Honda plans rival to Hero Honda in 100cc segment

Honda Motor Co. Ltd plans to enter the biggest segment of the Indian motorcycle market by introducing a 100cc model as it severs ties with the nation’s largest two-wheeler maker.

“Huge demand is expected in future for basic means of transportation,” Shinji Aoyama, chief executive officer of Honda Motorcycle and Scooter India Pvt. Ltd, said in an interview on Thursday at the unit’s factory near New Delhi. He declined to provide a timeframe for the model’s launch.

The world’s biggest motorcycle maker will also open a new India plant this year and may boost capacity further as the sale of its 26% stake in Hero Honda Motors Ltd lets the firm widen its product range, Aoyama said.

Tokyo-based Honda will have to overcome Hero Honda’s brand awareness and sales reach to win customers, said Mayur Milak, an Alchemy Share and Stock Brokers Ltd analyst.

“It won’t be a cakewalk,” said Mumbai-based Milak, who rates New Delhi-based Hero Honda buy. “Being in the 100cc category is all about the sales network and Hero Honda is unmatchable at this point.”

Hero Honda had 4,500 outlets in India, according to its report for the year ended March 31. Honda has 800 India outlets and plans to add 200 more annually, Aoyama said.

Hero Honda fell 2.2%, the most in more than a week, to Rs.1,464.9 at close of trading on Friday in Mumbai.