Honda SIEL Cars India, buoyed by the success of the City (a 'three box' sedan version of the Fit/Jazz hatchback) and strong demand for its Accord sedan and CR-V SUV models, is planning to double its manufacturing capacity and will also build an engine and transmission plant.

The City has sold over 3,500 units every month while the Accord and CR-V have led their segments. The combined output has given Honda enough volume to start thinking about plant expansion. This is also necessary now Honda is confident enough to start planning a small car project.

In the first phase, Honda is expected to double the capacity of its Greater Noida plant (near Delhi) to 100,000 units by the year 2010.

It is also expected to set up an engine and transmission plant to help increase local content in the City. At present, a high percentage of the car's components come from Thailand.

The company plans to invest INR10 billion in the engine and transmission expansion while the car manufacturing capacity increase will cost about INR1.5 billion.

Deepesh Rathore