Honda to rev up with Rs3,000 crore investment

Our Corporate Bureau
04 July 2006

Honda is present in both passenger car and motorcycle segments in India. The passenger car business is under Honda Siel, in which it currently holds more than 99 per cent stake. Delhi-based Siel is reportedly planning to hike its stake to 5 per cent at a cost of Rs76 crore.

In the motorcycle business, Honda Motor is a co-promoter of the country''s largest two-wheeler manufacturer Hero Honda. It also has a fully owned subsidiary Honda Motorcycle and Scooter India which sells gearless scooters and one motorcycle model.

Honda Motor would set up a new subsidiary, Honda Motor India, to deal in auto components. The group believes a focused company would help synergise component sourcing for various group companies.

The CEO of Honda Motor, Takeo Fukui, said India is a more promising market than China in the long term. The country is more attractive for Honda as it is a democracy.

Honda Siel would expand its capacity to 1 lakh units per annum by next year from around 50,000 units currently. The company''s capacity would rise further to 1.5 lakh units by 2010.

Honda is seriously considering an entry into the small-car segment. The premium hatchback segment is the fastest growing in the country as the recent excise duty cut has made the cars more affordable. Honda is in negotiations with some state governments for setting up a second car assembly unit, dedicated for small cars.