Honda is hoping to gain a greater share of the Indian small car market, but a senior executive has said it is unlikely to sell cars at the cut prices that rivals Tata Motors and Renault are promising for upcoming models.
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Honda on Sunday opened its second plant in India, in the northern state of Rajasthan, and plans to roll out its first small car from the plant in 2009, but chairman Satoshi Aoki told reporters at the plant in Tapukara that building a car that cheap would be difficult for Honda, according to the Associated Press (AP).
“Our mini car in Japan costs around $US9,000 … to produce something at one-third the cost would be rather challenging,” he said.
AP noted that Tata Motors plans to sell a car priced at INR100,000 ($2,460) rupees from next year, which would make it India’s cheapest car while, earlier this year, Nissan CEO Carlos Ghosn said his company also plans to manufacture a $3,000 car for India.
AP said Honda presently controls 5.5% of the Indian market and is spending $491 million on its latest plant, which will have an annual capacity of 200,000 units. Honda is also expanding capacity at its plant in New Delhi and plans to manufacture 150,000 vehicles annually by the end of 2010.
Honda’s Indian small cars will contain 90% local parts, officials told the news agency.
“The North American business is very important to us, but we like to add business from other markets like China, India, Southeast Asia and Brazil, so we won’t be dependent on a single market,” Aoki was quoted as saying.
Passenger vehicle sales in India, where eight out of every 1,000 people own an automobile, are forecast to double to 2m units by 2010, AP added.
Aoki was also reported to have said Honda was likely to revise upwards its profit forecast for the 2007 fiscal year because of the yen’s surprising depreciation against the dollar. The yen’s decline would boost repatriations from markets like the US, which accounts for 70% of Honda’s profits.
Honda said in April that its profits would drop by about 3% to $4.7bn on an expected appreciation of the yen and rising prices of commodities like steel and aluminium, the Associated Press said.
