17 June 2009;economictimes.indiatimes.com:Anirvan Ghosh:BANGALORE: The automotive slowdown has prompted Honda Siel Cars India (HSCI) to put its new assembly plant operations on hold and also pause hiring employees for its plant at Tapukara in Rajasthan. This comes even as the rising yen and dollar compelled the company to price the new hatchback model Jazz higher than what it had hoped to. “We had earlier planned the new plant to start by this year, but are not able to,” said Tatsuya Natsume, director, marketing, HSCI. The total cost of the plant is estimated at Rs 1,000 crore. Investments in the plant slowed down since December last year, and now it’s stopped till the automotive market in India improves. The new plant, which was shut down mid-way, now faces an uncertain future for the time being. “We do now know when the next Rs 400 crore (required for the plant to go on stream) will come,” he said, the first time the company admitted this uncertainty, in a chat with ET. “We have a target that the market should reach two million units of cars before we pour in more investments in India,” he said. The domestic car market was estimated at 1.2 million units in FY09 and growing at a sluggish pace in the wake of the economic slowdown. This also means that the date for the launch of the next small car, to be smaller in size than the 1.2 litre Jazz, is also not certain anymore. HSCI had planned to set up the second plant in Rajasthan with an initial capacity of 60,000 units, while it expanded capacity at its Greater Noida facility to one lakh unit per year. It will launch its next small car by 2011. The company is going aggressive on localisation for its new models in order to combat the slowdown and cut costs. The Jazz has a localisation of 77%, the highest among its models. The City and the Accord have localisations of 75% and 35%, respectively. The higher localisation content allowed the company to keep the pricing of the new City competitive and sales have grown 20% since its launch six months ago, said Natsume. However, the rise in the yen and dollar resulted in the pricing being a bit steep for the Jazz than previously planned, said Natsume. “We were adversely affected by the rise in yen and the dollar, as we import parts from Japan and the US,” he said. The car is priced between Rs 7.15 lakh to Rs 7.50 lakh ex-showroom in Bangalore, making it the nation's most expensive ‘super-mini’ car. The company has already seen 1,000 bookings for the car, he said. “We hope the Jazz sales will propel us to a double-digit growth this year,” he said.
