Honda Motor to invest regardless of growth uncertainties

Sep 12 2013, 11:40 IST
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SummaryEven though the demand for cars and two-wheelers has sharply slowed down in the last year, Japan’s Honda Motor has been one of the few players to go against the tide and record strong performance for both the businesses.

Even though the demand for cars and two-wheelers has sharply slowed down in the last year, Japan’s Honda Motor has been one of the few players to go against the tide and record strong performance for both the businesses. Between April and August this fiscal, volumes for its car business rose over 64% at 49,263 units — an all-time high, while two-wheeler sales went up 21% at 12.78 lakh units. While announcing plans to expand capacity through fresh investments, Honda has also bought out its local partners — the Munjals-led Hero Group in two-wheelers and Siddharth Shriram’s Usha International — helping it gain greater control of its local subsidiaries. In an interview with Roudra Bhattacharya, Honda Motor chairman and representative director Fumihiko Ike talks about the optimism for India and its long-term promise despite the current slowdown. Ike, who took over as chairman of the group this April, plans to make India an export hub for emerging markets with diesel engines taking the lead. Edited excerpts:

Does the slowdown in the Indian car market worry Honda?

Yes, it is the biggest concern. Globally, the financial situation is getting worse, especially in the emerging markets. It’s very ironical because the US economy is recovering — earlier because of a difficult financial situation they were spreading out the money by giving loans for cheap, but now they are planning to tighten up. That affects the emerging markets. The other concern is the Chinese economy and this combination affects the emerging markets.

Will Honda delay its investment plans for the two-wheeler and car businesses?

In fact, we have a very aggressive investment plan regardless of the uncertainties of growth of the Indian economy. I am encouraged by participating in the dialogue between the two countries. Anand Sharma (Union minister for commerce and industry) has expressed a strong commitment to expedite the Delhi Mumbai Industrial Corridor (DMIC) and the Japanese government has promised utmost support for the joint development.

Will you look at the DMIC for Honda’s next plant, maybe because it will be closer to the ports for exports?

We are very interested in the 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 we

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