The president & CEO of Honda Motorcycle and Scooter India shares with Vikram Chaudhary the company’s performance in the recent festive season, why scooters never went out of style, and how Honda plans to make Auto Expo 2014 exciting.
It has been a good year for Honda Motorcycle and Scooter India (HMSI). The monsoon rains have been plentiful, rural markets are seeing increased spending power and this has translated into better two-wheeler sales—a lot of which have come from HMSI,” I prepare notes about the ‘only’ Honda in India as I wait for Keita Muramatsu, president & CEO, HMSI, at the Honda guesthouse in Gurgaon. Wearing a smile that can be attributed to that of a successful man, Muramatsu-san (san is a Japanese honorific) greets me. “Konnichiwa,” I reply.
As we take seats, I congratulate him on HMSI clocking record-breaking sales in the festive season. “We sold 4.56 lakh units in the festive season and 80,000 units on the day of Dhanteras alone. Starting from Dhanteras to Diwali, HMSI registered a growth of 70%, which is our all-time highest festive sales growth. Additionally, our total sales in October 2013 stood at 3,75,741 units,” Muramatsu shares the numbers with me.
“Have these record numbers come both from the scooter and motorcycle segments?” I ask.
“Certainly,” he says, adding, “While our Activa scooter saw sales of over 1.4 lakh units in September, even surpassing those of the country’s best-selling motorcycle, our Dream Neo (the 110cc motorcycle) achieved 1 lakh sales units within four months of its launch.”
“So, both the segments have been winners…” I chip in.
“I would say that Honda has been a winner and our performance shows the growing customer trust and preference for Honda products across the country,” Muramatsu replies, adding: “We also attribute this success to our strategy of network expansion in tier 2-4 towns together with capacity expansion.”
“So, Honda’s USPs today are brand value, product innovation and smart marketing?” I ask.
Muramatsu replies, “You have sort of defined HMSI’s success in India. To these USPs, I would add that we have always tried to keep up with customer demand by having enough and sustained production and, more importantly, we have been ensuring that parts for HMSI products are not only available everywhere but also remain affordable. And then the fact that we have been giving our customers the finest products that can be created in the two-wheeler space.”
“You opened a new technical centre at your Manesar facility this year. Does this mean that India is now emerging as an innovation hub for Honda?” I ask.
“Indeed,” Muramatsu says, adding, “One of our key innovations this year has been the Honda Eco Technology (HET), a technology that has led to our products delivering even better fuel efficiency. In fact, HET is an added value for our customers at no extra cost.”
We move beyond Manesar and I ask him, “You currently have three manufacturing plants in India—Manesar (Haryana), Tapukara (Rajasthan) and Kolar (Karnataka). What is the total capacity of all three?”
Muramatsu replies, “Running at maximum capacity, Manesar can produce 16 lakh vehicles a year, Tapukara can churn out 12 lakh and Kolar 18 lakh.”
I add up the numbers and say, “The total comes out to be 46 lakh two-wheelers a year.”
“That’s right,” he replies.
I ask, “And how many vehicles you sold over the last 12 months?”
“Close to 32 lakh,” he replies.
“So, going by your current speed, maybe in another two years you might touch the 46 lakh mark. What then? Your plants would already be running at their full capacity,” I ask.
Muramatsu smiles. “Although we are fast, the media seems to be faster than us.”
“But you must be scouting for new locations?” I press on.
“You will get to know, there is still time…” he smiles on.
“I must veer a bit and add that our focus in the country is FIF—For India, In India and From India,” Muramatsu says.
“Please elaborate,” I say.
“For instance, at our Narasapura Industrial Area plant in Kolar, almost 89% of the workforce is from Karnataka and 51% of the manpower comes from Kolar district alone. Helping uplift the community around us is the global philosophy of Honda and we want to be a company that the society wants to exist. In Kolar, we also gave one job to each family that contributed land for our factory,” he replies, effectively moving beyond my question on scouting for new locations.
“What is your export policy like?” I too switch.
“Although the recent fall in the value of the rupee against major currencies did help exports, and currently we are exporting 4% of our total volumes, the fact remains that because India itself is a huge market, we first have to focus on the home market rather than looking at foreign shores. In fact, sometimes the domestic demand is so high that we just cannot export enough,” he replies.
“At a time when some two-wheeler manufacturers stopped believing in the scooter story, Honda did, and reaped the benefits. What decisions went into focusing on the scooter market when everyone else was focusing on motorcycles?” I ask.
“Scooters never went out of style, they perhaps had to be reinvented,” Muramatsu smiles. “And we did so by bringing in technological advancements. Today, the gap between the mileage of a scooter and a motorcycle has reduced dramatically. In fact, our new HET technology delivers the same mileage both for scooters and motorcycles. Then, the fact that women have been increasingly showing interest in scooters—some reports show that women today constitute 40% of first-time scooter buyers—has also worked to the success of this convenient mobility.”
“What has been the percentage growth of scooters?” I ask.
“Over the last five years, the CAGR of two-wheeler industry was 14%—while motorcycles grew 12%, scooters grew 23%.”
“So, can it be the case that a company that had earlier exited the scooter market might now want to re-enter the space and give you more competition?” I ask.
Muramatsu simply smiles back.
Auto Expo 2014 is round the corner, so I ask him one final question: “During the Expo 2012, Honda had launched seven new products. So, what do we expect from Honda at the Expo in 2014?”
Muramatsu smiles again and says, “We would like to keep it a surprise, but it will be exciting.”
“Still, any leads?” I ask.
“All I can say is that we have taken one of the biggest areas at the Auto Expo 2014. So, naturally, we will need many products to fill that area. Watch out,” he says.
