Honda lays foundation stone for world’s largest scooter plant in Gujarat

Honda Motorcycle & Scooter India (HMSI) today held the foundation stone laying ceremony and ‘Bhoomi-poojan’ for its fourth manufacturing plant, which will produce only scooters, at Vithalapur (Mandal taluka, Ahmedabad district), in Gujarat.
Spread across 250 acres, HMSI’s fourth two-wheeler plant at Vithalapur, to be set up at an investment of Rs 1,100 crore, lies around 80km from Ahmedabad city. Once operational by the end of 2015, this flagship plant will have an annual production capacity of 1.2 million units, making it the world’s largest only scooter manufacturing facility.

The foundation stone laying ceremony was attended by Anandiben Patel, chief minister of Gujarat, Saurabh Patel, finance minister, government of Gujarat, and other senior dignitaries from the Gujarat government. Key officials from Honda included Noriaki Abe, chief operating officer, Honda Motor Company (Asia & Oceania Region); Yoshiyuki Matsumoto, managing officer, Honda Motor Co, president and CEO, Honda Motor India; Keita Muramatsu, president and CEO, HMSI; Harbhajan Singh, VP (General & Corporate Affairs, HMSI); and Yadvinder S Guleria, VP (Sales & Marketing, HMSI). 

For HMSI, which has been facing difficulty in catering to huge demand in India for its popular Activa (which continues to see a waiting period in some states) series and other scooters, the new plant will help expand total manufacturing capacity to 5.8 million units, including 1.6 million units at the first plant (Haryana), 1.2 million units at the second plant (Rajasthan) and 1.8 million units at the third plant (Karnataka).

An aggressive HMSI is looking to selling almost 45 lakh two-wheelers in India this year. Commenting on the importance of the India market to Honda, Noriaki Abe, chief operating officer, Honda Motor Company Ltd (Asia & Oceania Region), said: “As the world’s biggest two-wheeler market, India is already a priority market for Honda. In the current fiscal 2014-15, Honda aims to sell 18.2 million two-wheelers worldwide and for the first time, India will contribute almost 25 percent to global Honda sales. We have huge expectations from this project as this will be our flagship and benchmark plant in India in terms of volume, safety, quality, cost, associate skill and moral.”

Sharing details of the fourth plant, Yoshiyuki Matsumoto, managing officer, Honda Motor Co, said, “I would like to thank the Gujarat government for its support in setting up the plant. With the fourth plant, we aim to reach closer to the vast market in West (India) which contributes over 25 percent to Honda business. The new plant will employ approximately 3,000 people within the first 2 years of commercial production and will entail a Rs 1,100 crore investment.”

According to Keita Muramatsu, president and CEO, HMSI, said: “The Indian automatic scooter market is growing at 2.5 times the speed of overall two-wheeler industry growth. The latent demand of automatic scooters is so strong that with improving infrastructure in rural India, we foresee that this segment sale can go up to 35 percent of overall two-wheeler sales in a 5-10-year horizon. As we gear up to take up this challenge of meeting customer demand, Gujarat will an ideal home and a springboard to achieve greater heights.”

For Honda, which has a presence in more than 40 countries globally, worldwide two-wheeler sales volume was 17 million units in FY’2013-14. For the first time, India’s contribution crossed the 20 percent mark globally, making India the second largest contributor globally in FY’2013-14.

In September, HMSI, which is fast spreading its network in rural India, and has also launched a slew of commuter bikes, sold 420,600 units, posting a year-on-year growth of 34.82 percent. In the half-year April-September 2014 period, it has sold 2,108,949 units, marking a year-on-year growth of 32.59 percent. At present, HMSI has a 25.82 percent market share in the overall Indian two-wheeler market: 1,201,460 scooters (for a 54.85 percent market share in scooters) and 907,489 motorcycles (for a 16.21 percent market share in bikes).

Honda’s clearly betting big on scooters in India. In H1, 2014-15, the segment has notched a 32.11 percent year-on-year growth, and in September, 37.99 percent. However, rivals like TVS Motor Co, Hero MotoCorp and India Yamaha Motor are also revving up their action in the scooter market. So, with the new plant in place by end-2015, HMSI will be well placed to cater to future demand. Watch this space.  

Photograph: Keita Muramatsu, president and CEO, HMSI, at the bhoomi poojan.