Honda’s Gujarat plant reaches peak capacity in record 6 months

Honda Motorcycle & Scooter India (HMSI) has confirmed that its fourth manufacturing plant, which is located in Vithalapur, near Ahmedabad (Gujarat), has reached its peak production capacity in August 2016.

The production plant, which has two assembly lines that can roll out 600,000 units per annum each, has a manufacturing capacity of 1.2 million units a year. This plant is also understood to be the world’s largest scooter-only production plant.

While the mass production operations at this plant commenced on February 17, 2016 after being inaugurated by the ex-chief minister of the state, it reached peak capacity in August – a mere six months after its operations went on stream. This possibly becomes the only specialised scooter manufacturing unit of its scale in the world to have reached peak capacity so fast. It is also a pointer to the remarkable pace of scooterisation in India.

Keita Muramatsu, president & CEO (right) and YS Guleria, senior VP (marketing & sales), HMSI, inaugurate the second scooter assembly line at the Vithalapur plant on June 29.  
 

The Gujarat plant saw its second assembly line going on stream on June 29, 2016, which had added additional capacity of 600,000 units, enabling HMSI to address the backlog for the Activa and other scooters models. The 1.2 million unit capacity at the Gujarat plant, which can add no more than two existing assembly lines, also expanded HMSI’s total production capacity to 5.8 million units per annum.

Speaking to Autocar Professional on June 29, HMSI’s top management had estimated that the plant could hit peak production by October 2016, addressing the surging demand during the festive season. However, this has happened almost two months prior to the estimated timeline.

Commenting on this development, YS Guleria, senior vice-president – sales & marketing, HMSI, said: “In just two months (July-August) record time and before schedule, Honda has achieved 100% peak production levels at its second assembly line in the recently inaugurated Gujarat plant. The new capacity of our fourth plant gives us wings to grow at a faster pace and prepare for the festive period like never before.”

While this development has come as good news for HMSI, which is aiming to cross the sales milestone of 5 million units during FY2016-17, the capacity constraint could also hamper its prospects of maximising sales during the incoming festive season.

Expanding capacity at Narsapura

However, HMSI is also expanding capacity at the Narsapura (near Bangalore) plant simultaneously. “We are already under preparation to boost production capacity at our Bangalore plant simultaneously. We have additional land at that site where we can expand operations. We have laid out plans for levelling, construction, building and have started work there. However, we haven’t taken a decision on commencing operations. That will depend on how the market behaves during and after the festive season later this year,” Guleria had told Autocar Professional on the sidelines of the inauguration of its second assembly line in Gujarat plant on June 29.

While setting up an assembly line entails investment in the range of Rs 500-Rs 550 crore, it is certain that the company will have to now speed up the construction of the fourth line at its South India plant.

In Gujarat, HMSI had invested in excess of Rs 1,100 crore in setting up the scooter plant, which created over 3,000 job opportunities. The plant also brought around 22 suppliers of HMSI to the site, who jointly invested an additional Rs 1,100 crore while setting up their respective ancillary units. The suppliers linked to Honda in this project created another 6,000 indirect employment opportunities. 

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