Indian component cos may power Honda bikes globally

HONDA Motor of Japan plans to buy two-wheeler parts from India for its global operations to capitalise on its pricing and quality advantages in keeping with the trend set by its peers, says a person familiar with the development. 

    "India's scale, pricing and quality advantages convinced Honda that it made huge business sense," said the person, who did not wish to be named. 
    Global auto companies such as Hyundai, Suzuki, GM and Toyota buy components worth millions of dollars from Indian companies at lower prices than global ones to remain profitable. Some global auto manufacturers face bankruptcy and many are shutting plants across the globe to remain competitive.
    Honda is looking at global sourcing from India to leverage the scale that its Indian subsidiaries Hero Honda and Honda Motorcycle and Scooters India (HMSI) have built up, according to a person with direct knowledge of the development. Between the two subsidiaries, Honda sells more than five million two-wheelers in India, over 40% of the Indian two-wheeler market. 
    Honda has been using Thailand as a base for low-cost aggregates for two-wheelers as well as cars, as, along with Toyota, it is one of the two big players in the Asean region and has a huge capital investment in that country. 
    However, the pull of the Indian market is far too strong to resist. After China, India has the world's second largest twowheeler market. It is also the second-fastest in terms of automotive growth. 
    Hero Honda's top gear performance — the company is all set to cross 4 million units in sales this financial year — seems to have "convinced Honda that sourcing from India is the way ahead," said the person familiar with the matter.