Honda Cars India expands capacity with second plant in Rajasthan

Honda Cars India Ltd (HCIL) has begun production at its all-new Tapukara plant in the Alwar district of Rajasthan. The facility, set up with a total investment of Rs 3,526 crore, is the first car manufacturing plant in the state and HCIL’s second unit, after its Greater Noida plant.

An Amaze sedan was the first car to roll out of the new plant, which will manufacture both petrol and diesel models. The plant, which has an installed capacity of 120,000 units (same as Greater Noida), will initially start production with a capacity of 60,000 units in a single shift. Second shift operations are expected to start by end CY 2014.

“We will increase production capacity to 120,000 units as per market demand,” said Hironori Kanayama, president and CEO, HCIL. With this unit, the carmaker’s total production capacity has been upped to 240,000 units per annum. “With an overwhelming response to our current models like the Amaze, new City and promising future line-up, we are ready to cater to the strong demand for Honda cars from our customers in India.” 

The Tapukara facility is built on a 450-acre plot, which means there is plenty of scope for expansion. The fully integrated plant includes forging, press shop, powertrain shop, weld shop, paint shop, plastic moulding, engine assembly, frame assembly and engine testing.

Employing over 3,200 associates compared to about 6,500 at the Greater Noida facility, the plant focuses on conservation of energy and efficient use of energy and natural resources.

The plant will start production with the much-in-demand Amaze sedan, manufacturing both the petrol and diesel variants while continuing with the car’s production at the Greater Noida facility as well. The additional production capacity will help ease some load at the Greater Noida plant that runs a three- shift production run to cater to the requirements of the Amaze and other models that are produced there like the Brio and CR-V.

Honda officials have stated that the waiting period for the Amaze has now stabilised, with a maximum of one month wait for certain variants. Honda has stated that the Tapukara plant is a flexible facility and can be used to manufacture any of its other products. Interestingly, the upcoming Mobilio MPV that is likely to be launched in July this year may not be produced at the Tapukara plant, at least not in the initial phase of production. Kanayama said the management is still considering which models to manufacture at Tapukara. Among the other new models to be rolled out by HCIL will be the new Jazz, slated for rollout by March 2015.

The Tapukara plant started its phase 1 operations in September 2008 with the press shop and powertrain unit for engine components. During the current fiscal (2013-14), HCIL crossed a milestone of 100,000 unit sales for the first time in a fiscal by selling 101,370 units in the April 2013-January 2014 period, growing by 78 percent over the same period in the previous year.

“India is an important market for Honda and with the beginning of car production at the Tapukara plant, we are advancing our commitment to expand Honda’s business in India,” said Yoshiyuki Matsumoto managing officer, Honda Motor Company.

Meanwhile, the new Honda City has received total bookings for 28,500 units, according to Shigeru Yamazaki, SVP and director (sales and marketing), HCIL. Of these, 70 percent are for the diesel variant and the balance for the petrol. While production of the diesel-engined City began in January, the petrol model has started rolling out this month. Going forward, HCIL is looking to tweak this equation to 60:40 towards diesel and petrol with the petrol market faring better.

“Last month, 7,200 diesel Citys were delivered with the petrol model having a waiting period of three months,” said Jnaneswar Sen, senior vice-president, HCIL.

The company has commenced exports of the Brio and Amaze to South Africa and the SAARC region like neighbouring Nepal last year with about 6,000 units to be exported during the current fiscal. The target for 2014-15 is to double exports which are still a small portion of the company’s sales.

The company is going all out to penetrate Tier 3 markets in India and the marketing strategy will revolve around tapping 40 new Tier 3 cities during FY’15 with a 35 percent growth in dealerships, taking the total to 230 outlets in 150 cities during 2014-15.