Just months after exiting its successful two-wheeler joint venture with the Hero Group, Honda Motorcycles and Scooters India (HMSI) announced on Thursday expansion plans with the setting up of a third factory in Karnataka.
This will take its production capacity to four million units by early 2013. Market leader Hero Honda has an annual capacity of six million units and Bajaj Auto about five million units. The Japanese company is expected to invest around Rs 1,000 crore in this plant near Bangalore, said a person close to the development. Production will start by the first half of 2013, at an installed maximum capacity of 1.2 million units a year.
“We chose Karnataka since South India is a very important market for us and we need to be close to it. There is also access to the ports in case we want to export,” a company official said. Even as the first phase (six lakh annual capacity) of its second factory at Tapukara, Rajasthan is scheduled to start operations in July, HMSI has decided to advance the second phase (1.2 million annually) of the same plant to March 2012. The strategy to speed up work on both the second and third plants underline Honda's intention to quickly snatch the premier spot in the world's second largest two-wheeler market.
“This capacity expansion plan will increase HMSI's total annual production capacity to four million units, preparing HMSI for further and rapid growth of the market,” a company statement said.
At present, it has a plant in Manesar, Gurgaon with an annual capacity of 1.6 million units where it manufactures models such as the Activa, Dio, Aviator, CB Unicorn, CB Shine, CBF Stunner and the CB Twister. In 2010, it sold 1.5 million units (up 40 per cent compared to 2009).