Honda offers VRS to its office associates

Mumbai | Delhi: Japanese carmaker Honda Motor’s Indian subsidiary has embarked upon an aggressive “right-sizing” of its workforce, at a time when sales almost halved in the last one year.The maker of popular sedans - Honda City and Honda Amaze - had offered a voluntary retirement scheme to its plant workers in January-February and now has initiated a similar scheme for its office associates starting 24th of July. This scheme will be applicable to close to 1000 workers or 50-55% of its 2000 associates.Associates over 40 years of age or the ones who have completed five years of service at the company are eligible for this scheme. The scheme is open from 24 July 2020 and the option is available to eligible people across functions, a source said.According to people in the know, the severance package extended in some cases will include compensating them for a period ranging between 12-to-18 months. Honda is taking a step further by helping these associates secure placement with other companies through international agencies.In an official response Honda Cars India spokesperson confirmed that the company has rolled out a voluntary retirement scheme for office associates and the scheme has been made to provide a ‘win-win situation’ for associates in terms of the overall benefits as well as the company to be able to enhance efficiency in operations, given the current market demand and industry forecast.“We cannot share the specific details of the scheme, but the benefits are among the best in the industry and it has been prepared keeping the welfare of our associates in mind,” added the spokesperson.In January Honda had initiated a voluntary retirement scheme (VRS) for its manufacturing line associates at Greater Noida facility to increase productivity and efficiency. The scheme was operational between January 28 and February 17, 2020.The plant workers were offered a sum of Rs 50 lakh each, based on their seniority and total number of working years. For associates seeking VRS are also eligible for health insurance amounting to Rs 88,000 along with acquired leaves, gratuity etc as part of the broader compensation.The capacity utilization at the plant has been low amid a prolonged slowdown in the local automotive market.In FY-20, Honda Cars India’s sales fell 45% to 102,016 units, the company’s market share stood at 3.7%. With sales of 1,14,081 units, Japanese rival Toyota, in fact, edged ahead of Honda to grab the fifth position in the domestic market last financial year. Passenger vehicle sales in India recorded its worst decline in over two decades to fall by 18% to 2.78 million units in FY20.The sharp decline in sales volume forced several manufacturers to trim costs by restructuring their workforce. Last year, Toyota Kirloskar Motor too had initiated a voluntary retirement scheme for the employees of its manufacturing facility in Bidadi, Karnataka. The company - a joint venture between Japanese auto major Toyota and the Kirloskar group - had announced the scheme for its unionised employees and supervisory category with a minimum of five years of service at the plant. Tata Motors had also offered VRS to some employees to cut costs as part of its restructuring process.In the two-wheeler segment, market leader Hero MotoCorp had also come up with VRS for its employees last year.