Honda Subsidiaries to Expand Production Capacity in India - Analyst Blog
Honda Motor Co., Ltd. HMC announced that two of its subsidiaries in India are expanding their production capacity to meet the expected growth in demand from the market. The two subsidiaries are Honda Motorcycle & Scooter India Pvt. Ltd. (“HMSI”), the company’s motorcycle production and sales subsidiary in India, and Honda Cars India Limited (“HCIL”), Honda’s automobile production and sales subsidiary in the nation.
HMSI will invest INR 5.85 billion (approximately $93.1 million) to add a new production line to its motorcycle production plant in Karnataka, India. This is HMSI’s third motorcycle production plant in the nation. It has been operational since Jun 2013.
The new production line at the Karnataka plant will commence operations from 2016. It will increase the production capacity of the plant by 600,000 units to 2.4 million units. HMSI will hire 1,900 new associates for the plant to manage the increase in production capacity.
Honda is also building a new motorcycle plant in India, which is scheduled to start operations from the first half of 2016. The new plant and the expanded production line at the Karnataka plant will increase HMSI’s annual motorcycle production capacity to 6.4 million units, making it Honda’s largest motorcycle assembly plant in the world. This will help Honda meet the growing demand from India.
Meanwhile, HCIL will invest around INR 3.8 billion (approximately $60.48 million) in its second automobile production plant located in Rajasthan, India. The plant has been operational since Feb 2014, with annual production capacity of 120,000 units.
HCIL’s investment will add several new facilities to the plant, including an extended assembly line. This investment will boost the production capacity of the plant by 60,000 units to 180,000 units per annum. HCIL will hire 600 new associates for the plant to manage the increase in production capacity. The expanded production capacity at the Rajasthan plant will increase HCIL’s annual production capacity to 300,000 units in India. Honda expects significant growth in the small-sized passenger car market in India.
Currently, Honda carries a Zacks Rank #4 (Sell). Better-ranked automobile stocks include Tata Motors Limited TTM, American Axle & Manufacturing Holdings Inc. AXL and Wabash National Corp. WNC. While Tata Motors sports a Zacks Rank #1 (Strong Buy), both American Axle and Wabash National carry a Zacks Rank #2 (Buy).
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