Honda bike plant in Rajasthan

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Honda Motorcyle and Scooter India (HMSI) will invest Rs 500 crore (USD 110 million) to build a new plant in the Indian state of Rajasthan, a company executive said.

The new plant will have annual capacity of 600,000 scooters and motorcycles that will take HMSI's total capacity to 2.2 million, said Naresh Kumar Rattan, general manager of HMSI and operating head of sales and marketing.

Honda plans new USD 110 m two-wheeler plant in India

HMSI is a wholly-owned subsidiary of Japanese automaker Honda Motor Co.

HMSI's current facility in Haryana state has peak capacity of 1.6 million scooters and motorcyles, and is close to operating at full capacity.

HMSI will also launch at least six new motorcycles in the Indian market in 2011, the first of which -- the CBR 250R -- will be introduced in April, Rattan told reporters on the sidelines of an event late on Wednesday.

Media reports have said India's Hero group and Honda Motor would soon terminate their joint venture Hero Honda Motors, the Indian market leader in motorcycles, through the sale of Honda's 26% stake to its Indian partner.

Hero Honda price raise for all bikes

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Hero Honda has increased the prices in India in the range of Rs. 500 – Rs. 1500 depending upon its various models in the domestic market. It stated that there has been a considerable increase in input costs constantly and the rise in prices is to partially off-set those costs.

"We have always taken a long-term view on pricing, given its strategic nature. Hence we had consciously held back price increase on most of our products despite the rising input costs and hardening commodity prices," said the company spokesperson. The lowest increase has been made on models in the entry-level segment such as the Splendor, while premium models--the Karizma and the ZMR--saw the highest increase, the executive said. Hero Honda is a joint venture between New Delhi-based Hero Group and Japan's Honda Motor Co.

Meanwhile, the Hero Honda JV split has taken a new turn where the investors have expressed their protest for such a move. The companies agreed upon selling the shares at a cost lesser than the current market price. Hence the investors fear that they may be deeply affected because of this which may thus lead to an increase the royalty amount.

Honda to loss market share in India

Without the 26% stake in Hero Honda, Honda will lose some bragging rights: Namely the claim that it has about 58% of India's nearly nine million-unit-a-year motorbike market.

But in truth, Honda's share of the joint venture's income is only about $120 million a year, Deutsche Securities estimates. That is a fraction of the $6 billion profit Honda is forecasting for its full year through March.

Even the royalties the partnership generates for technology used in the Hero Honda bikes aren't terribly significant because the technology is old. Hero says it paid Honda $90 million last year. Anyway, Honda is likely to keep collecting the royalties for some time.

Critically, for Honda this isn't an exit from India. Rather, it is a reshaping of its strategy toward the market, which once was unapproachable without a local partner.

Honda already makes and sells bikes and scooters under its own brand in India, holding about 14% of the market by units sold, according to J.D. Power & Associates data.

The company has said it plans to increase production next year there by more than one-third, to 2.3 million units a year. Going alone means Honda can keep building on this sales and production base without worrying about tip-toeing around its current partner. Analysts expect Honda to start exporting more from India, including to the West, as it already does from Thailand.

This break-up will be harder on Hero, which could lose access to Honda's technology and brand name. So all eyes are on the price Honda fetches for such a large chunk of the venture. But even if it leaves something on the table—in the sum of a few hundred million dollars—it would be only a minor setback for a company sitting on more than $15 billion in cash.

Honda's guidance on this issue has been less than stellar, but losing the sidecar in India is a smart thing to do.

Honda cars registers impressive sales

Honda Siel Cars India Ltd., (HSCI) leading manufacturer of passenger cars in India was established in December 1995 as a joint venture between Honda Motor Co. Ltd (Japan) and Siel Limited with a commitment to provide Honda’s latest passenger car models and technologies, to the Indian customers.

HSCI’s first state-of-the-art manufacturing unit was set up at Greater Noida, U.P in 1997 with an investment of Rs. 450 crore. The total investment made by the company in India till date is Rs. 1620 crores. At present, the company has a capacity of manufacturing 100,000 cars.

HSCI’s second manufacturing facility is in Tapukara, Rajasthan. This facility is spread over 600 acres and will have an initial production capacity of 60,000 units per annum, with an investment of about Rs 1,000 crore. The first phase of this facility was inaugurated in September 2008.

The company’s product range includes Honda Jazz, Honda City, Honda Civic and Honda Accord which are produced at the Greater Noida facility with an indigenization level of 77%, 76%, 74% and 28% respectively. The CR-V is imported from Japan as Completely Built Units.

Honda Siel Cars India has a strong sales and distribution network spread across the country. The network includes 120 facilities in 71 cities. HSCI dealerships are based on the “3S Facility” (Sales, Service, Spares) format, offering complete range of services to its customers.

Honda Jazz is the company’s first offering in the premium compact car segment. The Jazz is a segment-defining car that has won accolades and adoration all over the world. Honda's all-new Third Generation Honda City was launched in September 2008. It comes with a completely new design, new engine, spacious cabin and equipped with various active and passive safety features. The new Honda City achieved milestone sales with 50,000 units sold within one year of its launch.

HSCI launched the1.8 S Civic in India in July 2006. The company launched the Sportier and More Aggressive New Honda Civic in September 2009. Honda launched a refreshed version of the 3rd generation CR-V in November 2009.

Honda’s models are strongly associated with advanced design and technology, apart from its established qualities of durability, reliability and fuel-efficiency.

The company operates under the stringent standards of ISO 9001 for quality management and ISO 14001 for environment management.