The Hindu Business Line : Honda sets target of 1 lakh cars a year to make engines in India

"We need a minimum of one lakh cars annually to start manufacturing engines here," the Honda Siel Cars President and Chief Executive Officer, Mr H. Yamada, told newspersons on the sidelines of the launch of a new dealership in Bangalore.

He said the company expects to cross the 50,000-mark by 2006-07. He did not say when the company expects to grow to one-lakh cars per annum. At present, the indigenisation level in Honda New City sedan is about 79 per cent. The rest, which constitute the engine parts, are sourced from Japan.

Mr Yamada said Honda expects to sell 42,500 cars in 2005-06 compared with about 37,000 units in 2004-05. It has pumped in about Rs 50 crore to expand its existing capacity to 50,000 units by October. Its current capacity is 37,000 units.

In 2004-05, Honda expects to sell 32,000 New City, 3,300 units of Accord and 1,600 Honda CR-Vs. Its share in the premium market is around 23 per cent. Honda has wiped out its accumulated losses and has started posting net profits, he said.

Mr Yamada said about a million passenger cars are expected to be sold by 2006-07 in the Indian market. In 2004-05, about eight lakh cars are expected to be sold.

He said there are no plans to launch a new car this calendar year. He added that the company will not bring a diesel variant of New City as the petrol version had performed extremely well because of the better mileage it gives. "Indians are extremely price conscious and we customise our products according to their needs."

In 2004, Honda sold a total of 34,414 units, which was 110 per cent more than what it sold in 2003. Its market share increased to 22 per cent during the corresponding period from 15 per cent in 2003. Its largest selling car, New City, sold 30,834 units in 2004, which was about 115 per cent more than what it sold in 2003.

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