Honda Eyes on Growth with New Auto Plant in Brazil

In a recent announcement, the Japanese automobile giant, Honda Motor Co. revealed its plan to construct a new auto assembly plant in Sao Paulo, Brazil. The company is eyeing on building a plant with a huge capacity of rolling out 120,000 units per year. The newly planned Sao Paulo assembly plant of Honda is going to be a facility worth 430 million USD or 1.26 Billion RM and will be placed in Itirapina, a city at a distance of 200 km from Sao Paulo. With this, the company’s annual capacity out of the Brazil manufacturing facilities would be doubled. The plant is expected to be operational from the year after next in 2015.

According to the company’s spokesperson, the Itirapina plant of the Honda will be producing compact vehicles of the company including the Fit, those ones that have a huge demand in the international market. The new assembly plant will employ close to 2000 workmen.

The President of the Brazilian subsidiary of Honda, Masahiro Takedagawa commented that Brazil is a crucial market platform for Honda, being the fourth largest automotive market in the world.

Presently, Honda employs close to 3500 people in Brazil, where it made its entry back in the year 1997. The new plant is another effort from the Japanese auto manufacturer to reach its overall international sales target by the end of FY 2016, in March 2017, which the company has set as 6 million units. The last year global sales figure of the Honda was registered at 4.01 million.

The company is aiming at its fuel efficient models to meet the target figures. While, at the same time, it is undergoing an intensive capacity expansion operation in Asia, to meet the ever-growing demand in the Asian markets.

Honda registered a 4 % share in the Brazilian automobile market during the first of this year. A sixty percent market share is together held by three biggest auto makers in Brazil, General Motors, Volkswagen and Fiat.

The recently announced plant in Brazil is the sixth capacity expansion project from the Honda since the end of fiscal year 2011. The company is also in the process of growing its production capacity in other Asian countries like China, India, Mexico, Indonesia and Thailand.

Earlier this year, in order to deepen its hold on the Brazilian car market, Honda designed an exclusive model of its star performer compact hatchback, Honda Fit, according to the demands of the local market. Furthermore, some flexible fuel car models that use ethanol as fuel, like the compact SUV CR-V were also launched this year.  As a result of these developments, Honda has registered a 24% jump in the sales of its cars, during the period of January to July 2013.

Presently, Honda has a single manufacturing plant in Brazil which is in Sumare city of Sao Paulo. This plant too has an annual capacity of 120,000 units. The plants rolls out the popular models from Honda, including the Fit, city and Civic. The units produced at the plant are also exported to neighbouring countries like Peru, Argentine and Chile.