An Economic Times reports says that the Honda's Indian partner Siel might not be too keen to make further investments after it lost some of its stake through a rights issue worth Rs.1,200 in November last year. Japanese carmaker currenly holds a stake little less than 97 per cent and if Siel is not able to raise the required money in proportion to its stake in HSCI, its stake could further shrink to a much smaller number.
Reports say Honda is planning to buy the entire stake of Siel. Honda is planning to build diesel engines in India and also intends to boost production to higher levels. The carmaker has not seen much sales success in the recent two years as the lack of diesel cars and the shortage of supply dented its performance.
Te company has already developed a prototype of a diesel engine which will be made available with the Civic hatchback in Europe and America. This diesel engine might not be made available to Honda's best selling cars, the City sedan and Jazz hatchback. The engine needs to be modified to suit the Indian cars and HSCI is keen to make these modifications quickly so that it can regain some of the lost market share.
Honda which had earlier been among the top five Indian carmakers has now been overtaken by recently arrived car brands such as Toyota and Volkswagen. Honda started its Indian operations through Honda Siel Cars India way back in 1999.