Part 3/7:
Honda's decision to cut back production comes from a combination of factors. According to a statement from GM, the move is a reflection of Honda's strategy to align production with customer demand and market conditions. The core issue remains that both Honda and GM have not been able to break even on the Prologue’s production costs; hence, a reduction in output becomes a pragmatic move.
Honda's previous contract with GM facilitated the manufacturing of a pre-determined number of units, but the reality of sales has prompted this reassessment. Honda attempted to stimulate demand through discounts, which artificially boosted sales figures but were not sustainable long-term solutions, particularly given that Honda operates with tight margins.