Honda Siel Cars India (HSCI) plans to invest Rs 300 Crore in its second plant at Tapukara (Rajasthan) to make engine and transmission components (powertrain) that will help it cut cost of critical car components.
HSCI president and CEO Takashi Nagai said, “The aim is to cut costs and improve financial yields.” He said Honda will identify more critical parts to be manufactured locally. Till now, these components were imported from Indonesia and Thailand. Industry experts say that spares made in India could be 15-20 per cent cheaper compared to imported products.
The new facility would start operations early next year and will help HSCI build volumes in the country’s small-car segment. The high price of Jazz, its only product in the segment, has made it a niche player in the hatchback market in India.
The fresh investment would result in better utilisation of HSCI’s 600-acre facility, which was inaugurated in September 2008 and was scheduled to start operations in Q4 of 2009. However, it remained unutilised as it coincided with global economic slowdown that also resulted in sluggish car sales in India for almost a year.
Honda is currently utilising the facility to export crankshaft and connecting rods to Japan. “We are looking at making the Indian manufacturing facility as significant production base for critical components by leveraging the low-cost manufacturing here for our global operations,” Mr Nagai said.