Honda to invest Rs 100cr more in 2,3 wheeler unit

Honda has set up a specialised and state-of-the-art manufacturing base in India for manufacturing two-wheelers, three-wheelers and component parts. The approved foreign equity is 100 per cent amounting to $43 million.

Honda also plans to manufacture new models involving latest state-of-the-art technology for the Indian market. To strengthen its distribution network and provide world class after sales service, the company has appointed 60 dealers and it is expected to increase the dealer network to 250 by the end of 2004-05.

In a bid to improve customer satisfaction levels further, the company will provide after sales service for those Honda models, which are not manufactured in India. This would also involve import of genuine spare parts and components and their sale through HMSI’s dealership network in the country.

However, the company has also told the government that HMSI would undertake domestic retail trading of imported components and spare parts only to service its own imported models. Normally, government policy disallows retailing activities of imported products in the auto sector.

The company commenced production of its Activa model in May 2001 and in the very first year of production nearly 1,300 units have been exported besides its sale in the domestic market.

Apart from the permission to manufacture two-wheelers in India, HMSI has also been permitted to import new two-wheeler in the completely built unit (CBU) to India from Honda group of companies.

To manufacture the Honda models, the Indian subsidiary will make a lumpsum royalty payment of $ two million with a special condition that the company will not manufacture NH 100 and Marvel models in India and the import and sale of CBUs will be carried out as a secondary activity.