It was referred to as the ‘competition motorcycle’ in the press release but it was all too clear that the model in question was Hero MotorCorp’s Splendor.

Earlier this week, Honda Motorcycle & Scooter India (HMSI) made it known that its Activa scooter had emerged the top selling two-wheeler brand of 2016. Between April and June, it has consistently surged ahead of its nearest rival, Splendor, with its net tally for the six months being 1.33 million scooters against 1.23 million motorcycles.  

HMSI went on to state that this marked an end to the ‘17-year-long monopoly of motorcycles’ with the Activa now ‘gaining lead as India’s most preferred two-wheeler for commuting’. What was equally significant was the fact that it added a ‘phenomenal 1,97,295 units over last year in just six months (Jan to June, 2016) to be on top’.

There are no two ways about the fact that HMSI has hit the bull’s-eye with Activa which has grown from strength to strength since it was launched 15 years ago. Today, monthly sales average 2.3 lakh units and are poised to grow even further with the commissioning of the all-scooter plant in Gujarat. It is quite likely that HMSI could even be producing three lakh scooters every month from next fiscal if growth continues at this frenetic pace.

Close call What cannot be disputed either is the way the company has grown. . It is barely five years since the two called it quits with each other and at that point in time, HMSI operated out of a single plant in Haryana with an annual capacity of 1.6 million units.

This has now grown to 5.8 million units across four facilities with Karnataka being the highest at 1.8 million while Gujarat and Rajasthan are tied at 1.2 million units apiece. Haryana continues to roll out 1.6 million units annually while the following fiscal will see capacity at Karnataka being enhanced further to 2.4 million units. Clearly, the priority for HMSI is market leadership except that its former ally, Hero, is no mood to give up its crown in a hurry. Sure, Splendor may have lost out to Activa but in overall numbers, the Munjals-promoted company continues to be the monarch even while HMSI has been stepping on the gas aggressively.

There were enough sceptics who were certain that Hero would be relegated to the sidelines after its divorce with Honda but nothing of the kind has happened. The company has made it amply clear that it intends to be in the reckoning for some years to come even while competitive pressure is coming in from all ends.

Even rivals grudgingly concede that it will take some doing to better Hero when it comes to customer trust especially in smaller towns and villages where it literally rules the roost. And even while HMSI has cracked it with Activa, it has just not been able to replicate the same magic in its commuter motorcycle business except for Shine which is doing brisk numbers. It is here that Hero is comfortably ahead with models like Passion and Glamour even while Splendor has lost out to Activa in recent times.

There is a section of industry which believes that HMSI will need to think of something very different in motorcycles if it needs to take on Hero. “Most of its models are pretty much on the same lines of the market leader. There is really no compelling reason for a customer to think of a Honda bike in the commuter space,” says a rival company executive who does not wish to be named.

Yet, it would be premature to write off the Japanese brand which is a formidable name to reckon with in the global two-wheeler business. It is a strong No 2 in India right now and would also be the first to admit that it is up against strong local competition. With four plants already in its kitty, it will be interesting to see if Honda will still add a couple more by the end of this decade in its endeavour to be the leader of the pack.

Scooters vs motocycles The other interesting market reality is the growing component of scooters in the overall two-wheeler arena. What was a minuscule component at the time of the Activa’s entry 15 years ago has since grown to 30 per cent today. Will scooters eventually take over from motorcycles? To some, this may seem plausible but with rural demand poised to pick up momentum, this may not happen in a hurry. It is precisely its faith in motorcycles that prompted Bajaj Auto to exit scooters even while HMSI is rewriting the script with Activa.

It is difficult to predict what kind of a scenario will eventually emerge in the coming years. HMSI set the ball rolling in scooters which has led many others to follow suit. Its closest challengers are Hero and TVS while Yamaha and Suzuki have also thrown their hats into the ring. With rapid urbanisation, more and more customers are opting for scooters though motorcycles are still sought after for power and mileage.

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