High on sales, Honda to ramp up production

Jul 05 2014, 23:38 IST
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'We are working on Mobilio’s pricing and once that is fixed' 'We are working on Mobilio’s pricing and once that is fixed'
SummaryEncouraged by the growth in sales volumes over the past one year, coupled with the expectation...

Encouraged by the growth in sales volumes over the past one year, coupled with the expectation of a soon-to-be-launched vehicle to shake up the market, Japanese carmaker Honda is looking to ramp up production at its Rajasthan manufacturing unit to meet the expected surge in demand.

The company is going to start a second shift at its

recently commissioned Tapukara plant in Rajasthan later this year, expecting to achieve full capacity utilisation to cater to the incremental demand on account of its new multipurpose vehicle (MPV), the Mobilio, to be launched later this month. However, the Mobilio will be manufactured at the company’s Greater Noida facility.

Honda, India’s fourth-largest carmaker by volumes, has an installed capacity to produce 2,40,000 cars in India annually. It sold 17,000 cars in June, 23% higher than the month ago and 70% higher than the year earlier.

Honda Cars

“Our newly commissioned manufacturing plant at Tapukara in Rajasthan is operating a single shift right now, but we are planning to start the second shift soon,” said Jnaneshwar Sen, senior vice-president of marketing and sales at Honda Cars India.

Sen said once full capacity utilisation was achieved, Honda might even consider operating a third shift at Rajasthan to meet any excess demand. Earlier this year, the Greater Noida plant ran a third shift. At present, the Rajasthan plant manufactures only the Amaze model.

Honda had for long been struggling in the Indian market, losing out on market share to rivals like Maruti Suzuki and Hyundai.

Where Honda fell behind was the absence of a diesel offering and key gaps in its portfolio like a small car and a compact sedan — two segments that are hugely popular in India. In fiscal 2013, Honda reported a net loss of R1,110 crore, as per the company’s filings with the Registrar of Companies.

However, things changed last fiscal, when the company gained traction in sales from its new offerings like Brio, its small car; Amaze, the compact sedan; and City, the new version of its traditional sedan. The diesel variants of the latter two models were in great demand among Indian buyers.

Honda’s manufacturing facility in Rajasthan is spread over 450 acres and the Greater Noida facility is on a 150-acre plot. As per Sen, once the company attains full capacity utilisation in these two plants, it won’t be difficult to scale up assembly lines

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