When Honda entered India, it did so with four ventures: Kinetic Honda Motor Ltd (1984-1998), Hero Honda (1984-2011) and Honda Siel Cars India (1995-2012). Now, the company operates out of two modes, HMSI for the two wheeler division and Honda Motor for the four wheeler division.
With the two-wheeler operation of the company getting some serious business, Honda Motor is trying to tap that source and double its share in the automobile market in the coming future. For this, Honda Motor will collaborate with the former’s dealer network, distribution and customer base and try to capture the rural reach.
Recently, Honda Motorcycle & Scooter India Pvt. Ltd (HMSI) became the largest manufacturer of two wheelers for its mother company, Honda. After commissioning a 4th new production line in Karnataka, the Narasapura plant now handles 6.4 million in capacities in a year. HMSI makes the Honda Activa, which is the highest selling two wheeler in the world and also enjoys having the second largest market share (30%) in the two wheeler segment in India.
All of which is made possible by the vast dealer reach the company has within the country, including all Tier 1, 2, 3 cities and also the rural markets. The motor car leg of the Japanese company, on the other hand, has a mere 5.3% market share and is only the fifth largest manufacturer of four wheelers in the country behind Maruti, Hyundai, Mahindra & Mahindra and Tata Motors.
Targeting a double-digit market share in the next five years, Honda Motor is exploring all possible synergies to collaborate with the vast network of HMSI to boost its sales across to the rural markets, which bring nearly a third of all sales for its competitors. While HMSI has around 5400 dealer branches across the country, Honda Motor has only 348 sales outlets in 233 cities.
Seeing the successful run of HMSI, Honda Motor is examining the possibilities of tapping into its bases and figure out if they can float out car sales too within the huge customer reach. Although this strategy is aimed at doubling the market share figure, this only can act as a complementary and not as a core strategy.
Shinji Aoyama, CO at Honda (Asia & Oceania) commented on this move “”I think we can collaborate more as far as dealer network is concerned. HMSI dealers (who) sell with profit can reinvest in Honda’s automobile business. This is (already) happening. We will accelerate this momentum,”
Given HMSI’s strength of the brand and customer base, it would bring in incremental volumes if everything goes according to plan. And if it does, Honda Motor could see the rise in market share for their four wheeler segment; also since the reach in rural districts and towns is very limited as of now.