Honda Motor hopes new plant will cut wait time for popular models

Honda Motorcycles and Scooters India (HMSI) has said that with sales remaining strong through the year, it would now depend on its second upcoming plant in Rajasthan to help maintain its growth target of about 22 per cent for 2010-11.

Increased production would also help reduce the month-long waiting period for a few of its popular models, like the Activa scooter.

The fourth largest domestic two-wheeler company laid the foundation stone for its second plant at Tapukara on Monday. While the construction for the plant is to begin immediately, production would only start by the second half of 2011.

“We sold 12.7 lakh units in 2009-10 and this year, we aim to sell 15.5 lakh units. The new plant would help us to meet our growth targets,” said Mr Shinji Aoyama, President and CEO, HMSI.

HMSI's motorcycle sales in 2009-10 stood at 5.2 lakh units, while scooter sales were at at 7.5 lakh units. Mr Aoyama recently said that though scooters represent 60 per cent of sales, the split between scooters and motorcycles would become equal this year. Moreover, as motorcycle demand grows, it may even constitute a larger share of the company's sales by 2012.

Built over 240,000 sq.m taken from Honda Siel Cars's 1,000 acres in the region, the new plant would have an annual capacity of six lakh units in the initial phase. Officials said that there would also be an option of doubling the capacity to 12 lakh if there is high demand. Combined with a smaller increase in annual production at its first plant to 16 lakh units, HMSI would look to have a total annual capacity to produce 22 lakh units when the new plant also becomes operational.

Mr Fumihiko Ike, Managing Director and COO of Honda Asia and Oceania, said that the first plant has almost reached full capacity and the new plant is critical for HMSI's plans for India. “India is one of the most important markets for Honda. There is a promise of future growth,” he said.

HMSI has invested about Rs 500 crore for this new plant, which would involve fresh hiring of close to 3,000 employees.