Honda Siel limited is mulling the prospect of using its facility in Gurgaon as a production and supply hub for the south Asian market. The move is being seen as a step towards using the spare production capacity that the Indian plant currently has due to a slump in demand for petrol cars.
Honda, which currently has no presence in the diesel cars segment, has seen a downturn in its fortunes after consumers, in face of rising petrol prices, switched their preferences to diesel mills. It is also planning the move to take advantage of Indian’s cheaper production costs.
The Indian facility will come up as an alternate to the Thailand plant which currently supplies cars to export regions including petrol rich South Africa, the latest developing Right hand drive market. If Honda makes the move, it will join the likes of Hyundai, MSIL, Toyota, Tata and Mahindra who all use their local plants to build vehicles for exporting to South Africa.
Another reason for the move is that Honda’s global operations suffered twice last year, once due to the tsunami in Japan and later due to the Thailand floods that completely destroyed the facility. The car maker suffered heavy losses last year and is looking at options to mitigate the risks by making facilities self reliant. After the Thailand floods the Indian plant was used to supply components to few regions and might now play a bigger role in global operations.
