• Kyodo

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Honda Motor Co. plans to accelerate its presence in India through new investments and new models in the coming months to compete in the country’s growing automobile market.

“We will launch the new versions of the City and Accord models in the second half of the next financial year,” Hajime Yamada, president of Honda Siel Cars India Ltd., said at his factory on the outskirts of the Indian capital.

To boost its share in Asia’s fourth-largest automobile market, and with plans to top the premium segment, Honda has made an investment of 2 billion rupees ($41.9 million) in 2002-2004 for adding new models and upgrading existing ones, Yamada said.

“We would also like to become a major player in the market, selling more than 100,000 cars by 2006, though the road ahead is not so easy,” Yamada said.

But he is certain an increasing number of Indians will go for sedans in the coming years, mainly due to rising incomes and falling interest rates.

The Indian automobile market has 12 manufacturers, offering more than 100 models and variants.

More than 85 percent of the market is dominated by mini and compact cars made by Maruti Udyog Ltd., the Indian arm of Suzuki Motor Corp., South Korea’s Hyundai Motor, Italy’s Fiat SpA and others.

But with confidence in its brand, quality and dealer network, Yamada says Honda is now willing to introduce more Indian parts and components into its vehicles.

Honda has sold about 50,000 cars since its entry into India’s automobile market five years ago, but Yamada said he is confident India’s automobile market, which soaks up about 600,000 units annually, will double to 1.2 million vehicles a year by 2010.

Honda, he added, has no plans to move into minicar production in India but does plan to introduce its popular Fit compact.

It also may enter the utility segment, where many of its rivals are now introducing vehicles.

“The road ahead is rough, but we would like to make an impact in this segment,” Yamada said.

Honda’s Indian unit also hopes to cash in on exports.

Honda Siel already exports some completely built units to Bangladesh, Nepal and Sri Lanka, where it hopes a change in duty structure will lead to a surge in demand.

“We have big expectations from the neighboring countries,” Yamada said.

Besides South Asia, Honda Siel also exports components to Thailand and Britain.

“If India could adopt a stable duty structure, like China, it would help reduce costs and bring down the prices of our cars,” Yamada said.

At present, 45 percent of the price of a Honda car is composed of taxes and duties, Yamada said, urging the government to lower those so customers “can select better from world class brands at lower prices.”

Honda’s City model has been a top-seller over the last three years in the upper premium segment — 28,305 vehicles against a total of 56,547.

The company has sold 2,182 Honda Accords since its introduction in 2001.

Honda Siel is a joint venture with Siel Ltd. in which Honda has 99 percent of the equity.

The factory on the outskirts of New Delhi has an initial installed capacity to make 30,000 cars a year.

Commercial production began in 1997 and sales started in 1998 with the launch of the City model.

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