Honda expands scooter capacity with second assembly line at Gujarat plant

Honda Motorcycle & Scooter India (HMSI) today inaugurated the second assembly line at its fourth manufacturing plant located at Vithalapur, near Ahmedabad in Gujarat. 

The new line will add 600,000 units, which takes the overall capacity of the plant to 1.2 million per annum and HMSI’s cumulative capacity to 5.8 million units per annum (see capacity chart below).

With this production increase, the two-wheeler manufacturer is looking to reduce the existing backlog of its popular Activa scooter of 25,000 units a month to below 20,000 units. The first assembly line at this Gujarat plant commenced operations in February 2016 and within four months reached its peak capacity. HMSI has till now invested Rs 1,100 crore in setting up this plant.

The Gujarat plant which, according to the company, can accommodate no more than two assembly lines is estimated to reach its peak production later this year. Henceforth, HMSI plans to further boost its production capacity at the Bangalore plant by 600,000 units per annum in 2017.  

According to company officials, HMSI has employed an additional 1,500 workforce to operate the second assembly line. This takes the total number of plant personnel to 4,000. HMSI and its 23 component vendors have together invested close to Rs 2,200 crore and generated nearly 9,000 new employment opportunities in Gujarat.

Speaking at the second assembly line inauguration today, Keita Muratmasu, president and CEO, said: “Honda Two-Wheelers sold a total of 17 million units globally during 2015-16; 27% of that came from India which is now becoming the most important and the biggest market for Honda in the world. We expect that India will overtake Indonesia in FY2017. Scooterisation, a trend seen earlier in developed markets of the world, is firmly driving the Indian two-wheeler momentum today. The scooter segment is growing at 30% compared to 15% growth of the two-wheeler industry.”

According to company officials, Honda Two Wheelers has a market share of 70% in Indonesia; in India, it has a market share of 27% in India which, of course, is a much larger market compared to Indonesia.

HMSI has a commanding 58% share in the Indian scooter market, most of it capitalised by the Activa family of scooters. From January to May 2016, the Activa has been the best-selling two-wheeler in India, going past Hero MotoCorp's best-selling Splendor range of motorcycles. .

Meanwhile, HMSI is looking to cross the sales milestone of 50 lakh units for the first time in a single financial year in 2016-17. According to YS Guleria, senior vice-president (sales and marketing), HMSI, the second assembly line inaugurated today is likely to reach peak production capacity by the festive season this year (September-October 2016).

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