Honda to invest Rs 1,775cr to expand 2-wheeler capacity

Japanese auto major Honda will invest Rs 1,775 crore this fiscal to expand two-wheeler production capacity and launch of new models in India, a market which the company expects to become 'number one' for it globally in two years.
The company's wholly owned subsidiary, Honda Motorcycle and Scooter India (HMSI) plans to introduce 15 new products this year, out of which seven are brand new models. It will also start assembling high-end sports bike CBR 650F in India.
"In 2015-16 India will be second largest contributor to Honda's global sales accounting for 25 per cent. Currently Indonesia is number one, but considering the way Indian two-wheeler market is expected to grow, we may be able to be number one," HMSI President and CEO Keita Muramatsu told reporters here.

In 2014-15, HMSI sold 44.5 lakh units and is eyeing to sell 47 lakh units this fiscal. Currently, it is facing capacity constraint at all of its three plants in Manesar (Haryana), Tapukara (Rajasthan) and Narsapura in Karnataka that are running at full capacity.
On when India could become Honda's number one global two-wheeler market, Muramatsu said: "In the next two years when we have Gujarat plant and additional capacity in Karnataka plant ready, we may be able to be number one."
Commenting on the company's plans for the ongoing fiscal, he said: "We will be adding a total of 18 lakh units with the fourth plant at Gujarat expected to come during this fiscal and another third line being added at the Karnataka plant."

While the Gujarat plant is expected to be operational this fiscal, the additional capacity at the Karnataka plant will be ready by the end of 2016 to take the company's overall production capacity to 64 lakh units annually.

The total investment for the fiscal, including capacity expansion and new model launches is Rs 1,775 crore.
"The majority of this investment will be on the Gujarat plant and the rest on Karnataka plant expansion and new models," HMSI Senior Vice President (Sales and Marketing) Yadvinder S Guleria said.
On the company's product launch plans, Guleria said 15 new introductions have been planned for the year, out of which six are already out and nine remaining.

"We will also be assembling the sportsbike CBR 650F which will be our flagship brand here at our Manesar plant. Initially, we will roll out two units a day and this will be sold in India through select shop-in-shops at 20 select towns," Muramatsu said.
If the model is successful, then the company would consider assembling more such sportbikes in India, he added.