Honda Buys 380 acres for a Plant in Gujarat
Mumabi: Honda Motor spent an estimated ₹ 1,000 crore to acquire 380 acres in Gujarat to set up a manufacturing unit, as the Japanese automaker bets on the long-term potential of the Indian market despite its factories now producing fewer cars than what they are designed for.
The new site is at Vithalapur, about 80 kms north-west of Ahmedabad, where Honda last year opened a facility for two-wheelers. Honda Cars India bought the land from private individuals and completed transactions early this month.
The land acquisition comes as a surprise, as the company’s current facilities — at Greater Noida and Tapukura, Rajasthan — utilise just 60-70% of their combined production capacity of 2,40,000 vehicles. But with challenges of land acquisition and rising relty prices, it wants to derisk itself from future volatilities, people in the know said.
“We have finished the land acquisition recently,” Honda Cars India chief executive Yoichiro Ueno told ET. “Honda is confident of long-term potential growth of India and is committed to the region. At GDP growth of 7% per annum, it is among the fastest growing markets and Honda would want to participate in its future growth.”
Honda expanded capacity in India to more than 2,00,000 units from 60,000 in a short span of time. Part of it was in diesel vehicles, seen as a must-have until a couple of years ago for automakers to succeed here. But customer preference is shifting back to petrol as the price difference has narrowed. Automakers like Honda are sitting on underutilised diesel capacities as a result. To regain the lost momentum, Honda is readying new here. Having the land ready will allow the company to respond quickly to improvement in demand as and when it happens.