By Anand K/Bloomberg
New Delhi: Honda Motor Co., the world’s biggest maker of motorcycles and scooters, will build a second factory in India as demand grows in the world’s second-largest two-wheeler market.
The company is conducting a feasibility study for a new plant, Yukihiro Aoshima, president of Honda’s Indian unit, said in New Delhi on 19 March. The unit now has an annual production capacity of 1.2 million motorcycles and scooters in India.
Honda’s new factory and its plans to sell new models also increases competition for its affiliate Hero Honda Motors Ltd, India’s biggest motorcycle maker. Demand may grow an average 10% until the end of the decade with purchases made by 500 million Indians who are aged 25 or below, according to the Society of Indian Automobile Manufacturers.
“There is a huge young population in India that’s taking to motorization,” Aoshima said. “The market is big enough in India for both us and Hero Honda to co-exist.”
Honda has a 26% stake in Hero Honda Motors, through which it has been selling motorcycles since 1985. In 2001, Honda started selling scooters on its own and in 2005 started selling motorcycles through its fully owned unit.
A record 7.06 million motorcycles and scooters were sold in India in the year ended 31March, with Honda and its affiliate Hero Honda controlling a combined 49% of the market.
Honda, which has a factory at Manesar, wants to increase capacity to 2 million units a year by 2010 and sell 100cc motorcycles, Aoshi said. The company also plans to import motorcycles with engines bigger than 500cc, he said.