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Japanese auto major Honda is embarking on an aggressive ride in India to challenge the number one position of erstwhile partner Hero in two-wheeler segment with plans to produce 10 million units by 2019-20 that may entail the company having up to eight plants in India.

 

Besides, the company's Indian arm Honda Motorcycle and Scooter India (HMSI) plans to accelerate the rate of new model launches while lowering prices of the products by increasing localisation levels. It will also hire up to 4,000 people for its third plant in Karnataka.

 

"With our third plant coming up in Karnataka, in fiscal 2013-14 we will have a total production capacity of four million units. In the long term, the target is to have a capacity of 10 million units by 2019-20," HMSI President and CEO Keita Muramatsu said.   

 

When asked how many plants would the company need to have in order to meet the envisaged target, he said based on its current capacity, "about seven to eight plants" will be required. 

  

Honda's erstwhile partner Hero MotoCorp has already announced its intention to have USD 10 billion turnover in the next five years with sales of 10 million units, out of which exports would be 10 percent of the total sales. 

  

HMSI's Manesar plant has a capacity of 1.6 million units annually, while that of the Tapukara plant is 1.2 million. The upcoming plant in Karnataka will have the capacity of produce 1.2 million units per year initially.  

 

Muramatsu declined to comment on the investments required to meet the company's long term target saying the focus currently was on the third plant in Karnataka, which is expected to start production by the first quarter of FY14. The company is investing Rs 1,500 crore on the plant.  

 

HMSI will hire 3,000-4,000 people for the new plant, Muramatsu said, adding that "when all the three plants are operational the company will have a total of 13,000-14,000 workers".

 

Commenting on the new products programme, he said: "We want to accelerate the introduction of new models, reduce product development time and bring down the price of products. We want to utilise local sourcing and production infrastructure and create products for customers in India through our research at our new technical centre." 

 

HMSI has invested Rs 150 crore at the new technical centre at Manesar, where Honda Research and Development India, a wholly-owned subsidiary of Honda R&D, Japan, is also shifting its entire two-wheeler operations in India to facilitate closer coordination and synergy of operations. 

 

In terms of sales, Muramatsu said the company has crossed a cumulative of 10 million customers and it expects to touch the 12 million milestone in the next fiscal.

 

To boost sales, HMSI is also expanding network and plans to add new 500 outlets to have a total of 2,000 sales and service touch-points across India by FY13 end.

 

Link:
http://www.moneycontrol.com/news/business/honda-aims-at-10m-units-by-fy20india_770665.html?utm_source=investor-briefing

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