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). Each one of them gave the required push for the Japanese brand to establish itself into the roots of the automotive market and the rest, as they say, became history.
For the two wheel world though, it was the 2001 entrant scooters, Activa and Dio that went on churning a large number of volumes for their parent company. On this fortunes, Honda became the second largest two wheeler manufacturer in the Indian market and in 2016, Honda 2 Wheelers India became the number one contributor to Honda’s global two-wheeler business.
With such laurels up their alley, Honda decided to pump in major investments and R&D into the country’s production and service with one goal in sight: To become the number one player in the motorcycle segment by 2020 taking over reigns from Hero MotoCorp.
If statistics are to be believed, India is in the highest rankings in terms of growing economy.The market in India sees an upward trend ever since 2010, thanks to the improved rural infrastructure and rising income levels, affordability has become a norm to people from small towns and villages too. Moreover, urban citizens find it easier to operate who wheelers on the streets due to increase in traffic congestion and availability of parking.
Owing to such a growing market, Honda has bet big and going full guns into pumping in money and R&D into the country’s automotive operations. Opening up new retails, expanding existing production capacities, improving customer service and satisfaction, setting up new greenfield projects are all in the cards for the coming fiscal year.
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, HMSI can now handle 64 lakhs in capacities in a year and is the top production base for Honda in the entire world.
Now, industry sources point out that HMSI wants to expand its scooter-only plant at Vithalapur in Gujarat which is the largest such facility in the world that already produces close to 12 lakh scooters annually. With adding a third new assembly line at this plant, the brand wants to come close to eliminating demand and supply requisites and promote minimum waiting periods.
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. When it comes to the scooter segment alone, HMSI is leading the charts with an impressive 59 per cent market share and are in a race to add two more scooters to the existing line-up.
In the motorcycle section, it is the CB Shine that commands a huge 54 percent market share in the segment, and it also became the first motorcycle to cross the 1 lakh sales for April. HMSI’s motorcycle market enjoys a healthy 17 percent market share currently, which is a 3 percent raise from the previous fiscal year.
Seeing this as an opportunity to increase motorcycle market share, Minoru Kato, President & CEO, HMSI believe they can replicate the success CB Shine has in other commuter models in their portfolio. And their strategy to do this includes expanding their current portfolio of commuter motorbikes by adding another game changing 125cc motorcycle.
They also are aiming at pushing their rural reach by expanding their sales network and adding upto 500 new touch points by the end of this fiscal which will take it up a total of 5700. Out of the 500, HMSI plans to add at least 70 percent of it in the rural areas.
According to HMSI Senior VP Sales and Marketing, Yadvinder Singh Guleria, this move will play a huge role in achieving the ambitious target of selling around 60 lakh units this year, 10 lakh more units than the previous fiscal. The rural region sees a lot of untapped potentials which is believed to increase by 20 percent in the coming festive season.
Coming to plant expansions, HMSI said that all their four plants: Manesar in Haryana, Tapukara in Rajasthan, Vithalapur in Gujarat and Narsapura in Karnataka are currently operating at full capacities and are churning out around 64 lakh two wheelers for the year.
However, only the Vithalapur plant in Gujarat can accommodate more product lines or even allow for setting up a new Greenfield unit. As of now, HMSI does not plan on starting up a new Greenfield facility since it requires to justify sufficient volumes and demands for its establishment.
That being said there are a few other market expectations that will come into force soon that HMSI needs to accommodate before they can decide on opening a new line in Gujarat. Be it BS VI compliancy by 2020 or the compulsion of adding ABS and other safety features onto their products, HMSI should accommodate these escalating costs for new technology implementation.
With electric vehicle market currently being ploughed in the industry, the Japanese Red is also getting serious about developing electric vehicles and so is being busy partnering with another technocrat, Hitachi Automotive Systems. With this JV, it will be heeding to develop, manufacture and sales of motors for electric vehicles, both for Honda and other players.
Although all this is a good piece of technology meant to run cleaner motorcycles, it is going to take at least a couple of years until Honda can completely develop these motors and make use of it on any production motorcycle. And when it comes to the Indian market, it is more of a challenge with customers expecting nothing less than the 100cc petrol powered counterparts.
Nonetheless, this EV development is a long term plan. For now, though, HMSI is looking into boosting sales this coming festive season and are planning to lure customers by availing huge discounts and providing free accessories package. In preparation, the company has built up stock and currently has inventory that can last 42 days.