Honda mum on Hero Honda's future; 'to meet demand is more imp'

Honda mum on Hero Honda's future; 'to meet demand is more imp'

"Two wheeler market in India is growing at a scorching pace of more than 30 per cent. Therefore, if the market keeps growing at this pace, I believe, the bigger worry is, for any company, no matter how quickly they expand, it will be difficult to keep pace with the growth of the market," Honda Motor Co President and CEO Takanobu Ito told reporters here.

He was replying to a query on how Honda looks its motorcycle ambitions in India with or without Hero Honda. "It (meeting the demand) should be a greater worry than anything else. So other than that, I don't think there is any need to worry about any other issue regarding two-wheelers in India," Ito said.

He, however, declined to give any comment on reported differences and a possible split with its partner Hero Group. Total two-wheeler sales in India achieved a record figure of 11,27,827 units in October, up 50.38 per cent from the same month last year. Similarly, motorcycle sales of 8,76,810 units in the month, up 43.31 per cent, was also a record.

Honda and the Munjals-promoted Hero group holds 26 per cent each in Hero Honda, the world's largest two-wheeler maker. However, there has been market speculation that there is unease between the partners after the Japanese firm decided to enter the Indian two-wheeler market through its wholly- owned subsidiary Honda Motorcycle & Scooter India (HMSI).

In 2004, the Hero group and Honda had extended their agreement for 10 years, under which the Japanese partner would continue to provide technology to the JV. It will come up for renewal in 2014.

Currently, Hero Honda is finalising plans to set up the fourth plant in the country. It already has three facilities at Dharuhera and Gurgaon in Haryana and at Haridwar in Uttarakhand with a total capacity of 50 lakh units a year.

On the other hand, HMSI has announced an investment of Rs 500 crore to set up its second plant near Bhiwadi (Rajasthan), with an annual capacity of six lakh units. Once the facility becomes operational, in the second half of 2011, the company's total annual capacity will reach to 22 lakh units. HMSI is also reportedly scouting for a location to set up its third facility.

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