Honda wants India to be parts export hub, eyes Rs 1,100cr in FY16 | business | Hindustan Times
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Honda wants India to be parts export hub, eyes Rs 1,100cr in FY16

Japanese car maker Honda plans to make India an export hub for auto components by enhancing supply from the country to its various international operations, while it also looks to enhance overseas shipping of global models produced in the country.

business Updated: Jul 12, 2015 18:26 IST

Japanese car maker Honda plans to make India an export hub for auto components by enhancing supply from the country to its various international operations, while it also looks to enhance overseas shipping of global models produced in the country.

The company, which exported auto components worth Rs 722 crore in 2014-15, is looking for over 50% increase to Rs 1,100 crore in the ongoing fiscal by adding more countries such as the US, China and Canada to its basket.

"We have been exporting a lot of components from India. We are definitely looking to increase exports from here as we want to make it a global export hub," Honda Cars India president and CEO Katsushi Inoue told PTI.

Honda's exports of auto components from India has been gradually increasing. In 2013-14, its component exports had a turnover of Rs 420 crore.

It ships different engine parts, forgings and transmissions along with others, which are produced at its Tapukara plant in Rajasthan to a host of global operations.

These include Japan, Thailand, Malaysia, Indonesia, Philippines, Taiwan, Vietnam, UK, Brazil and Mexico. Soon, it will start exporting components to its operations in US, China and Canada.

Inoue said Honda was very much in consonance with Prime Minister Narendra Modi's Make in India initiative.

"Honda's expectations from India is very high. There is a huge potential ahead...Currently it's the fourth biggest market for us after the US, China and Japan," he added.

On exports of cars from India, he said Honda will look to increase the volumes but "it will be to right hand drive countries".

Honda Cars India exported 8,403 units last fiscal while in 2013-14 it had shipped out 5,798 units across various markets. In the first quarter of the current fiscal, the company has already exported a total of 1,858 units.

Keeping with its focus on exports, the company, which had recently re-launched its premium hatchback Jazz in India had started exporting the model ahead of its launch New Delhi.

The company also exports models like hatchback Brio, compact sedan Amaze, mid-sized sedan City and multi-purpose vehicle Mobilio.

Honda Cars India Ltd (HCIL) exports mostly to South Africa and neighbouring countries Nepal and Bangladesh. It is exploring other options to increase the export market.

While Amaze, Jazz and City are manufactured at the Tapukara facility, other models like Brio and Mobilio are rolled from its Greater Noida factory.

Commenting on the Indian market, Inoue said: "Indian market is growing, the young generation is entering car market. It is an important market for us."

HCIL has set a target of selling three lakh units annually in India by 2017. Last fiscal, it had sold 1.89 lakh units in the domestic market, up 41% from the previous year.

"We are increasing Tapukara production capacity after which our total production capacity will increase from 2.4 lakh to three lakh units per annum. The enhanced capacity will be there by middle of next year," Inoue said.

The company is currently investing Rs 380 crore to enhance the production capacity of its Tapukara plant from 1.2 lakh units per annum to 1.8 lakh units per annum.

The other facility at Greater Noida has an annual production capacity of 1.2 lakh units.

Commenting on the 2020 plans for the company, he said: "We have already started acquiring land in Gujarat for another plant but we have not started work on it as we can still enhance production capacity of our Tapukara plant. However, Indian market is growing and the idea to set up another plant is to cater to the expected enhanced demand."

On the challenges in the Indian market, Inoue said: "India is a discount market and the competition in tough. Our main focus will be to enhance customers satisfaction."

He said the company will not chase volume ahead of customer satisfaction.

"For us customer is most important. If we try to increase production very rapidly we may hurt customers ...that's not what we want, customer satisfaction is very important for us," Inoue said.