Honda puts bike market on notice with stiff targets

Honda plans to double motorcycle sales in India in the next 2-3 years through its wholly-owned arm, Honda Motorcycle & Scooter India (HMSI).

And if Japan’s Nikkei daily is to be believed, it will treble sales to 50 lakh units over five years.

Already, the company is targeting a 25% annual growth in sales this year to around 20 lakh units.

Clearly, the end of its decades-old joint venture with the Hero Group isn’t going to stop the world’s largest two-wheeler company (Honda) from going all out in the world’s largest two-wheeler market (India).

Not only is Honda rapidly adding capacity in India, but is also believed to be readying more bikes at the entry level, lower price band, which has till now been the forte of Hero Honda Motors.

It is also believed to be readying a game plan to penetrate the hinterland and smaller towns —something it could not do till now because of the joint venture.
HMSI officials had confirmed earlier that from sales of 12.7 lakh units (bikes and scooters) last fiscal, the company was gearing up to sell about 22 lakh units in the “next two-three years. The way demand is growing, we have been adding three lakh units every year anyway.”

A second manufacturing plant with six lakh unit annual capacity will come on stream in the second half of 2011, giving a further boost to HMSI’s presence in the two-wheeler market. It has already launched CB Twister, a 110 cc bike, which directly competes with Hero Honda’s products in the same segment.

When contacted, NK Rattan, HMSI’s operating head (sales & marketing), said, “Currently, we are operating at full capacity of 16 lakh units in Manesar… Our second factory (at Tapukara, Rajasthan) will be operational in second half of 2011 with initial capacity of six lakh units. This will take our total capacity to 22 lakh units… We expect to sell 20 lakh units this year. Then, with demand growth, we can expand the second factory to 12 lakh units in coming few years. So far, there is no concrete plan for further expansion.”

In a presentation on Honda’s global strategy recently for the next 10 years, Honda Motor Co’s CEO Takanobu Ito had pointed out that his company was targeting increased annual bike production capacity in Asia (excluding Japan) at 18 million units (from 16 million now) by 2011 end.

“Today, key competitors in those (emerging) markets are Chinese and Indian makers. In order for Honda to remain a market leader, it must not only maintain the high attractiveness and quality of products but also further improve cost-competitiveness to match the low prices of these competitors,” he had said.