Honda to Increase Presence in Indian Auto Market

Anthony Fontanelle
May 4, 2007

The Asian continent is fast becoming a huge market for automobiles. While some European markets seem to be slowing down and the U.S. auto sales is hampered by housing problems, Asian countries are increasingly becoming a favorite of car manufacturers. In fact, China and Japan are only next to the United States in terms of auto sales.

Aside from these two countries, another Asian country is fast becoming a hub for car manufacturers. India is now the fourth biggest car market in the Asian continent and car companies are taking notice. Not so long ago, General Motors announced their interest in the growing auto market of the country. Aside from General Motors, the alliance of Nissan and Renault has already started testing the Indian auto market. Following their steps towards the high ranks is the second largest Japanese car manufacturer Honda.

The company announced that they will be manufacturing and selling compact cars in the region by the year 2009. The company’s decision to market smaller cars in the country is due to the fact that the three-quarters of all the cars sold in India are compact cars. General Motors, Volkswagen, Nissan, and Renault have also announced that they will be manufacturing small cars for the country. Honda's small cars to be sold in India will be built on a plant to be constructed in Rajasthan. The company reported that they expect to spend $728 million in the construction of the new assembly facility.

Honda's announcement to enter the small car market in India is fueled by the prediction that the country’s demand for small cars will continue to increase in the near future. It has been estimated that by the year 2016, annual car sales in India will reach 3 million units. This predicted car sales will be divided by car manufacturers such as Suzuki and Hyundai, both of which have an already established buyer base in the country, as well as other brands like Nissan, Renault, General Motors, Volkswagen, Honda and other domestic and international brands who are willing to invest in India.

Although it is speculated that Honda will be manufacturing small cars, the Japanese car company is yet to name what model they will be producing at the Rajasthan production plant. Upon completion, the assembly facility will be expected to produce 60,000 vehicles annually. By the year 2014, Honda plans to expand the facility and increase its production capacity to 200,000 per year. The facility will handle all the processes handled by a full time automobile assembly plant. Although Honda is yet to announce the full scale of jobs to be handled by the facility it is expected that the brake assembly for vehicles will be one of the tasks of the plant.

To meet the expected production output, the new plant will be employing 4,000 workers. This means that Honda will not only benefit from the growing market in India but they will also be helping the country’s economy.

Source:  Amazines.com