Honda to build second motor cycle plant.

Honda Motorcycle & Scooter India (HMSI) plans to build a second motorcycle production plant to meet increasing demand in India. The new unit will come up at a new site spread over 240,000 square metres within the Tapukara Industrial Area, Rajasthan, 40km from the existing plant and 90km from Delhi.

The plant is scheduled to become operational in the latter half of 2011 with annual production capacity of 600,000 units. Further, HMSI is expanding annual production capacity of its existing plant from the current 1.25 million units to 1.55 million units by the end of March 2010, with a further expansion to 1.6 million units already scheduled for next year.

As a result, HMSI’s total annual production capacity will stand augmented to 2.2 million units when the second plant becomes operational. The new plant will employ approximately 2,000 workers at the initial stage of full capacity. Total investment will be around Rs 4.7 billion.

India represents the world’s second largest motorcycle market behind only China, and industry-wide motorcycle sales in India for 2009 reached 8.8 million units (up 19 percent compared to 2008). HMSI was established as a wholly-owned motorcycle production and sales subsidiary of Honda in 1999 and began production in 2001.

HMSI’s sales (see chart below) have grown steadily with 2009 sales of approximately 1.1 million units (up 11 percent compared to 2008) achieving a record high for nine consecutive years.