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NEW DELHI (Dow Jones)--Honda Motor Co.'s (HMC) Indian two-wheeler unit will invest about INR15 billion ($331 million) on its production capacity expansion plan, a person with direct knowledge of the matter said Thursday, as it seeks to exploit rapidly rising demand in the South Asian nation.
Honda is among several auto companies in India which are expanding their existing plants or building new factories to tap the world's biggest two-wheeler market after China. The Japanese auto maker's plans follow its recent exit from Hero Honda Motors Ltd., India's largest motorcycle maker by sales, by selling its entire stake to its local joint venture partner Hero Group.
Earlier in the day, Honda Motor said its wholly owned Indian subsidiary will double production capacity at its second factory to 1.2 million vehicles by March 2012 and also set up a third plant of equal capacity.
The Japanese auto maker didn't disclose investment details. N.K. Rattan, Honda Motorcycle & Scooter India Pvt. Ltd.'s vice president for sales, marketing and corporate affairs, said: "We can't comment on investments at this point of time."
But a person with direct knowledge of the matter, who declined to be named, told Dow Jones Newswires that the company will spend INR10 billion to build the third factory and INR5 billion on expanding the second plant.
The company's first factory is at Manesar in northern Haryana state and has an annual capacity to make 1.6 million vehicles. The second plant, located in northwestern Rajasthan state, is scheduled to start operations June 1. The third plant, to be established near Bangalore in southern India, will start production in the first half of 2013.
Honda Motorcycle's move to rapidly expand production is in line with its aim to surpass Hero Honda Motors and become India's biggest two-wheeler maker within a decade.
Hero Honda controls more than half of India's motorcycle market with 15 two-wheeler models, including six 100-cubic-centimeter models such as the Splendor+ and Passion Plus. In the year through March, Hero Honda sold 5.27 million two-wheelers in India compared with Honda Motorcycle's 1.55 million.
Honda Motorcycle had previously said it expects vehicle sales to grow 27% this financial year that started April 1 to 2.1 million vehicles. In March, the company said it plans to launch an entry-level, or 100cc, motorcycle to expand presence in a segment that makes up for more than half of the over 9 million motorcycles and scooters sold in India each year.
Honda Motorcycle had so far been prevented from introducing a lower-priced entry-level motorcycle in India because of Honda's relationship with Hero Honda. But in December, Honda agreed to sell its 26% stake in Hero Honda for about INR38.42 billion, paving the way for the launch of such vehicles.
Honda Motorcycle makes motorcycle models such as the CB Twister, Shine, Stunner, Unicorn, and scooter models Aviator, Activa and Dio at its first factory. It also sells the imported 250cc motorcycle CBR250R.
Source : UPDATE: Honda India Unit To Invest About INR15 Bln To Up Two-Wheeler Capacity - Source - WSJ.com
Honda is among several auto companies in India which are expanding their existing plants or building new factories to tap the world's biggest two-wheeler market after China. The Japanese auto maker's plans follow its recent exit from Hero Honda Motors Ltd., India's largest motorcycle maker by sales, by selling its entire stake to its local joint venture partner Hero Group.
Earlier in the day, Honda Motor said its wholly owned Indian subsidiary will double production capacity at its second factory to 1.2 million vehicles by March 2012 and also set up a third plant of equal capacity.
The Japanese auto maker didn't disclose investment details. N.K. Rattan, Honda Motorcycle & Scooter India Pvt. Ltd.'s vice president for sales, marketing and corporate affairs, said: "We can't comment on investments at this point of time."
But a person with direct knowledge of the matter, who declined to be named, told Dow Jones Newswires that the company will spend INR10 billion to build the third factory and INR5 billion on expanding the second plant.
The company's first factory is at Manesar in northern Haryana state and has an annual capacity to make 1.6 million vehicles. The second plant, located in northwestern Rajasthan state, is scheduled to start operations June 1. The third plant, to be established near Bangalore in southern India, will start production in the first half of 2013.
Honda Motorcycle's move to rapidly expand production is in line with its aim to surpass Hero Honda Motors and become India's biggest two-wheeler maker within a decade.
Hero Honda controls more than half of India's motorcycle market with 15 two-wheeler models, including six 100-cubic-centimeter models such as the Splendor+ and Passion Plus. In the year through March, Hero Honda sold 5.27 million two-wheelers in India compared with Honda Motorcycle's 1.55 million.
Honda Motorcycle had previously said it expects vehicle sales to grow 27% this financial year that started April 1 to 2.1 million vehicles. In March, the company said it plans to launch an entry-level, or 100cc, motorcycle to expand presence in a segment that makes up for more than half of the over 9 million motorcycles and scooters sold in India each year.
Honda Motorcycle had so far been prevented from introducing a lower-priced entry-level motorcycle in India because of Honda's relationship with Hero Honda. But in December, Honda agreed to sell its 26% stake in Hero Honda for about INR38.42 billion, paving the way for the launch of such vehicles.
Honda Motorcycle makes motorcycle models such as the CB Twister, Shine, Stunner, Unicorn, and scooter models Aviator, Activa and Dio at its first factory. It also sells the imported 250cc motorcycle CBR250R.
Source : UPDATE: Honda India Unit To Invest About INR15 Bln To Up Two-Wheeler Capacity - Source - WSJ.com
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