Trade Analytics

Go Back

Honda starts world's largest scooter plant in Gujarat

Business Standard:  February 18, 2016

New Delhi: Gujarat is now home to the world's largest scooter manufacturing site, as Japanese two-wheeler giant Honda Motorcycle and Scooter India (HMSI) started its fourth plant in India at Vithalapur, a scooters’-only facility, just 15 km from Suzuki Motor Corporation's upcoming facility in Gujarat.

Spread over 250 acres, the facility has come up in just 13 months with an investment of nearly Rs 1,100 crore. Initially, the plant would produce around 600,000 scooters per annum which would be scaled up to 1.2 million scooters per annum by mid 2016. With the Gujarat plant commencing full production, HMSI's net installed capacity in India would be scaled up to 5.8 million units per annum in 2016 from 4.6 million units at present.

Around 22 vendors of HMSI have set up shop in the vicinity of Vithalapur and in Sanand (about 40 km from here), and have cumulatively invested around Rs 1,100 crore in Gujarat.

HMSI claimed that its fourth plant in India has created job opportunities for 3,000 people (directly and indirectly). About 85 per cent of the operators on the shop floor are local, while about 50 per cent of the managerial staff are from Gujarat.

Inaugurating the facility here, the company said that it was all set to take the two-wheeler market by storm with its all new 'fun-bike' Navi that would hit the Indian roads by April this year. It would, however, be made at its Tapukara plant in Rajasthan and would sport the 110-cc Activa HET engine.

After running full capacity at its three existing plants in India last year, the fourth plant is expected to give HMSI the much-needed volume boost required to clear its current order backlog of 30,000 scooters till January.

Explaining the increasing 'scooterisation' of the Indian as well as the Asian markets, YS Guleria, senior vice president, sales and marketing, HMSI said, automatic scooters now contribute nearly 30 per cent of the two-wheeler market in India, and in the next five years, we see this share going up to 35 per cent.

"Between April 2015 to January 2016, while the overall two-wheeler market in India has declined by 1 per cent, motorcycles have registered a sales decline of 2 per cent, while scooters have registered a growth of 12 per cent," Guleria said.

As such nearly 65 per cent of HMSI's sales in India come from scooters and Keita Muramatsu, president and CEO of HMSI, claimed that India contributes roughly about 25 per cent of HMSI's global sales of 17.5 million two-wheelers. As per data from the Society of Indian Automotive Manufacturers (SIAM), HMSI has sold 3.5 million two-wheelers during April to January 2015-16.

Gujarat roughly accounts for nearly 10 per cent of HMSI's sales and is a key market for the company, and nearly 40 per cent of all two wheelers sold in Gujarat are scooters.

Speaking on the occasion, Gujarat chief minister Anandiben Patel said that as a member of legislative assembly from Mandal in 1998, she had seen this zone languish without proper infrastructure, roads and even agriculture. "With these companies setting up plants here, it has brought about a huge difference to the area. I saw several young ITI pass outs working at the site during my plant visit," she said adding that the state government has urged companies to adopt Industrial Training Institutes (ITIs) to develop industry-ready youth.  

Cumulatively HMSI has invested Rs 6,000 crore in its Indian operations so far, and by the end of this fiscal the figure would touch Rs 7,400 crore as the fourth plant comes into operation. HMSI started production in India from 2001 (Manesar, Haryana). In 2011, the second plant came up at Tapukara, Rajasthan, followed by Narsapura facility in Karnataka in 2013, taking the total installed capacity to 4.6 million units pa.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.