Honda to add dealers, eye alternative fuels

NEW DELHI, Sept 5 (Reuters) - Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz) will more than double its dealer network in India and consider segments such as diesel and alternative fuels for a larger share of the market, a senior company official said on Wednesday. Honda is spending more than $490 million on a second plant in India which will have an eventual annual capacity of 200,000 vehicles, and will target smaller cities and towns with a small car, which accounts for the largest share of the local market.

"So far we have been targeting the bigger and more premium segments, but with our small car we can go into smaller towns," said Tatsuya Natsume, director - marketing, Honda Siel Cars India Ltd, told Reuters on the sidelines of an auto conference.

Honda, which sells the City, Civic and Accord saloon cars and the CR-V sport utility in India, is also increasing capacity at its plant near New Delhi to 100,000 units a year.

It aims to make and sell more than 150,000 vehicles in India by the end of 2010. To service the bigger output, Honda will increase its dealer network to 160 from 62 now, Natsume said.

"Our benchmark is 1,000 cars per dealer, so we are going to need that number," he said.

Honda was not keen on developing a super cheap car like some of its local and foreign rivals are doing, because it wasn't convinced such a car would meet its standards, he said.

"We are not sure a $3,000 car will meet the Honda standards of quality, safety and performance, so we would rather focus on features like greater fuel efficiency," he said.

India's Tata Motors Ltd (TAMO.BO: Quote, Profile, Research, Stock Buzz) is building a car priced at just under $2,500 scheduled for launch in 2008.