Honda Motorcycle to expand capacity to 4.6 mn units by March 2014

To add third assembly line with 600,000 units capacity at its third plant in Narasapur near Bangalore

Honda Motorcycle and Scooter India Pvt Ltd (HMSI), the second largest two-wheeler company in India, plans to expand its installed capacity by 15% to touch a total of 4.6 million units by March 2014. Currently, the company has a capacity to manufacture 4 million units from three plants at Manesar, Tapukara in Rajasthan and Narasapur in Karnataka.

On Tuesday, the company inaugurated its third plant at Narasapur Industrial Area, about 58 kms from Bangalore, which will produce 1.2 million units to begin with. The company is adding the third assembly line with an additional capacity of 600,000 units, which will be operational by March 2014, Keira Muramatsu, President & CEO, HMSI said.

When the expansion is completed, the Narasapur plant will see a total investment of Rs 1,350 crore. The company has also acquired additional 23 acres land from Karnataka government for creating additional facilities like safety riding track among others. Presently, the plant is spread over 96 acres and would provide employment to 4,500 persons by end of this fiscal, Yadvinder Singh Guleria, vice president, sales and marketing, HMSI said.

To begin with HMSI will start production of Dream Yuga motorcycle at this plant from June. It will start manufacture of Activa scooter on the second line two months later, he said.

“Seeing the current trend of demand for scooters and motorcycles, we have decided to expand the capacity by another 600,000 vehicles by end of this fiscal to take the total capacity to 1.8 million units in Narasapur. The total capacity of the company will go up to 4.6 million units from 4 million units at present,” Guleria said.

With the commencement of production at Narasapur plant, the company will reduce the waiting period significantly from the present 15 days for Activa, he said.

“Presently, 100,000 customers are waiting for delivery of Activa in cities like Bangalore, Kochi, Trivendrum, Chennai, Hyderabad and Vizag,” he said.

During 2012-13, HMSI recorded 31% growth in sales and sold 2.6 million two wheelers, while the entire two-wheeler industry recorded just 3% growth. It als oexported 1,47,000 units during the year. In 2013-14, the company aims to sell 3.9 million vehicles, a staggering 85% growth over last year.

Out of 3.9 million unit sales target, 1.8 million units will be scooters and balance would be motorcycles. Activa will dominate the scooter segment with 1.35 million unit sales.

“Our major focus is to reach 4.6 million sales target before going on to expand the capacity further. In this kind of flat growth cycle, we are aiming at 4.6 million units, which will happen in the next fiscal,” Muramatsu said.