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Honda lowers its expectations as economic growth slows down

Honda lowers its expectations as economic growth slows down

Snapshot: Honda now expects the deliveries in India to rise up to 20 to 25 million units by 2020, a few million lesser than its initial forecast

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India's second largest two-wheeler maker after Hero MotoCorp that sold 3.6 million two-wheelers in India last year had predicted a figure of 30 million two-wheelers by 2020. But it seems that the slow economic growth has hampered Honda's dreams a little.

“Industry deliveries will probably expand to 20 to 25 million units by 2020 in India, fewer than Honda’s earlier forecast of 30 million,” Shinji Aoyama, operating officer in charge of Honda's motorcycle operations said in an interview on Tuesday. Motorcycles accounted for more than 20% of the profit last fiscal year.

“We thought about three years ago the Indian market could reach 16 million to 18 million units by now,” said Aoyama at Honda’s Tokyo headquarters. “The market is not growing as fast as we expected, even though Honda sales are in line with our own projections.”

Honda sold 37% more two-wheelers last financial year than the year before that, making its market share rise to 26% in the fourth quarter compared to 12% in 2009.

The Japanese giant is all set to open its fourth motorcycle plant in India’s Gujarat in the second half of FY 2015, which will help Honda make about 5.8 million units a year. By March 2015, Honda plans to have a total of 3,400 sales and service dealers, which hopefully will increase to 5,000 in a few years, according to Aoyama.

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