Honda focuses on costs, mileage to take on Hero

Nearly two years ago, Honda Motor Company’s global President & CEO, Mr Takanobu Ito, had dwelt on the strategy for the next decade where emerging markets would play a big role.

In his presentation, he had said, “Today, key competitors in those (emerging) markets are Chinese and Indian makers. In order for Honda to remain a market leader, it must not only maintain the high attractiveness and quality of products but also further improve cost-competitiveness to match the low prices of these competitors.”

Since then, Honda has called its quits with its ally of 26 years, the Hero Group and, in the process, ceded two valuable bike brands – Splendor and Passion – which account for annual sales of nearly four million units.

It is this number that will be on the radar of HMSI (Honda Motorcycle & Scooter India), the 100 per cent arm of the Japanese automaker.

“Top quality and performance will be our priorities and we will consistently focus on higher capacity along with (higher) mileage. Our challenge is to reduce running expenses for motorcycle riders in the mass segment,” Mr Keita Muramatsu, President & CEO of HMSI, told Business Line .

This will become a reality once Honda R&D becomes part of the Manesar facility from October. “Technology will become the driving force for us along with the challenge of keeping costs in check,” he added.

Honda has already made it known that India will contribute to 30 per cent of its global volumes by 2020, more than twice the present level of 13 per cent. This is not all; over the next couple of years, annual volumes in India at four million units will be at par with Indonesia before overtaking it to become Honda’s largest two-wheeler market in the world.

In addition, there is a strong possibility of the company sourcing components from India for its operations in the Asean region as well as back home in Japan where costs are spiralling.

Experts say this exercise could get a fillip once the FTA (free trade agreement) momentum is in place.

“India can play a bigger global role in the future for Honda but, for now, the domestic market is important,” Mr Muramatsu said.

HMSI believes the key to leadership is creating two more models like the Activa that can do one million units each a year.

The Dream Yuga marks an important initiative in bikes for a company whose strength is better known in gearless scooters.

Now with the Hero partnership passé, HMSI plans to focus extensively on the mass commuter segment which accounts for a lion’s share of volumes.

“Our direction is going down right from the 150cc and down to 125cc and finally to 100cc, even while the market has been upgrading. Creating additional value for the customer is, therefore, a priority for Honda,” Mr Muramatsu said.

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