Honda Starts Building 2nd Motorcycle Plant In India

By Nikhil Gulati

ALWAR, India – June 2, 2010 – (Motor Sports Newswire) – The Indian motorcycle and scooter manufacturing unit of Honda Motor Co. (HMC) Monday began building a second factory that will lift the company’s total production capacity to 2.20 million vehicles as it expands to meet rising demand for its Aviator and Twister models.

Honda Motorcycle and Scooter India Pvt. Ltd. will invest about INR5 billion ($108 million) in the new factory that is being constructed at the town of Alwar in the northwestern state of Rajasthan and will have an annual capacity of 600,000 vehicles, Shinji Aoyama, its president and chief executive, said at a function held to mark the ground breaking of the new plant.

The new factory is scheduled to start operations in the second half of 2011 and will employ about 3,000 workers initially, he said.

“Our Manesar plant (in Haryana state) will reach its peak capacity this year and we would require a new plant from next year,” Aoyama said.

The Manesar plant can produce 1.55 million vehicles a year and is being expanded to make 1.60 million vehicles.

Lower borrowing costs, rising disposable incomes and launch of new models by companies such as Honda, Yamaha Motor Co. and Bajaj Auto Ltd. have boosted sales of motorcycles and scooters in India, the world’s second-biggest two-wheeler market. Local sales of scooters, motorcycles and mopeds climbed 26% in the last financial year through March to 9.37 million vehicles.

Aoyama said Honda Motorcycle aims to sell about 1.55 million vehicles in 2010, up from 1.27 million vehicles sold last year.

Honda Motorcycle, a wholly owned unit of its Japanese parent, produces motorcycles such as the Unicorn and Twister as well as the Aviator and Activa scooters at the Manesar plant.

Honda also owns 26% of Hero Honda Motors Ltd. (500182.BY), India’s biggest motorcycle maker by sales. Honda also has a joint venture, Honda Siel Cars India Ltd., with India’s Siel Ltd. to make cars such as the City and Civic sedans and the Jazz hatchback at a factory at Greater Noida in the northern state of Uttar Pradesh.

“India is one of the most important markets for Honda. It offers immense possibilities for future growth,” Fumihiko Ike, Honda’s chief operating officer in charge of Asia and Oceania, told Dow Jones Newswires separately.

He said also Honda Siel is on track to develop a new small car. “It should be ready for launch by the end of next year. Our car will be positioned above the existing models in this space in India.”

Honda unveiled a small-car concept in January this year and the model is expected to go on sale in India and Thailand next year.