Honda says to build fourth motorcycle plant in India for $175 million

Japanese automaker Honda has made an official announcement on 5^th Feb 2014 that, it will set up fourth motorcycle factory in India in Gujarat with initial capacity of 1.2 million units. This production unit will be Honda’s fourth motorcycle factory in India and will be developed with a capital outlay of 11 billion. The bike maker has setup its factory in Gujarat due to excise and tax incentives and offered by local government which will be helpful in managing finances until sales start. During announcement of this project Honda also stated that it will help establish the firm as India’s top motorcycle maker within a couple of years after it starts production by 2016.

It is also estimated that this production unit will created jobs for nearly 3000 people and will manufacture more scooters than motorcycles as these are more in demand across world markets due to versatility of use and durability. In 2013 Honda had expanded production capacity of its third motorcycle factory in India to 600,000 units annually. Once the fourth production unit is ready and starts output as per schedule, Honda’s total output of two wheelers in India will be 5.8 million annually. The firm has managed to set up a new plant every year since 2011 leading to increase of 3 new production units from one within 3 years.

Presently Honda Motorcycles and Scooters is the largest manufacturer of two wheelers in the world but has not been able to gain that position in India which is being held by Hero Motors. To expand demand for its products Honda has introduced four global motorcycle models at the recently held Auto Expo in Delhi which will be ready for sale by end of 2014. The firm’s second plant at Rajasthan which manufactures only motorcycles and became operational by 2011, also exports its products across Asian and South African markets. Honda’s Tapukara, Rajasthan based production unit which manufactures nearly 1.2 million units annually can contributes a major share to the firm’s total sales.

Honda realizes that with fast changing markets trends and technologies products need to be in tune with reigning buyers’ sentiment otherwise over a short period of time manufacturers will lose their hold over markets. Besides technology manufacturers also have to show care and understanding of customers’ requirements and develop a personal rapport with them by showing concern for their safety and well being. Therefore Honda builds products with combined brake system and also trains its dealers to help buyers get comfortable by using stimulators before actual purchase.

Honda also is keen on expanding its existing portfolio of scooters in India to meet growing demand for these products by women drivers who prefer lightweight products which are easy to drive and maneuver. Market reports also show an emerging trend among young Indian women to try out latest superbikes which has already prompted bike manufacturers like Hyosung Harley Davidson and Piaggo to develop products which are specifically suited for women. Therefore Honda also needs to ramp up its production portfolio to make a varied number of vehicles which are suited to both men and women.