Honda Siel Cars India – the joint venture between India’s Siel Group and Honda – will start exporting engine components to Japan from October from its plant at Tapukara in Rajasthan which opened last autumn.
The company plans to export 54,000 sets of crank-shafts and connecting rods over the next six months for hatchback models of the Jazz. In doing so HSCI becomes part of Honda's pan-Asia supply chain network.
The export order follows a rapid increase in the sale of small cars in Japan following government incentives, which has led to a capacity constraint at Honda's facilities for the components.
Under the government incentive programme, which began in the middle of June, consumers in Japan are eligible to receive a 250,000 yen ($2,700) subsidy if they scrap a car more than 13 years old to buy a new one. They receive a 100,000 yen for a new car purchase without scrapping an old one. The subsidies are available retroactively for purchases from April 10.
Honda joined Toyota in being the first Japanese carmakers to see the first rise in vehicle sales in 13 months.
The Japanese carmaker has also said that it owes the small growth it has seen during the recession to another of its Indian joint ventures Hero Honda, which makes small commuter motorcycles for the Indian market.
Talking to The Economic Times, Honda Siel Cars India President and CEO Masahiro Takedagawa said: “We were damaged in the US, Europe and Japan. The Chinese, Asian and Latin American markets were so-so. It’s the commuters motorcycle business in Asia, particularly India, that has supported our business both in terms of profitability and growth. That’s the main reason why Honda is showing a small but still positive growth.”