Honda Motorcycles to step on the gas

After parting with Hero, says it wants to be in top three for all segments.

Honda, the market leader in two-wheelers globally, is to get aggressive in India after its exit from Hero Honda, its joint venture with the Hero Group. Honda Motorcycle & Scooters India (HMSI), its fully-owned arm set up in 1999, plans to launch two new motocycles every year, expand its reach and bring in a new mass market 100cc bike.

“Honda always wants to be in the Number One position. Right now, we are in the fourth position, not very far from the third player. We want to be among the top three players (in India), and very close to the No 2 player,’’ said Shinji Aoyama, President & CEO, HMSI, in an interview to Business Standard last week.

“The short term plans will not be driven by events at Hero Honda but long term, there will be a huge difference. Single-mindedly, the world leader will think differently. Things will change dramatically,’’ said Naresh Rattan, head of marketing & sales, HMSI.

Till now, Honda Motor Company was operating in India through both Hero Honda and HMSI. A joint working group decided on the line of models for both. The ventures were not to disturb each other, but play a complementary role, so that together Honda enjoyed a 60 per cent market share. ‘‘That horizon will change. Honda will bring in more core products now,’’ said a senior Honda executive.

Aoyama said Honda would like to fill the gaps in its portfolio. ‘‘Whatever we didn’t not have in our product portfolio, we would like to fill. For instance, we would like to enter the inexpensive product segment, and bring in a core product in the entry-level 100cc segment. This product will make us really aggressive (in the market),’’ he said. It has a 110cc bike in the Twister, but it’s a niche product targeted at urban youngsters. It is clear that Honda is looking for a more mass market bike.

However, Honda doesn’t believe the time is yet right to get aggressive. Its priority would be to address the huge backlog in orders. None of its bikes are available off-the-shelf and have waiting period from two to three months. Honda’s second factory will come up at Tapukara in Alwar district in Rajasthan by July-August. Aoyama says it will take Honda at least two years to ensure supply matches demand.

Despite its technological strengths—many in the industry believe Honda has the best four-stroke technology—it won’t be easy. It will have to contend with well-entrenched brands like Hero Honda’s Splendor and Passion, and now Bajaj’s Discover. Honda, however, believes it can overcome these with better quality of products and distribution. ‘‘In a decade, we can change the entire market situation,’’ said Aoyama.

He believes the real demand for its products is much more but the short supply makes his dealers miss potential sales. ‘‘We are selling 700,000 units of the Activa a year. If we didn’t have production constraints, we could easily sell a million units. We are selling 300,000 units of the Shine a year, which we can easily double,’’ said Aoyama. HMSI has about 400 dealers and an equal number of service centres. He now plans to add 200 dealers or service centres every year.

HMSI will push exports from India to markets which show a preference for India-made bikes that combine style, mileage and performance. Besides neighbouring countries, it includes markets in Latin America, where Chinese bikes are not preferred. Last year, it exported 75,000 bikes and this is expected to rise to 100,000 bikes this year, 150,000 next year and 200,000 the year after. For now, Africa is not on its radar or mandate, where Bajaj Auto has made significant inroads.