With sales volumes almost halving in the past four years, Honda Cars India, Japan's leading carmaker, is considering to restructure its manufacturing operations and cut cost, which may mean closing down one of its two units.With annual plans likely to drop to almost 1 lakh units in FY20, Honda Cars India may move production from Greater Noida to the Rajasthan plant and sell the land acquired in Gujarat a few years back, said five people familiar with the company’s plans.The Greater Noida facility — its first manufacturing base in India — may turn into a R&D hub and small CKD operation units at best from the buzzing manufacturing operation it used to be almost a decade back, if the plan goes through.The production at the Greater Noida plant, which has an annual capacity of 1.2 lakh units, has come down to almost 2,500 units month -- i.e., capacity utilisation of less than 20-30%. And even cumulative production capacity is expected to drop to as low as 40%.The feasibility study of recasting the manufacturing process is happening at a time when the Indian market is staring at its steepest decline in passenger vehicles sales in the past two decades.A large senior management team led by Masayuki Igarshi, chief of Asia Oceania region for Honda, and the team from Thailand visited India earlier this week to review the mid-term plan for India, which included restructuring of manufacturing plans.When contacted, the Honda Cars India spokesperson said in the current market scenario where auto sales have declined sharply this financial year, the company has been continuously optimising production volumes between the two plants to match the sales situation, and it has nothing to do with shutting down of any plant.“The senior management’s visit was one of the periodic meetings where we discussed ways to enforce greater competitiveness in our future products and strategy. HCIL firmly believes in India’s future growth potential and we are committed to bringing the latest products and technologies for the highest level of customer satisfaction,” said the spokesperson.“With over a couple of decades presence in the state, Honda cannot claim tax benefits anymore and where the plant is located is also becoming a residential town. The option to move manufacturing to Tapukara has been going on for the past two years; it is not a question of ‘if ’, but a question of ‘when and how’ – that’s what the management has been vigorously studying,” said a person on the condition of anonymity.Honda had invested in Gujarat and Rajasthan between 2010 and 2015, expecting a strong growth, but the market has actually grown by merely 4-5% compounded on an annual basis in the past five years.The company has slowed down on dealership expansion, and even the investment on new customer interface, which it was supposed to roll out over the past couple of years, will be deferred.The new-generation City has been largely moved to Tapukara plant and the production in Greater Noida has come down to just 60 units a day and that too mostly completely knocked down (CKD) units.Amit Kaushik, country head and managing director India, Urban Science, said the adverse market climate is pushing vehicle makers to take tough calls like this to remain in the reckoning.“Strategy may bring in shortterm cost optimization benefits for Honda. For me, however, it's a big setback to the local Yogi government. This presents an opportunity for new automakers, especially from China, to tap into the readymade facility if Honda indeed concludes the sale to get a quick market entry," said Kaushik.In April to September of FY20, Honda has registered a sales decline of 35% to 60000 units. The company has also slipped out of top five car makers in the country for the first time in the last half a decade.