Honda to set up third two-wheeler facility in India

Japanese automobile company Honda today said it would set up its third two-wheeler manufacturing facility, at Narsapuram in Karnataka.

Though the company did not specify the amount of investment required to set up the plant, industry sources pegged it at around Rs 1,000 crore. The facility will have an annual production capacity of 1.2 million units.

“To realise Honda’s vision to provide good products with speed and affordability, the third plant will be built in the Bangalore area. It is scheduled to become operational in the first half of 2013,” the company said in a statement.

The company’s wholly-owned subsidiary, Honda Motorcycle & Scooter India (HMSI), is investing about Rs 500 crore in setting up its second facility at Tapukara in Rajasthan. The facility, with an initial installed capacity of 0.6 million units per annum, will be inaugurated on June 1. HMSI has already decided to double the capacity of the facility by the end of this financial year.

After the expansion exercises, HMSI’s total capacity will rise to four million units per annum from 1.6 million units. “India is the world’s second-largest motorcycle market behind China, and industry-wide motorcycle sales in India for 2010 reached 11.32 million units (up 30 per cent compared to 2009. HMSI’s sales have grown steadily, with 2010 sales of approximately 1.526 million units (up 40 per cent compared to 2009), achieving a record high for 10 consecutive years,” the company said.

Last December, Honda Motor had decided to sell its entire 26 per cent stake in Hero Honda to the Indian promoter, BM Munjal-led Hero Group. Hero Honda crossed five million units sales mark last financial year. HMSI had earlier indicated it would aim at becoming the top two-wheeler brand in the country over the next 10 years.