2014 Honda City Launch Front

Honda is on track to create a lot of factories, something which it has been planning for the last 3-4 years. Honda is now set to invest Rs. 4000 crore to build an automobile manufacturing facility at Vithalapur in Gujarat, it will be the third plant in India for the company. The last factory was in Tapukara, Rajasthan which opened in February. The new factory will have a capacity to produce around 1-1.25 lakhs cars a year. Honda is scouting to buy 150 hectares of private land in Vithalapur-Manpur area, near Mehsana. A component manufacturing plant could be on the cards too, the plans of which Honda has submitted to the state government officially.

If Honda decides to build its third car plant in Gujarat, the company will become the second largest Japanese carmaker in India in terms of capacity after Maruti Suzuki. Honda will also become the second Japanese company that will build a car factory in the Vithalapur area in Gujarat after Suzuki Motor Corporation, the parent company of Maruti Suzuki. In other news, Honda Motorcycle and Scooter India (HMSI) has also acquired about 100 hectares of land in Vithalapur for a new unit, where the 2-wheeler giant plans to spend Rs. 1100 crore but that will happen in 2016.

Honda will make half a million cars in India by the beginning of next year which will be the second largest figure after Maruti Suzuki. Honda declined to comment on the proposed factory in Gujarat. However, the company did announce it plans to invest Rs. 18,000 crore in Gujarat in the long run. Honda also denies this news because it just recently started the facility in Rajasthan where we were invited a few months ago. Honda says their current focus is on generating more demand, an ideology seen every single time with every single product when it comes to strategies of the company. Honda has shown less focus on expansion of production capacity.

A struggling economy saw sales falling by 6.5% to 2.5 million units when the fiscal year ended on 31st March. However, Honda has managed to jump start their sales by introducing two new sedans in diesel guise, the Amaze and the new City. As we remember, Honda sold 1.35 lakh units in 2013-14 compared to 73,483 units in the preceding year, in a time when every single manufacturer was showing numbers which were falling down the stairs. All of this meant that Honda saw its market share rise to 5.37% from 2.76% in just one year. Honda looks at this opportunity and hence started looking at a new plant (this one in Gujarat) to continue this success in the very distant future.

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