Honda has big plans after they inaugurated Tapukara plant

Japanese carmaker Honda’s Indian subsidiary Honda Motor India is upbeat about its future in Indian passenger car and two wheeler industry which is evident in its announcement of large research and development facility and inauguration of a new manufacturing facility in Rajasthan. By carrying out both these ventures within one year Honda has affirmed its business interest in India with investment comprising of nearly four thousand crores. Two of its fastest moving models Amaze and Honda City have helped the brand move up value chain from seventh largest to fourth largest carmaker in India. The carmaker is therefore launching a couple of more new models in 2015 which will help increase its market ranking within India and also overseas.

The new factory of Honda Motors India was inaugurated by Rajasthan’s Chief Minister on 24^th February at Tapurkara at a cost outlay of Rs.3520 crores. The production facility is spread over 450 acres and will provide employment to 3,000 people who will manufacture 120,000 cars every year.  Though Indian automobile industry is reeling under low demand and piled up inventory and is trying hard to stimulate demand through various means, these factors have not affected Honda Motors. During month of January 2014 the firm sold a record number of more than 15000 units and though in 2013 car market shrunk by 6.13 percent, Honda reported 78 percent of growth by selling more than one lakh cars within 10 months.  The carmaker is therefore confident that it will end 2014 with 120,000 units if existing pace of demand continues to drive sales.

The delivery of Honda City and Amaze will keep the car carmaker’s production units busy for next few months as  all models of this category announced during Auto Fest 2014 will not be ready for delivery till middle or end of 2014 therefore it is safe from competition at least till that period. Honda is targeting deliveries of six million on a global level by March 2017 followed by 300,000 units in India. Since its only competitor Toyota in high price segment is not able to produce models for mass market segment Honda will find little competition throughout 2014. No one expected Honda to grow at such a rapid pace as during early year its portfolio was limited to one or two brands with petrol engine option only leading to market share of 4-5 percent only.

To meet these sales targets Honda is planning to increase its portfolio of vehicles across India and international markets by making targeted products in every category instead of making several products in one category. The carmaker’s aggressive growth plan includes increasing sales outlets in India from current 159 across 100 cities to around 170 sales outlets in 107 cities and also setting up service centers across 230 locations within next three to four years. The carmaker realizes that entry level compact car market is India has become too crowded with each cannibalizing into market share of existing models as demand for these models has shrunk. For a price sensitive market like India it has to introduce products which are in every price category available in market. To reduce cost of production it is planning to set up production and research facilities within India itself to reduce imports of essential components.