Riding solo, Honda shifts to top gear on 2-wheelers

Honda plans to put its India two-wheeler business plan on the fast track after the recent split with the Hero Group.

“In order to meet customer demand, we have to hurry up and do a whole lot of things, including introduction of more India-specific models. While there is no timeframe to achieve this goal, the priorities are new models, expanding sales channels, strengthening the vendor network and increasing manpower across the chain,” Mr Shinji Aoyama, President and CEO of Honda Motorcycle & Scooter India (HMSI), told Business Line.

A wholly-owned arm of Honda, HMSI, will be the growth vehicle for two-wheelers in the coming years. After parting ways with the Hero Group, the Japanese automaker now finds itself in the fourth spot in India. HMSI is expected to end this fiscal at a little over 1.6 million two-wheelers which would put it behind the Hero Group, Bajaj Auto and TVS Motor.

According to Mr Aoyama, motorcycles such as the Twister and Stunner were not in the “centre of demand” which was a deliberate strategy in the context of the Hero Honda joint venture. In the process, the company did not expect these models to do over 15,000 units a month.

In order tomeet customer demand the company plans to introduce more India-specific models. A line-up of Honda's Activa in a showroom.

Volume focus

“We are obviously not satisfied and want to focus on the volumes game and become the centre of demand. In my view, the Activa and Shine as well as the Unicorn are already in this place. We have nearly a month's backlog for the Unicorn which translates into nearly 20,000 units,” he said.

Going ahead, the key lies in providing customers “not the exact product but the same type of product” as Hero Honda's successful Splendor and Passion motorcycles.

Equally, even as HMSI prepares to rev up operations, it believes there are other issues to solve. There are still constraints on the supply side, right from availability of manpower to components, while demand is galloping away. “While we expand our product line-up, it is equally important to grow our dealer and vendor network while ensuring that there is no shortage of manpower. Honda may be able to invest in any number of plants but these other issues are far more important and not immediately in our control,” Mr Aoyama said.

Even though it has slipped in the ranking game in India, this is not an immediate concern for HMSI. “India is still not a mature market and we believe we can change many things here. Though we have only 1.6 million units, we can go higher and higher,” he added.

While the leadership position of the Activa in the gearless scooter segment is cause for cheer, HMSI is equally upbeat on motorcycles where it produces over 60,000 units a month. The fact that there is stronger local competition is also something the company is aware of while battling it out in this competitive market.

“Bajaj and TVS are strong players with a longer history than HMSI. There are also many things to learn from them on producing at competitive costs. However, I am not unduly worried because of the Honda belief of providing the best quality products to customers at reasonable prices,” Mr Aoyama said.

Order backlog

For the moment, the company's biggest worry is meeting the order backlog of over 2.2 lakh bikes and scooters.

The new plant in Rajasthan, with an initial capacity of six lakh units, is expected to partially alleviate the problem. It is due for commissioning in mid-June and by the end of March 2012, HMSI expects to roll out over two million two-wheelers from its two facilities.