nothing has been frozen. But only when we are sure of utilising the new capacity at Tapukara, can we ask the headquarters for more investment,” a Honda Car India official said.
"This is a very key pillar of Honda's new growth strategy. With such a move, Honda will be going for the volume car market and competing with Maruti Suzuki and Hyundai for the first time. For such volumes, they will need a new plant, or an extra line," said Gaurav Vangaal, senior analyst, automotive forcasting, at IHS Global.
The development comes on the back of an aggressive growth target set by the company. Honda is targeting a market share close to 10% with four new models planned for launch by 2015-16 — a new City, new Jazz, completely new compact MPV on the Brio platform and a small SUV based on the Jazz. With volumes up 65% to 49,263 units in April-August this year on the back of strong demand for the Amaze, Honda's market share in the PV segment has almost doubled to 5% from 2.73% in FY13. Currently, Maruti leads with a 40% share of PV sales, followed by Hyundai (15%) and Mahindra (10.6%).
Honda global chairman Ike recently told FE in an interview that expansion at Tapukara beyond the current plans would prove tough, but the company is looking at other regions within the Delhi-Mumbai Industrial Corridor. “We are very much interested in DMIC, but we need infrastructure. There are some bottlenecks in terms of infrastructure. For example, if we want to expand our volumes in Tapukara (existing two-wheeler and upcoming car plant), we cannot, because of limited supply of water. So we have to find another place. There are problems in logistics. So, even if expand capacities to meet the demand, the problem is how to deliver these vehicles to people in time,” he said.
Sources said Sanand could be the most likely site for this third plant as Honda's domestic two-wheeler arm, Honda Motorcycle & Scooter India, has already bought a plot of land in the region for its own facility. This is because Honda follows a strategy