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Old 27th March 2015, 13:26   #1
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Default Honda to invest Rs. 380 crore to expand Tapukara plant

Honda Cars India has announced that it will invest Rs. 380 crore in the expansion of the annual production capacity its Tapukara plant. This will enable the facility to churn out 1,80,000 unit per annum as opposed to the current 1,20,000 units. The additional capacity is scheduled to be ready by middle of 2016. The step is expected to generate fresh employment for about 600 people.

With the expansion of the 2nd plant, Honda's overall annual production capacity will be bumped up to 3,00,000 units from the current 240,000 units. Honda's Greater Noida plant is capable of rolling out 1,20,000 units per annum.

The Tapukara plant, which is located in Alwar district in the state of Rajasthan, started operations in February 2014. The facility integrates various functions including operations for forging, casting, stamping, powertrain components production, welding, painting, resin molding, engine assembly, and frame assembly as well as an engine testing facility.

Honda's domestic sales have grown by 44% growth during the period April 2014 - Feb 2015. The company managed to sell 1,66,366 units as against 1,15,913 units in the corresponding period in FY 2013-14.

Honda to invest Rs. 380 crore to expand Tapukara plant-image002-1.jpg

Last edited by Aditya : 28th March 2015 at 18:55.
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Old 27th March 2015, 14:26   #2
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Default Re: Honda to invest Rs. 380 crore to expand Tapukara plant

Aah... finally! This was expected given the surge in demand for Amaze/City/Brio in the domestic market and the speculated increased demand for Jazz - both export and domestic (if and when it gets launched) markets.
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Old 27th March 2015, 16:06   #3
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Default Re: Honda to invest Rs. 380 crore to expand Tapukara plant

Somehow, I feel we will have to wait for Jazz launch until this expanded capacity gets operational.

But I seriously do not understand Honda's planning here. As of Today, Honda is running full capacity at both Noida and Tapukara. And still there is waiting for City and Amaze models. So there is a good demand and not enough supply. If they go the same way till mid 2016, the waiting for City will go up + No new models (including Jazz) can be launched + they cannot grow much this FY. Again, this is only 5k additional production per month and will not help much in terms of satisfying demand or launching new models. They need a new plant and a big one at that.

And, wasnt there news about a new plant in Gujarat / Rajasthan? Any updates on that??
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Old 27th March 2015, 16:44   #4
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Default Re: Honda to invest Rs. 380 crore to expand Tapukara plant

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Originally Posted by Vigkey View Post
Again, this is only 5k additional production per month and will not help much in terms of satisfying demand or launching new models. They need a new plant and a big one at that.
5K per month extra over sales of existing 15K is phenomenal, don't you think?
The waiting lists will definitely come down by this expansion, though I believe the magic of Honda City/Amaze/Mobilio will have weaned off by then.
In fact, Mobilio sales are already downhill and hence more Citys and Amaze will be made reducing waiting times.
So, the time right now is perfect for launching Jazz as there is capacity to be utilised.
And there is demand for ramping up exports as well.
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Old 27th March 2015, 21:24   #5
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Default Re: Honda to invest Rs. 380 crore to expand Tapukara plant

Good news for Honda fans. After years of complacency, Honda cars has shown real interest and commitment to the Indian market. India specific models, engines, new plants and capacity expansions.

Though they have been running more or less to capacity of late, we should bear in mind that any expansion is extremely capital intensive and would need due diligence and strong business case before committing to such investments. In my opinion, this is an indication of the confidence Honda has for their sales projections (domestic + exports) over coming years and launches. It may be ground work for Jazz launch and meeting potential latent demand for poor Brio which probably is de-prioritised over other models currently. Interesting times ahead.
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Old 27th March 2015, 21:34   #6
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Default Re: Honda to invest Rs. 380 crore to expand Tapukara plant

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Originally Posted by turbospooler View Post
5K per month extra over sales of existing 15K is phenomenal, don't you think?
The waiting lists will definitely come down by this expansion, though I believe the magic of Honda City/Amaze/Mobilio will have weaned off by then.
In fact, Mobilio sales are already downhill and hence more Citys and Amaze will be made reducing waiting times.
So, the time right now is perfect for launching Jazz as there is capacity to be utilised.
And there is demand for ramping up exports as well.
No Turbospooler, if we are talking about 5k extra sales next month, that is phenomenal. But we are talking about a period that is over 1 year away (the expanded capacity will be usable my mid 2016). City and Amaze still having waiting. I dont think the demand will be much different, at least for the City. Amaze sales might drop with the Figo Aspire coming. Even with Brio and Mobilio sales weaning off, there is still waiting for City and Amaze. And in the next year, the market expects Brio and Amaze facelifts which might boost the sales, at least by a bit. Or at least that will ensure the current demand continues.

I dont understand how Jazz can be launched with the current capacity unless Honda decides to cut down the production of Brio + Mobilio hugely + a little of Amaze also. Only then they will be able to make at least 3k Jazz per month. If we assume that the export of Jazz would reduce by then, we can make it 3.5k max. If the car clicks, then it would result in huge waiting for Jazz as well. And by the time the extra 5k is usable, there will enough waiting to completely utilize the capacity and again Honda will be like today - running almost 100% capacity and looking for expansion.
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Old 12th July 2016, 16:57   #7
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Default Re: Honda to invest Rs. 380 crore to expand Tapukara plant

Honda Cars India's Tapukara plant expansion will be completed by September 2016 after which it will have the capacity to churn out 1,80,000 units per annum, up from the present 1,20,000 units per annum, according to Autocar Professional.

The Rajasthan-based factory currently produces the City sedan, the new Jazz as well as the BR-V, and is running at 84 percent of its manufacturing capacity.

Also, demand for the BR-V continues to be steady as it has crossed 11,000 bookings so far and now commands a waiting period of 1½ months, according to Jnaneswar Sen, senior VP (sales and marketing).

And, when quizzed about the decline in sales in the past 2 months, Yoichiro Ueno, President and CEO said:

Quote:
“The shift in consumer preferences has led to high stock of diesel vehicles at our dealerships. As a deliberate measure, we have been rationalising wholesale dispatches to correct the stock situation. The market is good and our retail sales were much higher than wholesales. The stock levels at our dealerships have been almost normalised and we expect that our wholesales would match the retail sales level in July.”
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Old 12th July 2016, 17:49   #8
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Default Re: Honda to invest Rs. 380 crore to expand Tapukara plant

What do the wholesale dispatches mean vs retail sales? Guess the retail sales mean the sales done through the respective dealers.
Thanks in advance.

Last edited by vvrchandra : 12th July 2016 at 17:54.
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Old 12th July 2016, 18:00   #9
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Default Re: Honda to invest Rs. 380 crore to expand Tapukara plant

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Originally Posted by vvrchandra View Post
What do the wholesale dispatches mean vs retail sales?
Wholesale dispatch: Factory to dealership - Primary billing

Retail sales: Dealership to customer

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Originally Posted by vvrchandra View Post
Guess the retail sales mean the sales done through the respective dealers.
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Old 12th July 2016, 19:03   #10
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Default Re: Honda to invest Rs. 380 crore to expand Tapukara plant

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Originally Posted by RavenAvi View Post
The Rajasthan-based factory currently produces the City sedan, the new Jazz as well as the BR-V, and is running at 84 percent of its manufacturing capacity.
Are there any high selling products planned for launch?

I believe the products lined up are - 1. City facelift 2. New Accord 3. Brio facelift 4. New Civic and WRV compact crossover, of which I expect the Civic to do decent volumes for Honda.
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