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Honda to hike capacity

New Delhi, April 18: The local unit of Japan’s Honda Motor Co, the world’s largest motorcycle manufacturer, will invest Rs 300 crore to double its existing production capacity.

The wholly-owned Indian unit of Honda, Honda Motorcycle and Scooter India (HMSI), said production of scooters and motorcycles would increase to 7,50,000 units over the next three years as it expects higher sales figures.

Honda has invested Rs 300 crore till now in its plant located on the outskirts of Delhi which has an annual production capacity of 1,50,000 units. The firm currently manufactures Activa, a 100-cc scooter, and Dio, a gearless scooter. Recently, it launched Eterno, a 150-cc four-stroke geared scooter.

The company will increase its product portfolio with the induction of a new model every year, officials said. “This would arrest the decline in the Indian scooters segment,” an official said adding the firm would clock sales of around 3,50,000 units this fiscal.

Scooters were once the first choice of Indian consumers but their share in the overall two-wheeler sales has fallen sharply since 1998, when buyers switched to motorcycles attracted by jazzy new models and greater fuel-efficiency.

HMSI, which currently has a 55 per cent share of the mid-size scooter market, expects to sell around 1,00,000 units of the Eterno since the scooter’s higher fuel-efficiency of 60 km per litre would attract buyers. The firm has reported sales of 1,55,000 units for fiscal 2002-03.

The Japanese firm’s another joint venture subsidiary, Hero Honda Motors, with the Munjal family-controlled Hero group, makes motorcycles and is the industry's top-ranked motor cycle manufacturer. Honda and the Munjal family hold 26 per cent each in Hero Honda Motors.

Earlier, Honda had said it would renew for 10 years a pact to supply technology to Hero Honda when the current agreement expires in 2004.

Hero Honda has a 45 per cent share of the domestic market but has been facing slowing demand and cut-throat competition from Bajaj Auto after two consecutive years of over 30 per cent growth.

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