Honda to make small car, build second plant

JAIPUR: Come 2009, Honda Siel Cars India Ltd (HSCI) will join the bandwagon of compact car manufacturers in India. The company — which on Thursday signed an MoU with the Rajasthan government to set up its second plant in Alwar district in the state — will roll out its first compact car in the country by the last quarter of 2009.
The new compact car from the stable of Honda will meet the size and engine specification of government.In order to avail the excise exemption being offered, the car will stick to the industry norms, which means a length of 4000 mm and a 1.5 litre petrol engine, says Jnaneswar Sen, senior GM (marketing), HSCI. However, Sen denies the possibility of a launch of a diesel car simultaneously and the re-launch of company's global compact car Jazz.
Declining to divulge details of the pricing of the new car, NK Goila, V-P, HSCI said: "The car will be a premium compact car that will be priced between the B+ and the C segment cars existing in the market today."
This undoubtedly means that the auto giant's compact car will have a price tag in the range of Rs 5 lakh and Rs 6 lakh and will compete with Maruti Swift and Fiat Palio.
The Japanese auto giant, which has been in India in the premium car segment since its debut in 1998, is steering into the mass segment. "HSCI's second plant being set up in Rajasthan, will come up at an investment of Rs 1,000 crore and will initially produce 60,000 units," says Masahiro Takedagawa, CEO, HSCI.
"Going forward, the company will enhance the investment to Rs 2,000 crore that will help scale up the production capacity to 2,00,000 units," he added.
The second plant — which is five-to-six times the size of its first plant at Greater Noida — will also house a suppliers park and a power train plant. While the power train plant will come up at an investment of Rs 300 crore and will manufacture 2.5-3 lakh units in next three years, the suppliers plant will house the companys network of ancillary units.
HSCI currently manufactures Honda City, Honda Civic and Honda Accord at its Greater Noida facility where the total investment so far has been to the tune of Rs 900 crore. However, its SUV Honda CR-V is completely imported from Japan. For 2006-07, HSCI sold 61,000 units in India, a growth of 43.5% over the last fiscal year. And, it expects to attain the maximum production capacity of 1,00,000 units by 2007-end.