“Perhaps other two-wheeler companies, too, should,” I think as I take his leave.
It has been a good year for Honda Motorcycle and Scooter India (HMSI). The monsoon rains have been plentiful, rural markets are seeing increased spending power and this has translated into better two-wheeler sales—a lot of which have come from HMSI,” I prepare notes about the ‘only’ Honda in India as I wait for Keita Muramatsu, president & CEO, HMSI, at the Honda guesthouse in Gurgaon. Wearing a smile that can be attributed to that of a successful man, Muramatsu-san (san is a Japanese honorific) greets me. “Konnichiwa,” I reply.
As we take seats, I congratulate him on HMSI clocking record-breaking sales in the festive season. “We sold 4.56 lakh units in the festive season and 80,000 units on the day of Dhanteras alone. Starting from Dhanteras to Diwali, HMSI registered a growth of 70%, which is our all-time highest festive sales growth. Additionally, our total sales in October 2013 stood at 3,75,741 units,” Muramatsu shares the numbers with me.
“Have these record numbers come both from the scooter and motorcycle segments?” I ask.
“Certainly,” he says, adding, “While our Activa scooter saw sales of over 1.4 lakh units in September, even surpassing those of the country’s best-selling motorcycle, our Dream Neo (the 110cc motorcycle) achieved 1 lakh sales units within four months of its launch.”
“So, both the segments have been winners…” I chip in.
“I would say that Honda has been a winner and our performance shows the growing customer trust and preference for Honda products across the country,” Muramatsu replies, adding: “We also attribute this success to our strategy of network expansion in tier 2-4 towns together with capacity expansion.”
“So, Honda’s USPs today are brand value, product innovation and smart marketing?” I ask.
Muramatsu replies, “You have sort of defined HMSI’s success in India. To these USPs, I would add that we have always tried to keep up with customer demand by having enough and sustained production and, more importantly, we have been ensuring that parts for HMSI products are not only available everywhere but also remain affordable. And then the fact that we have been giving our customers the finest products that can be created in the two-wheeler space.”
“You opened a new technical centre at your Manesar facility this year. Does this mean that India is now emerging as an innovation hub for Honda?” I ask.
“Indeed,” Muramatsu says, adding, “One of our key innovations this year has been the Honda Eco Technology (HET), a technology that has led to our products delivering even better fuel efficiency. In fact, HET is an added value for our customers at no extra cost.”
We move beyond Manesar and I ask him, “You currently have three manufacturing plants in India—Manesar (Haryana), Tapukara (Rajasthan) and Kolar (Karnataka). What is the total capacity of all three?”
Muramatsu replies, “Running at maximum capacity, Manesar can produce 16 lakh vehicles a year, Tapukara can churn out 12 lakh and Kolar 18 lakh.”
I add up the numbers and say, “The total comes out to be 46 lakh two-wheelers a year.”
“That’s right,” he replies.
I ask, “And how many vehicles you sold over the last 12 months?”
“Close to 32 lakh,” he replies.
“So, going by your current speed, maybe in another two years you might touch the 46 lakh mark. What then? Your plants would already be running at their full capacity,” I ask.
Muramatsu smiles. “Although we are fast, the media seems to be faster than us.”
“But you must be scouting for new locations?” I press on.
“You will get to know, there is still time…” he smiles on.
“I must veer a bit and add that our focus in the country is FIF—For India, In India and From India,” Muramatsu says.
“Please elaborate,” I say.
“For instance, at our Narasapura Industrial Area plant in Kolar, almost 89% of the workforce is from Karnataka and 51% of the manpower comes from Kolar district alone. Helping uplift the community around us is the global philosophy of Honda and we want to be a company that the society wants to exist. In Kolar, we also gave one job to each family that contributed land for our factory,” he replies, effectively moving beyond my question on scouting for new locations.
“What is your export policy like?” I too switch.
“Although the recent fall in the value of the rupee against major currencies did help exports, and currently we are exporting 4% of our total volumes, the fact remains that because India itself is a huge market, we first have to focus on the home market rather than looking at foreign shores. In fact, sometimes the domestic demand is so high that we just cannot export enough,” he replies.
“At a time when some two-wheeler manufacturers stopped believing in the scooter story, Honda did, and reaped the benefits. What decisions went into focusing on the scooter market when everyone else was focusing on motorcycles?” I ask.
“Scooters never went out of style, they perhaps had to be reinvented,” Muramatsu smiles. “And we did so by bringing in technological advancements. Today, the gap between the mileage of a scooter and a motorcycle has reduced dramatically. In fact, our new HET technology delivers the same mileage both for scooters and motorcycles. Then, the fact that women have been increasingly showing interest in scooters—some reports show that women today constitute 40% of first-time scooter buyers—has also worked to the success of this convenient mobility.”
“What has been the percentage growth of scooters?” I ask.
“Over the last five years, the CAGR of two-wheeler industry was 14%—while motorcycles grew 12%, scooters grew 23%.”
“So, can it be the case that a company that had earlier exited the scooter market might now want to re-enter the space and give you more competition?” I ask.
Muramatsu simply smiles back.
Auto Expo 2014 is round the corner, so I ask him one final question: “During the Expo 2012, Honda had launched seven new products. So, what do we expect from Honda at the Expo in 2014?”
Muramatsu smiles again and says, “We would like to keep it a surprise, but it will be exciting.”
“Still, any leads?” I ask.
“All I can say is that we have taken one of the biggest areas at the Auto Expo 2014. So, naturally, we will need many products to fill that area. Watch out,” he says.
“Perhaps other two-wheeler companies, too, should,” I think as I take his leave.
