Honda to hike prices

Scooters and bikes will cost Rs 700-900 more from February 21, due to rising raw material prices, reports Rupesh Subhash Janve HONDA Motorcycle & Scooter India (HMSI), the wholly-owned subsidiary of Japan's Honda Motor Company, plans to hike the prices of its scooter and motorcycle models by Rs 700-900 from February 21, mainly on account of rising raw material prices.

"We plan to increase prices by Rs 700-900 from February 21 due to rising raw material prices," Naresh Kumar Rattan, operating head ­ sales & marketing, HMSI, told Financial Chronicle.

Rattan said that they did not hike prices when other industry players did so during the DecemberJanuary period. HMSI decided to absorb the higher costs as it was not able to meet the domestic demand. "But now, with enough advance notice to customers, we will be increasing prices," he said.

Competitors like Hero Honda, Bajaj Auto and TVS Motor had hiked prices of their two-wheelers by Rs 500-1,500 for the second time between November 2010 and January 2011. Earlier, in the June July period last year, the two-wheeler makers had hiked prices by Rs 500 1,000 across models. HMSI had hiked prices of scooters by Rs 540 and motorcycles by Rs 250-400 in October 2010.

During first 10-months of this financial year, HMSI has sold over 13.63 lakh scooters and motorcycles, including exports, against overall sales of 14.42 lakh two-wheelers in 2009-10.
Sooter models Activa, Aviator and Dio constitute to around 55 per cent of HMSI's sales. The company has 12 per cent market share in the domestic twowheeler market.

Owing to capacity constraints there were long waiting periods ranging from four to six months for models like Activa among scooters and Unicorn and Shine among motorcycles.
Recently, the company expanded its annual production capacity at its Manesar plant, near Gurgaon, from 1.25 million units to 1.65 million units to cater to the rising demand for Activa, Unicorn, Shine and 110cc CB Twister motorcycles.

Meanwhile, HMSI is planning to start production of motorcycles and scooters at its second plant in Tapukara in Rajasthan by July-August this year, against the earlier plan of September-October 2011.
"To serve the waiting customers we will start production at the second plant from July or August," Rattan said. The plant, which is being set up at an investment of Rs 500 crore, has an annual production capacity of 6 lakh units.