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Japanese automobile major Honda Motor Company, at its mid-year review on Wednesday, said its two-wheeler joint venture in India, Hero Honda, will add 450,000 units to its annual capacity by expanding its plants in Gurgaon and Dharuhera, both in Haryana.
In addition, the company will set up a new plant with a capacity of 450,000 units a year. With the expansion, the company's capacity will increase to 5.2 million units by next year.
Though no official statement has been made by either the Japanese company or Hero Honda, it is learnt from market sources that Hero Honda's third plant is likely to come up near Jaipur in Rajasthan. However, the quantum of investment in the new plant is not known yet.
Hero Honda that sold around 3 million vehicles in 2005-06, has its two plants at Gurgaon and Dharuhera, both located in Haryana.
The expansion of capacity comes at a time, when the two-wheeler market leader has been facing severe competition from Bajaj Auto, that has in the last few months managed to outpace the industry average growth rate of 18 per cent and eat into Hero Honda's market share in the motorcycle segment.
In 2005-06, while Hero Honda closed the year with 49.75 per cent market share, Bajaj Auto reported a total market share of 30.05 per cent.
Along with the third largest two-wheeler company, TVS Motor, the top three manufacturers command a consolidated market share of 90 per cent in the Indian motorcycle market.
Motorcycles account for over 80 per cent of the total two-wheeler sales of 7.5 million reported in 2005-06.
The rest of the market comprise scooter and mopeds.
Honda to double capacity of car JV too
Honda Siel Cars India said on Wednesday it will double its production capacity from 50,000 units per annum to 100,000 units by the end of 2007.
Announcing Honda's global plans and initiatives towards 2010, Honda Motor Company Ltd President and CEO, Takeo Fukui, said at a press conference in Tokyo today that the production capacity of HSCI's plant at Greater Noida would be increased to 100,000 units three years ahead of the original schedule. Honda will also consider further expansion to accommodate future growth in customer demand, he said.
The success of City ZX, launched in November last year, and the planned launch of the Civic this year has necessitated this second expansion exercise, a release from the company said. HSCI had increased its production capacity from 30,000 units to 50,000 in December last year.
HSCI was established in December 1995, with Honda Motor Co and its Indian partner Siel Ltd.
It is the leader in the Indian premium car market.
The company's Accord and CR-V models have added to the company being recognised as a premium segment leader in the Indian passenger car industry.
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