Honda may soon follow erstwhile JV partner Hero MotoCorp into Gujarat, with plans to set up its fourth two-wheeler plant in the state, sources told FE. The Japanese company is believed to have scouted for land near Sanand, where both Tata Motors and Ford have set up their manufacturing units.
The move is in line with Honda Scooter and Motorcycle India’s target of displacing Hero from the top spot in the two-wheeler market by 2020 for which it has planned an annual capacity of 10 million units across 7-8 manufacturing units.
At present, it has two plants (Haryana and Rajasthan), with a third in Karnataka almost ready to start production in the April-June quarter this year, taking the output up to four million units/year.
?They (Honda) were offered land near Sanand and have also reviewed another site at Viramgam, which is around 40-50 km away from Sanand. They need a large parking area and are still scouting for the right site,? a source in the know said, adding that Honda is seeking close proximity to ports for exports.
Another source added that the company may look at other sites as well since land prices are quite high in Sanand at about R1.3 crore/ acre, primarily because many companies have already invested in the area.
Asked for comments, a HMSI spokesperson said, ?We cannot comment on speculation or rumours. HMSI is currently focussing on production capacity expansion from the upcoming third plant at Narsapuram, Karnataka, which is scheduled to start operations from first quarter of FY14.?
Advantages over other states such as steady power supply, good roads and port infrastructure and an easier land acquisition system have made manufacturing companies, especially in the auto sector, make a beeline for Gujarat.
General Motors, Tata Motors and truckmaker AMW already have operational plants, while Hero MotoCorp, Ford Motor Co and Maruti Suzuki are also investing heavily in the state. There are also rumours that Volkswagen, Mahindra and Renault-Nissan have explored the state for investment opportunities.
Hero MotoCorp’s fifth plant in Gujarat is also scheduled to come on stream in the second quarter of FY15, a quarter after its fourth facility at Rajasthan starts operations. The company is investing around R1,110 crore in a 250-acre plot in Gujarat, which will initially have a capacity of 1.2 million units a year.