Honda starts work on 1,000-cr Kolar plant near Bangalore

In Honda, Karnataka has managed to get another big automotive giant to drop anchor in the state after Japanese car major Toyota, and Swedish bus manufacturer, Volvo.Honda Motorcycle & Scooter India (HSMI) a whollyowned subsidiary of Honda Motor Company, Japan, has begun work in setting up of its 3rd manufacturing facility in India, at Kolar (near Bangalore ), at an investment of Rs 1,000 crore. 

The facility, which is spread across 350,000 sq metres, will become operational in the first half of 2013 with an annual production capacity of 1.2 million units. Both scooters and motorcycles will be produced at this facility . HMSI's product line-up in India includes three automatic scooters, six motorcycles in the 110cc to 250 cc segment, and three superbikes in the 1000cc segment that are imported as completely built units. 

Once the new plant becomes operational HMSI's total annual production capacity will go up to 4 million units per annum, including 1.6 million units at its first plant at Manesar, Haryana, and 1.2 million units at its second plant in Tapukara (Rajasthan). Speaking at the foundation stone laying ceremony of the new plant, Keita Muramatsu , president & CEO, HSMI, said the increase in capacity by the addition of the new plant would prepare the company for further growth, cut down the waiting period of vehicles, and cater to rising demand in India's 11.32 million units two-wheeler market . At present three products -- Activa, Shine and Unicorn -- have an average waiting period of three months, which the company wants to bring down to 15 days to 30 days. 

"India is too big a market. We have two facilities in the north, but we needed a facility in the south and in particular Karnataka as it is one of the big southern markets for HSMI," said Muramatsu. The southern region is the largest for HMSI, accounting for 30% its total sales. Company officials said that a number of ancillary units will come up around its new plant, which will help them have a localization level of 80%. As of 2010, HMSI had a 13% market share in the Indian two-wheeler market, which it plans to increase to 14% (21 lakh units) by the end of December 2011. 

While HMSI enjoys a 40% market share in the scooter segment, it has only a 7% market share in the motorcycle segment. HMSI sold 16.56 lakh units in 2010-11 , a growth of 30% over the 12.7 lakh units of the previous fiscal. Scooter sales account for 54% of the total sales.