Honda India bike unit to sell 2.1 million units in fiscal year 2012

Japan's Honda Motor Corp's fully owned Indian bike unit expects to sell 2.1 million units in the fiscal year  that starts in April and will spend Rs20 billion ($444.3 million) to boost production and expand capacity, a company official said on Monday.

The company expects to grow at 30% and sell 1.65 million units in fiscal 2011, Shinji Aoyama, outgoing president and chief executive of Honda Motorcycle & Scooter India Pvt Ltd, said.

"We have not entered the mass market in India because of the existence of Hero Honda. From now onwards, we can enter the segment," Aoyama told reporters.

Earlier this month, Hero Investments agreed to buy Honda Motors' 26% stake in Hero Honda Motors for around $851 million, with the Japanese automaker exiting its joint venture in India after more than 26 years.

The Hero Honda joint venture is India's largest motorcycle manufacturer with more than half the domestic market. The company sold 1.43 million units in the December quarter, up 28% from a year earlier.

Honda Motorcycle will invest Rs6 billion in the first phase of its second plant, which is expected to begin operating in the second half of 2011.   

"In order to minimise the gap with not only Hero Honda, but Bajaj too, we will have to expand capacity," Aoyama said.

Unlisted Honda Motorcycle, which made its entry in the popular 100cc bike segment in 2009, will launch a low-cost  motorcycle in India soon, he said, but did not give a timeline.

The company appointed Keita Muramatsu as new chief executive effective April 1.

India is the second fastest growing auto market in the world after China and domestic auto sales grew by a third in 2010, powered by strong economic growth, an expanding middle class, and easy financing options.