Honda to invest Rs 2500 cr despite slowdown - Business Standard

At a time when passenger car sales in the domestic market have plunged to a decade low forcing most auto makers to cut back production plans, Japanese auto major Honda Cars India (HCI) have announced an investment of Rs 2,500 crore to double vehicle manufacturing capacity, set up a diesel engine component production line and a forging unit in the country. Yoshiyuki Matsumoto, managing officer, Honda Motor Company (HMC), said, "India is a key market for us and over the next three years, HCI will launch five important models including the Amaze. To expand our business in the country…(we) are investing a total of Rs 2,500 crore towards setting up a new assembly line for cars, a new diesel engine component production line and a forging plant at Tapukara in Rajasthan." The new models would include sedans and sports utility vehicles, likely to be based on the Brio platform. While the vehicle assembly line would have an installed capacity of 1,20,000 units per annum and would be commissioned in 2014, the diesel engine manufacturing unit would have production capacity of 1,60,000 units annually. Once commissioned, the facility will generate fresh employment for 2,200 people. "Earlier diesel engine components were made in Japan and assembled in UK. The diesel unit at Tapukara is the largest for Honda globally and would be used to supply parts to other Honda facilities in Europe", said Raman Kumar Sharma, senior vice-president & director (general affairs), HCI. HCI already exports critical components for petrol vehicles to markets in South-east Asia and Latin America. The company registered' revenues of Rs 242 crore from component exports last fiscal, which is expected to double in FY14 on commencement of supplies from the diesel engine component making unit. Though auto majors such as Maruti Suzuki and Hyundai Motor India had announced plans to infuse resources of Rs 1,700 crore and Rs 1,650 crore respectively to commission diesel engine manufacturing units last year, the investment for fresh capacity for vehicle production in the auto industry in India has come after a gap of nearly two years. It was in mid-2011, that Maruti Suzuki, Ford India and Toyota Kirloskar Motor (TKM) had announced combined investments of around Rs 9,000 crore to expand capacity by setting up new facilities and by enhancing production operations at existing locations. Honda is currently operating the Greater Noida facility at over 60% of its total installed capacity. The company grew volumes by 35% to sell 73483 units in the last financial year. "We currently operate in 10% of the passenger vehicle market as we did not have a small diesel engine. Now with the new 1.5 litre-DTEC diesel engine, our business will increase to cover 50% of the PV market over the next few years", added Sharma. The new diesel engine will be introduced in Honda's new entry-level sedan Amaze The company is currently producing around 100 units of the Amaze every day to build stocks at dealerships ahead of its launch on April 11. To oversee the rapid ramp-up of India operations the Japanese auto major has additionally changed its global organization structure. HMC has appointed Yoshiyuki Matsumoto, managing officer, HMC as 'Representative of Development, Purchasing and Production in Asia & Oceania Region' who will be based out of India. In his new role, Matsumoto will oversee operations at 25 companies and 11 R&D centres in the region. He will also head all Honda Group companies in India. via Technology - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNElran9lnHpPuklknkNhQkXdUthtg&url=http://www.business-standard.com/article/companies/honda-to-invest-rs-2-500-cr-despite-slowdown-113040200340_1.html

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