MUMBAI – Honda Motor Co. plans to resume a project to set up a second car plant in India to meet increasing local demand for its sedans, it was learned Saturday.
Work on the facility, which was suspended in 2008 in the midst of the global financial crisis, is expected to be completed next year, with initial annual production projected at around 50,000 vehicles.
The carmaker currently has one vehicle assembly plant in India’s northern state of Uttar Pradesh. That factory has an annual capacity of up to 120,000 vehicles.
Honda is already using the site of the second plant, in western India’s Rajasthan state, to make car components. Once the vehicle assembly line is fully operational, production capacity could reach an estimated 200,000 vehicles a year.
As well as grabbing market share in India, the additional output will also enable Honda to use the second facility as an export base to the Middle East, Africa and other overseas markets.
India’s new car market topped 3.42 million vehicles in the business year ending in March 2012. While the local market has softened as a result of rising fuel costs and interest rates, along with a sluggish economy, Honda has remained competitive as brand recognition has helped it to sustain sales.