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Honda Motor India unit to launch 100cc bikes-report

Tue Feb 13, 2007 11:02pm EST

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MUMBAI, Feb 14 (Reuters) - Japan's Honda Motor Co.'s (7267.T) wholly owned Indian motorcycle unit will soon launch 100cc motorbikes, and will also consider setting up a second plant in a few years, the Economic Times reported on Wednesday. Honda Motorcycle and Scooter India Ltd. will go head-to-head with Hero Honda Motors Ltd. (HROH.BO), India's top motorbike firm, in which Honda Motor owns 26 percent.

"We know that 100cc is the largest volume-generating segment in India, so we are planning to enter this segment to gain volumes," HMSI President and Chief Executive Yukihiro Aoshima told the paper.

Honda's near-term plan is to step up production at its existing facility to about 100,000 vehicles a month. The company expects to sell about 700,000 units in the current financial year, the paper said.

"We wish to touch about 1.2 million units in the next two years, which we can produce from our current factory. After that we will think of a second plant for two-wheelers," Aoshima said.

Hero Honda has said it would expand its presence in the entry-level segment, which makes up 40 percent of its revenues.

Rival Bajaj Auto Ltd. (BJAT.BO), the second-biggest motorbike maker, said earlier this month it would exit the lower-margin 100cc segment, which makes up about 45 percent of its bike sales, and launch a new bike platform to help boost profitability.

Competition is fiercest in the entry-level segment, where firms are kept from raising prices and forced to spend heavily on advertising and promotions to retain share.

((Reporting by Rina Chandran, editing by John Mair; Reuters Messaging: rina.chandran.reuters.com@reuters.net; +91 22 6636 9251)) Keywords: HONDA INDIA/

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