Honda to invest Rs 1,000cr in Rajasthan plant

Noida, Feb 25: Honda Siel Cars India (HSCI) today said it will invest Rs 1,000 crore to set up its new plant in Rajasthan which will have a production capacity of 60,000 units a year. The new plant, coming up in Takapura, Rajasthan, will be spread across 600 acres of land and the plant is expected to see an investment of up to Rs 3,000 crores by the time it reaches its full capacity.

The company intends to produce 60,000 units of cars in 2009 from the plant. M Takedagawa, President and Chief Executive of the India unit said the plant will also cater to power train manufacturing in the future and would be able to roll out 2.4 lakh units a year. The company, which has limited models in the country like the City, Civic, Accord and CR V, will also introduce a compact car into the market.

Compact cars are the fastest selling cars in the country, and an absence of a similar car from its India portfolio is hampering its growth potential.

''We are deeply committed to bring in the Jazz to the country and will be done very soon,'' said Mr Takedagawa.

The company intends to assemble the Jazz (known as Honda Fit in some countries) from its new plant in Rajasthan and a call is expected to be taken in a month.

The estimated price for the car is about Rs 5.5 lakh.

Preparing for its planned foray into the compact car segment in India, Honda is also expanding dealership network across 90 cities in the country in the next three years.

''The small car will take several years to materialise. The car will meet all the specification of a small car including the 4,400 mm size but will not have a diesel variant since we not have the technology,'' said Mr Takedagawa.

As per the excise duty structure, small cars with a certain specification of engine capacity and length attract lower tax of 16 per cent as against 24 per cent for bigger cars.

The car is expected to be in line with global models but designed especially for the needs and requirements of the country.

The company intends to sell 68,000 units this fiscal and increase it by 32 per cent to 90,000 units in the fiscal 2008-09.

To deal with increase demand, particularly for the Civic model, Honda inaugurated its new production facility here.

The passenger car segment is expected to grow by 16 per cent this year and the premium car segment is also expected to grow by the same number.

Currently, HSCI has 30 per cent market share of the premium car market and the upper D segment is expected to grow 46 per cent for the company next fiscal with the launch of its new Accord.

The HSCI's facility here would have a capacity of 1,00,000 units, up form the current 50,000 units. It has invested Rs 400 crore in the capacity expansion.

With this investment, HSCI has invested a total of Rs 1,620 crore since it started operations in India in 1997.

With the Rajasthan plant going on-stream next year, HSCI will have an annual capacity of 1,60,000 units in the country.

The company is also expected to bring its Hybrid Civic in to the country and intends to keep a vehicle with each dealer to inform customers about the hybrid technology and its technological prowess.

UNI