory here supplies four Honda plants in China, all of which have been shut down.
Automakers tend to put transmission factories only in the most politically stable and strike-free countries, because a shutdown for even a day is costly. Until now, China was seen as a safe bet.
Striking at a vital plant to achieve an auto-industry domino effect was a tactic first used to good effect in the United States by the United Automobile Workers. The U.A.W. won recognition from General Motors in 1937 through sit-down strikes at two other kinds of factories: making engine parts and stamping auto body parts for many other assembly plants.
The U.A.W. has repeatedly held strikes at crucial parts factories to shut down many assembly plants quickly, particularly at G.M. in the 1990s.
But the U.A.W. has benefited from a tight-knit union leadership. Workers here say they are operating more by consensus. And there has been no sign that the Chinese authorities are ready to let a cohesive group of labor activists emerge to lead a national independent union.
It’s a bit of a catch-22 situation: should you drive on and take the depreciation as it comes, or should you sell pronto?
Stuck with a discontinued car model and clueless on what to do with it? Fret not. We brought in the car experts to weigh in on how to deal with a discontinued model. Base your decision on these factors…
Examine why the model was discontinued
Each year, a few car models are discontinued for various reasons and it’s important to understand why a particular car was stopped before choosing to buy/keep/sell that model. “The most common reason is product lifecycle. Most cars follow a 5-to-7-year lifecycle, after which an all-new model replaces it,” says Rush Parekh, Founder of Team-BHP.com. For example, Chevrolet Blazer, which was replaced with the far more modern Chevrolet Trailblazer in the early 2000s.
However, there could be a number of other reasons and Rajat Sahni, CEO – Used Cars, CarDekho.com, lists them: Outdated design and change in demand pattern, is one. For example, the Nissan Xterra, which débuted when truck-based, body-on-frame SUVs were popular, before the rise of the car-based crossover. Another reason could be the unexpected exit of major market players, like in the case of General Motors’ exit from India. It forced Chevrolet to discontinue the Beat. The third reason could be performance-related issues, as compared with competitors, or a shift in market trends. For example, the Renault Pulse, introduced in India in 2012 as a slightly altered version of the Nissan Micra, failed to capture the Indian market and continued to sell in poor numbers. In 2017, Renault decided to discontinue the hatchback.
Similarly, body parts for Honda Crv 2020 launched its first MPV, the Mobilio, in 2014 with high expectations, but the seven-seater did not click in the Indian market. The main reasons behind its failure were its looks and the entry-level trim lacked features. In July 2017, Honda discontinued the Mobilio after facing tough competition from rivals like Maruti and Toyota.
Look at the brand
The brand definitely makes a difference in the decision to sell/keep a car. “As an example, if you own a discontinued model from Maruti or Toyota, parts and service shouldn’t be an issue. However, you are in for challenging times if you have a discontinued model from brands like Fiat or Chevrolet,” says Mr. Parekh.
Brand does impact the resale value, says Mr. Sahni. “If a brand shuts down completely, then it may not be the best decision to discard your car, as no one would be willing to buy it at a decent price.”
Check for after-sales support
It’s an unspoken rule that manufacturers must support their cars for 10 years after they have been discontinued. “Of course, in reality, after-sales support depends on a variety of things. There are cases where even two- or-three-year-old models aren’t supported well,” says Mr. Parekh.
“The discontinued vehicles are still part of a brand with an image to uphold, so after-sales service/support still follows the same policy,” says Mr. Sahni. “But if the brand shuts down in a particular country, then there are no provisions for such services, and the owner may have to find an alternate solution for servicing or any other kind of support.”
Check for availability of spare parts
Though understandably, companies continue to manufacture spare parts for these models, it’s always an ordeal to source them. “In that case, look at the big shops in prominent spare part markets, like Shetty Motor Stores in Opera House, Mumbai. If you are finding it difficult to source parts, also consider shopping online. There are lots of parts suppliers who might be able to help you,” says Mr. Parekh.
However, Binu Vijayan, Deputy General Manager, Popular Maruti in Thiruvananthapuram, urges caution over sourcing spares from online dealers, as the parts may not be certified by manufacturers, even as a large number of ‘local’ spares also flood the market. “Sometimes, it so happens that a particular part may not be in stock and will have to be ordered directly from the dealer or original maker. This may cost more and take more time,” he says.
One advantage is that, many modern cars share parts with other cars, says Mr. Sahni. “So even if the vehicle has been cancelled, it’s likely that the automaker will still build parts for other vehicles that share its engine, transmission or even smaller pieces, such as window switches.”
Ask about resale value
There is no fixed algorithm for calculating a fair price of discontinued models. Only demand and supply drives this. Mr. Sahni suggests two ways to evaluate this:
1. Inspecting the vehicle to know its exact value after considering various factors like wear and tear, depreciation and other factors.
2. Arriving at a tentative fair value of the model through inspection, though exact figures are known only after analysing the market demand for that particular model.
Paradoxically, for certain popular models, the resale value can actually go up, just like, say, motorbike models like Yezdi or old Yamaha RX 100, which retain a vintage appeal, says Mr. Vijayan.
- Created: 12-02-21
- Last Login: 12-02-21