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BS-VI Norms May Delay Auto Sector Recovery by Two Years: Honda Motor

In November month of 2019, two-wheeler domestic wholesale continued to post negative growth as compared to October 2019, said by a top executive at Honda Motor Company Ltd and the demand of new vehicles may take another two years to recover completely, reported Livemint.

Due to the anticipated price hike, Noriake Abe, Managing Officer at Honda Motor Company, expects the demand to remain subdued during Q1-Q2 of next fiscal. Referring to the latest BS-VI emission standards, which may lead to a 10-15 per cent hike in the prices, Abe said “The demand recovery may happen in another two years. The regulations in India are rapidly changing. All vehicle makers must change their models. Every change may be an opportunity for us.” Abe said that the management has revised the target for its Indian two-wheeler arm, Honda Motorcycle and Scooter India Pvt Ltd (HMSI), to 6 million units for FY20, which is less than its total sales in FY2018.

However, the two-wheeler maker does not plan to cut down its CAPEX for FY20. “We will continue to invest in the motorcycle and scooter market in India but we are not looking at expanding our production capacity for now,” Abe further said.

Now, HMSI’s total annual production capacity stands at 7 million units across four plants. The company is investing Rs 2,400 crore in FY20 that includes expenses involved in ensuring compliance with the incoming BSVI norms of its entire model which are in pipeline.

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