The country’s second largest two-wheelers maker Honda Motorcycle & Scooter India (HMSI) has said its overall investment in the country this year, including the expansion of production capacity at the Gujarat plant, might get delayed as it is considering the impact of the current pandemic on the overall ecosystem.
“The final decision will be taken in accordance with the market revival,” Yadvinder Singh Guleria, Director – Sales & Marketing, HMSI, told BusinessLine recently.
Currently, Honda’s all four plants located at Karnataka, Gujarat, Haryana and Rajasthan are operational, but production is being aligned with the market demand, local regulations and the supply chain, he said.
The Japanese subsidiary has spent around ₹11,000 crore so far since its entry into India in 2001 and has over 45 million customers. The company manufactures around 6.5 million units of two-wheelers from all plants put together in a year.
“Any decision on further ramping-up of production will be taken in accordance with sustainable market demand, in order to reduce inefficiencies in the supply chain and our ecosystem at large. Covid-19 slowed down our plans, while our dealerships were sufficiently stocked up to handle the BS-VI transition,” Guleria said.
In order to enable online purchase, HMSI is also starting a website this month from which customers can choose a dealer of their choice (nearest) and book a two-wheeler.
Price hike inevitable?
On supply chain issues vis-a-vis vendors, Guleria said: “We are trying our best to sustain the supply chain while ensuring utmost safety standards in the ‘new normal’ created by the pandemic. In the current scenario, not only suppliers but also OEMs are struggling with issues related to the migrant workers, driver shortage etc.”
And, due to these reasons, not only HMSI but the whole industry may have to increase the prices of their products, he said.
“Due to the current pandemic and low demand on account of bottomed-out economic activity, overall operational efficiency of the entire supply chain is extremely stressed. Already, the market is seeing a gradual price-up in the launched BS-VI products. If there is substantial increase in the cost of raw materials, the industry might have to pass the hike as the ecosystem is already under tremendous pressure,” Guleria said, adding that new expenses like sanitisation and additional safety measures put in place for safeguarding the heath and wellbeing of all stakeholders are also one of the reasons for the increased cost.