The Hindu Business Line : Honda’s small car won’t come cheap

(From right) Mr Satoshi Aoki, Chairman, Honda Motor Co Ltd, Japan; Mr Siddharth Sriram, Chairman, Honda Siel Cars India Ltd; and Mr M. Takedagawa, CEO of Honda Siel Cars India, after laying the foundation for Honda manufacturing plant-2 at Tapukara village at Bhiwadi in Rajasthan on Sunday. —

Priyanka Vyas

Tapukara (Rajasthan), July 1 Even as it announced its entry in to the small car segment, Honda Siel Cars India (HSCI) said that its cars would cater to the premium market and not be priced as low as $3,000.Other players like Tata Motors and Nissan-Renault are eyeing the small car segment with $3,000 prices.

“Our smallest car would cost about $9,000.To produce a car at one third of the cost is out of our range” said Mr Satoshi Aoki, Chairman, Honda Motors Company, at a ceremony to lay the foundation stone of its second plant in Rajasthan.

Indicating that the small car would not be a vanilla offering, he said: “Honda likes small cars with Honda-like characteristics.”

The company plans to develop a hatchback like Maruti’s Swift or Hyundai’s Getz in the premium segment that would qualify for excise duty benefits given to small cars.

INVESTMENTS

The planned plant, to be set up at an initial investment of Rs 1,000 crore, would begin production by 2009 and employ about 3,000 people, according to the company.

However, Mr Kuldeep Ranka, Managing Director of Rajasthan State Industrial Development & Investment Corporation, said on the sidelines: “The total investment is about Rs 5,000 crore, of which Rs 2,200 crore would be by the ancillaries of HSCI and the rest from Honda.”

He added that of the total 750 acres allotted, 100 acres would be used for setting up Honda’s R&D centre.

When asked, company officials refused to comment on the investment numbers, and maintained the initial investment figure of Rs 1,000 crore.

TARGET MARKET

Mr Aoki said that while Honda’s small car would be its global product, the company’s priority would be to cater to the Indian market.

In line with its global strategy, Honda would manufacture cars only for the domestic market and would not consider exports, he said, adding that there could be a possibility of exporting some parts to the European market.

With an initial capacity of 60,000 units, which could be scaled up to two lakh units, the plant would primarily be for small cars.

However, in view of the capacity shortage at its Greater Noida plant for the Civic and the Accord, the company said that it may have to adjust production accordingly.

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