Honda Siel is considering a plan to build a car assembly plant at its Rajasthan facility even as it admitted that the absence of a diesel engine is putting pressure on the company.
“It is a fact that not having a diesel variant is putting pressure on us,” the Honda Siel Cars Senior Vice-President for Sales and Marketing, Mr Jnaneswar Sen, said.
He revealed that Honda is developing a diesel engine at its R&D centre in Japan specifically for the Indian market.
Noida unit
Mr Sen also said that once the full capacity of 1.2 lakh cars a year at the Honda's plant at Greater Noida near Delhi is fully utilised, it will consider building a car assembly plant at its Rajasthan facility.
Initially, the new car assembly plant will have a production capacity of over 60,000 units but the 600-acre Rajasthan facility was big enough to house a two lakh units capacity, he said.
“It all depends on how new car model Brio performs in the market,” he said. Brio competes in the hatchback segment, which constitutes about 70 per cent of the total sales in the Indian domestic car market.
Investment
Honda has so far invested about Rs 3,000 crore in its Indian operations, which includes Rs 1,300 crore in its Rajasthan plant which currently makes auto components.
Mr Sen said the company expects its 1.2-litre compact car Brio to become a major player in the hatchback market.
Brio's production has been started again after the Noida plant was closed down for some time because it could not get key components from Thailand and Japan as they were stuck by natural calamities.
With the production at the Noida being resumed in January, Honda expects to clear the backlog for Brio by March while the backlog for City and Jazz will be cleared soon.
Sales
Mr Sen said that the company's sales had fallen during the last year largely because the car production had been stopped for six months. “But one can take some positives from here as we de-grew by five per cent while the market de-grew by 13 per cent between July and October last year.” During 2010-11, Honda sold a total of 60,000 units of which City model sold about 46,600 units.
Mr Sen said Honda's Indian operations expects to export components worth Rs 110 crore to feed its global operations and the export of components to South America and Thailand have already started.