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HMSI to invest Rs 1,600 cr in FY18 to expand operations

Honda's cumulative investment in country to reach about Rs 9,500 crore by fiscal-end: HMSI Senior VP

Press Trust of India  |  New Delhi 

Honda was inspired by the success of its Unicorn 150cc motorcycle to launch a new version with a 160cc engine, but it failed to grow overall sales
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(HMSI) aims to invest Rs 1,600 crore during the current fiscal as it looks to introduce new models and expand operations.

The two-wheeler major, which plans to sell a total of 60 lakh units this fiscal, intends to add another 500 touch points during the period. Till June this year, the company had around 5,380 sales outlets across the country.

"With new models and capital expenditure on new fourth assembly line at the Narsapura plant, Honda will invest Rs 1,600 crore in the current fiscal year," HMSI Senior Vice President, Sales and Marketing, Yadvinder Singh Guleria told PTI.

This will take company's cumulative investment in the country to about Rs 9,500 crore by fiscal-end, he added.

HMSI is also looking to expand its reach in the rural areas, which currently contribute around 30 per cent of the total sales.

In order to cater to growing demand, the company has already doubled its sales network from 2,300 outlets in 2013- 14 to 5,380 outlets as of June this year.

"Despite this aggressive network expansion, Honda's network is even today around 80 per cent of our competitor level," Guleria said.

With rural markets contributing 30 per cent to total sales as of now, penetration in smaller towns plays a critical part in the company's strategy, Guleria said.

"Looking at this, 70 per cent of the about 500 touch- points that we aim to add this year will be in rural areas," he added.

Besides, hub and spoke model is further expanding the brand footprint in remote areas, he said.

The company through its 20 Mobile Service Vans (MSV), is reaching even those customers who are far from its last brick and mortar touch-point, Guleria said.

During the first quarter of the current fiscal, HMSI's sales grew by 19 per cent as compared to industry's growth rate of 9 per cent.

In 2016-17, HMSI sold a total of 47,25,067 units. Currently, it has leadership in scooter segment with 59 per cent market share. It also occupies number two position in motorcycles vertical in India.

In order to cater to the growing demand for its products in the country, the company recently commissioned its fourth assembly line at the in Karnataka. HMSI now has an overall annual production capacity of 64 lakh units.

With the commissioning of the fourth line that has an additional 6 lakh units annually, the has also become Honda's single biggest manufacturing plant globally with an overall capacity of 24 lakh units annually.

Besides Narsapura (near Bengaluru), HMSI also has manufacturing plants at Manesar in Haryana, Tapukara in Rajasthan and Vithalpur in Gujarat.