Japan's Honda Motors Indian bike unit will nearly double production capacity for motorbikes in India to 4 million units by the first half of 2013, including through the construction of a third factory, to meet the country's rising demand.
India is the second fastest growing auto market in the world after China and domestic motorbike sales grew by a scorching 30% in 2010, powered by strong economic growth, an expanding middle class, and easy financing options.
Honda, the world's biggest motorcycle maker, said the third factory is expected to be operational in the first half of 2013 near Bangalore and will have a capacity of 1.2 million units.The company, which competes with Hero Honda Motors and Bajaj Auto in India, also said it would double capacity at the unit's second plant, currently under construction in Rajasthan, to 1.2 million units by March 2012.
Honda is in the process of exiting its Indian joint venture, Hero Honda Motors, after more than 26 years to reap profits on its own through wholly owned unit Honda Motorcycle & Scooter India. The joint venture was India's largest motorcycle manufacturer with more than half the domestic market. In March, Honda's Indian bike unit said it expects to sell 2.1 million units in fiscal 2012 that started in April and will spend Rs20 billion ($441.2 million) to boost production and expand capacity.
Unlisted Honda Motorcycle, which made its entry in the popular 100cc bike segment in 2009, will launch a low-costmotorcycle in India soon, the company said earlier this year.
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