Honda to source parts from India plant
Economic Times (India)
Honda to source parts from India plant
17 Sep 2007
Meenakshi Verma & Chanchal Pal Chauhan
NEW DELHI: India is likely to become an important sourcing hub for global auto maker Honda. Honda Motor India (HMI), the integrated subsidiary of Honda’s Indian operations, will start sourcing critical engine parts making India a key country in its Asia-Oceanic sourcing plans.
Honda, currently, sources components from various manufacturing facilities in Asia and plans to utilise its Indian subsidiary Honda Siel Car to meet its component requirements from India. As of now, Honda sources automatic transmission parts from Indonesia, manual transmission parts from Philippines, car body parts from Thailand and bumpers from Malaysia for its facilities in the Asia-Oceanic region.
HMC plans to take advantage of lower tariff structure once the Indo-Asean free trade agreement (FTA) comes into operation. HMC Asia head Masahiro Takedagawa said: “Once the FTA comes into effect, we will be in a position to source engine spares from India at competitive prices. We already have component hubs operating in a few countries in Asia for our automotive needs as common vehicles specifications help leverage cross-nation operations. India could emerge as an important sourcing destination, once the tariffs are lowered to the Asean level.”
Sourcing of auto parts from India will also make business sense once its second plant at Rajasthan comes into operation by 2009 and raises it production. It will have a combined capacity of 3.5 lakh units (at Greater Noida and Rajasthan) which will give it the required economies of scale for sourcing from India. “We expect a minimum volume of three lakh unit to support any kind of local sourcing. Once our second plant becomes operational, India could be an ideal sourcing hub for the Asia-Oceanic region along with South-East Asia,” he said.
