(Photo: Mint)
(Photo: Mint)

Honda, Suzuki alter 2-wheeler production plans amid weak sales

  • HMSI had last year announced a fresh investment of 630 crore at its Vithalapur plant near Ahmedabad
  • The relook at the production plans follows a more than 18% decline in HMSI’s total two-wheeler sales in India to nearly 1.8 million units during the April-July 2019 period

Honda Motorcycle and Scooter India Pvt. Ltd (HMSI) and Suzuki Motorcycle India Pvt. Ltd have adjusted their production schedules as sales continued to remain weak.

HMSI, India’s largest scooter maker and the second-largest two-wheeler firm, said it will go ahead with adding a third assembly line at its Gujarat plant, which manufactures scooters, but is uncertain about when to start using the additional capacity.

HMSI had last year announced a fresh investment of 630 crore at its Vithalapur plant near Ahmedabad where it planned to add the third assembly line, increasing the total plant capacity to 1.8 million units per annum.

The expansion would increase HMSI’s total production capacity in India to seven million units.

The relook at the production plans follows a more than 18% decline in HMSI’s total two-wheeler sales in India to nearly 1.8 million units during the April-July 2019 period. Scooters contributed 64% to the total sales volume.

The company continues to stick to its plan of investing 2,400 crore during FY20, including investments on conversion of the entire model line up to meet the stricter Bharat Stage VI emission norms that will come into force from 1 April 2020, said Y.S. Guleria, senior vice president, sales and marketing, HMSI.

However, the company has revised its “volume targets for the year as our priorities include market share retention and timely transition to the stricter emission norms", Guleria said on the sidelines of the annual convention of the Society of Indian Automobile Manufacturers (Siam) on Thursday.

He did not disclose Honda Motorcycle and Scooter India’s revised sales target for this fiscal year.

Meanwhile, Suzuki Motorcycle India said it is in no hurry to acquire land for its second plant as its existing facility in Gurugram can handle the production forecast until FY21. India’s third-largest scooter manufacturer last year announced plans to build its second plant by FY21 at an investment of 600 crore.

“Land acquisition should have happened by now but it hasn’t. Just on Wednesday we visited a potential site for land acquisition for our second plant. However, given the current market demand scenario, we are in no tearing hurry to acquire new land as the new facility is not happening in FY21. That said, our investment plans remain intact," said Devashish Handa, vice president, sales, marketing and after sales, Suzuki Motorcycle India.

The company has scaled down its sales target for FY20 to 850,000 units from 950,000 units, including export shipments. “We may not be able to reach there," Handa said about the earlier volume forecast.

Guleria said Honda has witnessed a subdued beginning to the festive season in Kerala and Maharashtra, while Handa said a “recovery in demand may not happen very soon".

“Kerala recorded poor demand for the second year in a row. Yesterday Mumbai was immersed in flooding and we don’t know how the market will respond tomorrow. That is the level of uncertainty we are dealing with," Guleria said. Kerala and Maharashtra are among the top scooter markets for Honda and Suzuki.

MG Motor plans to ramp up capacity

MG Motor India aims to advance the deadline for producing 3,000 units of the Hector sport utility vehicle by a month to September-end by starting a second shift on the assembly line at its Halol unit, Rajeev Chaba, president and managing director, MG Motor India, said in an interview.

The carmaker had temporarily closed bookings on 19 July, a month after launching the Hector, as it could not meet customer demand with 28,000 advance orders, which led to around eight months of waiting time. MG Motor had said at that time it will clock 3,000 units by October-end.

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