Bike leadership stakes will not be an obsession with Honda

Honda Motor Company is not likely to be in any tearing hurry to build its India market share in two-wheelers following its recent separation with the Hero Group.

Its 100 per cent local arm, HMSI (Honda Motorcycle & Scooter India), expects to end this fiscal at around 1.6 million units, which is a modest number compared to Hero Honda's annual output of five million bikes and scooters.

Yet, this would be of little consequence to the Japanese automaker whose focus has constantly been on technology. “Even during the joint venture days, the Hero Group did most of the work on building a huge distribution network across the country. Honda's top priority was the product and the combination ensured a leadership slot for the joint venture,” top sources told Business Line.

Long-term goal

This is not to suggest that Honda is not keen on the numbers game and grabbing market share. After all, it is the global leader in two-wheelers and has aggressive plans lined up in the Asean region. The key is that the company would rather take one thing at a time instead of planning an all-out product blitzkrieg.

“It is only in India where numbers become an obsession. Japanese companies like Honda are not up against any deadline to finish first. They typically draw up a long-term goalpost and take one thing at a time,” an industry veteran said.

More competition

This was not exactly the case in the gearless scooter space where Honda wasted little time in claiming market leadership position with the Activa. However, there was only one player to contend with at that time unlike today's motorcycle arena where competition is a lot stiffer.

Sources say Honda would rather give priority to good, solid products which ensure greater brand recall. This is evident with HMSI's Activa, which is perceived as the best bet in gearless scooters and whose customers are willing to wait up to eight months for delivery.

In contrast, the company's motorcycles have not quite created the same magic though it is quite willing to wait while sticking to its gameplan of premium, sporty bikes. It has already signalled its intent with the 250cc CBR, which will be launched in the coming months at less than Rs 1.5 lakh.

Further, from Honda's perspective, India is part of an overall growth vision for Asia in the two-wheeler space. Thailand, where it has had its longest innings, is a key production hub. Indonesia, likewise, is an important market where it plans to achieve capacity of five million units by mid-2011. Vietnam is yet another key part of its growth plans in the Asean region.

Asian focus

Some months ago, Honda had said that it was targeting two-wheeler capacities of 18 million units in Asia by end-2011. Without the Hero group, this number will reduce to 13 million units. Yet, it is substantial enough to leverage economies of scale in the Asean region and focus on aspects like sourcing and building a cost-competitive base.

In Honda's view, this is the most important task on hand for emerging economies like India and China where it is up against tough local competition. Recognising that costs could be getting out of control in Japan, it could also source parts from India.

“It eventually boils down to a bigger vision for Asia and not merely proving a point in India,” an automotive executive said.

Similarly, Africa will be part of the growth strategy for the future. Honda plans to launch a 125cc motorcycle in Nigeria in the middle of next year which will have China-made parts to keep costs in check. Incidentally, Bajaj Auto is also using China as its base for exports of the Boxer to Africa.

According to observers, nothing much will change in the India leadership stakes till the time the Hero Group and Honda have their licensing pact in place till 2014. By that time, HMSI will hope to have in place a stronger customer base for motorcycles. Bajaj Auto and TVS Motor will, likewise, be on overdrive with their two-wheeler range.