Shinji Aoyama is no stranger to India. He was President of Honda’s two-wheeler operations here from 2007 to 2011, a period which saw the company part ways with the Hero group, its partner of over two decades.
Today, from his headquarters in Japan, Aoyama oversees Honda’s two-wheeler operations across the world. As Director and Operating Officer of Honda Motor Company & Chief Operating Officer of Motorcycle Operations, India is a high priority market for him. There is also the added challenge of Honda Motorcycle & Scooter India getting to the top position, clawing ahead of Hero MotoCorp, which Aoyama believes could happen by 2016.
Excerpts from an interview with Murali Gopalan:
Are you pleased with the way Honda is building its two-wheeler business in India?
I am very happy with the current performance of Honda Motorcycle & Scooter India. The results are even better than my original plan made three years ago as the company has outpaced the original targeted timeline for these numbers.
In your last India visit, you had indicated that Honda could become the top player in India by 2015-16 ahead of the planned target of 2020. Do you still stand by that assessment?
Yes, to answer your question, I still maintain the same position. Unless and until the market grows again in a rapid manner to exceed our expansion of capacity, this target (of being the top player) may happen around 2016. Similarly, once the market start regaining volumes, there is an opportunity for Honda to reach higher levels of capacity.
Your former partner, Hero MotoCorp, is still going strong with the Splendor. Do you believe dislodging this brand will be the toughest challenge for Honda as it aims to be the top player in India?
Dislodging a brand is not my objective or scope of our business in India. The more we sell in the current market, the more we at Honda will take customers from competitors. As a result, some OEM brand may see a reduction in market share or volumes. While respecting all competitors, we should create a healthy industry and market especially from the viewpoint of road safety.
What, in your view, is still keeping the Splendor going even though it is an old brand?
Many Indian buyers think highly of a reliable product or brand. The Splendor has a long history which has been appreciated by people in India. The product still remains good.
During our previous interactions, you had said India would emerge as Honda’s top global market ahead of Indonesia and Vietnam. When will this happen?
Today, sales volumes in India have already reached the second position for Honda's two-wheeler business after Indonesia. India may be the top market for Honda in 2015 or 2016.
Your sales mix shows that the Activa (and the scooter range) is still ahead of your motorcycles. How would you explain that?
The sales performance of the Activa is far better than my expectations. Additional supply also helps create more and more customers. Today even in rural areas, the scooter segment boasts of high sales. This naturally accelerates demand for our scooter range.
Would you, therefore, agree with the view that Honda is a brand whose association is stronger with scooters than motorcycles?
Honda is still busy expanding capacity to meet the growing demand for scooters. I agree that the image of the brand is stronger in scooters than motorcycles. However, this will change over a longer time period.
Do you also believe that the success of the Activa can play a big role in boosting Honda’s motorcycle sales in India?
Honda is still at the halfway mark when it comes to network creation. Obviously, success of the Activa will only help in expanding the overall sales channel.
What is your own view of two-wheeler preferences in India? Do you think motorcycles will continue to stay ahead of scooters?
For a while, I do think motorcycles will remain the top preference for Indian customers. However, this situation may change after a decade. Year after year, the scooter is becoming more important in the market since it offers greater versatility when it comes to usage.
Honda has said in the past that it must offer high-tech products at competitive prices to meet local competition in India. Would that tempt you to offer ultra low-cost bikes in the future?
I believe there is a possibility for ultra low-cost bikes to generate a new demand trend. We should, however, study more about this kind of a product for India.
Finally, as you build more plants, does it become particularly challenging getting suppliers to new locations and coping with logistics?
Definitely yes! We cannot grow without the support and simultaneous development of suppliers as well as logistics in our growth plan.
Today, from his headquarters in Japan, Aoyama oversees Honda’s two-wheeler operations across the world. As Director and Operating Officer of Honda Motor Company & Chief Operating Officer of Motorcycle Operations, India is a high priority market for him. There is also the added challenge of Honda Motorcycle & Scooter India getting to the top position, clawing ahead of Hero MotoCorp, which Aoyama believes could happen by 2016.
Excerpts from an interview with Murali Gopalan:
Are you pleased with the way Honda is building its two-wheeler business in India?
I am very happy with the current performance of Honda Motorcycle & Scooter India. The results are even better than my original plan made three years ago as the company has outpaced the original targeted timeline for these numbers.
In your last India visit, you had indicated that Honda could become the top player in India by 2015-16 ahead of the planned target of 2020. Do you still stand by that assessment?
Yes, to answer your question, I still maintain the same position. Unless and until the market grows again in a rapid manner to exceed our expansion of capacity, this target (of being the top player) may happen around 2016. Similarly, once the market start regaining volumes, there is an opportunity for Honda to reach higher levels of capacity.
Your former partner, Hero MotoCorp, is still going strong with the Splendor. Do you believe dislodging this brand will be the toughest challenge for Honda as it aims to be the top player in India?
Dislodging a brand is not my objective or scope of our business in India. The more we sell in the current market, the more we at Honda will take customers from competitors. As a result, some OEM brand may see a reduction in market share or volumes. While respecting all competitors, we should create a healthy industry and market especially from the viewpoint of road safety.
What, in your view, is still keeping the Splendor going even though it is an old brand?
Many Indian buyers think highly of a reliable product or brand. The Splendor has a long history which has been appreciated by people in India. The product still remains good.
During our previous interactions, you had said India would emerge as Honda’s top global market ahead of Indonesia and Vietnam. When will this happen?
Today, sales volumes in India have already reached the second position for Honda's two-wheeler business after Indonesia. India may be the top market for Honda in 2015 or 2016.
Your sales mix shows that the Activa (and the scooter range) is still ahead of your motorcycles. How would you explain that?
The sales performance of the Activa is far better than my expectations. Additional supply also helps create more and more customers. Today even in rural areas, the scooter segment boasts of high sales. This naturally accelerates demand for our scooter range.
Would you, therefore, agree with the view that Honda is a brand whose association is stronger with scooters than motorcycles?
Honda is still busy expanding capacity to meet the growing demand for scooters. I agree that the image of the brand is stronger in scooters than motorcycles. However, this will change over a longer time period.
Do you also believe that the success of the Activa can play a big role in boosting Honda’s motorcycle sales in India?
Honda is still at the halfway mark when it comes to network creation. Obviously, success of the Activa will only help in expanding the overall sales channel.
What is your own view of two-wheeler preferences in India? Do you think motorcycles will continue to stay ahead of scooters?
For a while, I do think motorcycles will remain the top preference for Indian customers. However, this situation may change after a decade. Year after year, the scooter is becoming more important in the market since it offers greater versatility when it comes to usage.
Honda has said in the past that it must offer high-tech products at competitive prices to meet local competition in India. Would that tempt you to offer ultra low-cost bikes in the future?
I believe there is a possibility for ultra low-cost bikes to generate a new demand trend. We should, however, study more about this kind of a product for India.
Finally, as you build more plants, does it become particularly challenging getting suppliers to new locations and coping with logistics?
Definitely yes! We cannot grow without the support and simultaneous development of suppliers as well as logistics in our growth plan.
