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Honda contends with heavy order backlog for Activa

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Neha Kaushik

New Delhi, Sept. 15

AFTER resolving a labour dispute at its plant a couple of months ago, which resulted in substantial loss of production, Honda Motorcycle and Scooter India (HMSI) is now having to contend with a heavy backlog of orders for its scooters.

The waiting period for its popular scooter model Activa is currently at about 2-3 weeks, as production at the company's plant had remained affected for more than a month, till the labour problem was resolved in the beginning of August.

A company spokesperson said that production at HMSI's plant is currently operating at the optimum 2,000 scooters a day, and that the company was planning to stretch this figure to 2,200 units a day in order to clear the backlog of orders.

HMSI's production had dropped to less than 1,000 units a day during the labour trouble as most of the company's workforce was on strike. This resulted in a revenue loss of about Rs 125 crore for the company.

Dip in sales: The company's sales had declined by 13.9 per cent in the April-August 2005 period to 1,53,208 units as compared with 1,77,903 units in the same period last year. HMSI also saw a dip in its market share in the period to 43.7 per cent from 46 per cent in April-August 2004.

The dip in the company's sales also resulted in an overall dip in sales of the scooter industry. Scooter sales declined by 6 per cent in August to 76,426 units.

According to an industry analyst, the growth revival seen in the scooter market over the past couple of years was largely driven by HMSI. For example, in the last fiscal, while the scooter market grew by 4.2 per cent to 9,23,566 units, HMSI and TVS Motor were the only two companies to see a positive growth, with the remaining five scooter manufacturing firms seeing a decline in growth in the year.

HMSI, in fact, accounted for about half of the domestic scooter market with sales of 4,50,967 units last year.

(This article was published in the Business Line print edition dated September 16, 2005)
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