Honda Cars India is contemplating a 3rd factory to cater to the Indian car market. The 3rd factory from Honda could be set at Sanand, Gujarat. Rumours of Honda conducting a feasibility study at Sanand for its proposed third Indian factory has appeared on TheIndianExpress. Honda's third factory is likely to spearhead the Japanese car maker's efforts to boost its market share in India. Also, the feasibility study for the new factory could be aligned with Honda's plans of entering the high volume A-segment, a space that plays host to the likes of the Tata Nano, Maruti Alto and the Hyundai Eon.
Note: Honda Brio image used as an illustration.
Currently, the Brio hatchback, which starts at a little over 4 lakh rupees, is Honda's least priced car sold in India. So, the space for a car that is priced lower than the Brio definitely exists in Honda's current car line up. The A-Entry model, said to be aimed at a 2017 debut, could be the product that Honda can position in the 3 to 4 lakh rupee space. As of now, the Japanese car maker is struggling to meet demand for its Amaze compact sedan, whose diesel variants have turned out to be stiff sellers. Honda's second plant in Tapukara, Rajasthan, will be ready to go on stream next year.
When the Tapukara plant begins production, its 120,000 annual car production capacity will nearly double Honda's current installed annual capacity of over 120,000 cars. Tapukara is situated in Rajasthan, an arid region of India and Honda is not likely to expand the Tapukara factory owning to water availability constraints. Gujarat, a neighboring state with well-developed port infrastructure, could be an attractive destination for Honda. Also, Sanand is being developed as an automotive hub by the Gujarat government. While Tata Motors has established a greenfield facility to build the Nano, Ford is putting the finishing touches on its own factory, due to go on stream in 2014.
In the next couple of years, Honda Cars India will launch no less than 4 all-new products in the Indian car market. These include: 2014 Jazz hatchback, 2014 City sedan, 2014 Honda Mobilio MPV and the production version of the 2015 Honda Urban SUV concept. All these products will be available with the diesel engine option, a factor that could make them hot sellers in India. So, Honda will require quite a bit of production capacity to satiate India's demand for diesel engined cars. Honda's third car factory in India, notwithstanding its location, will be tailored to meet this demand.