Honda sees India as its largest 2-wheeler market in 5 years

Honda has targeted India to be its top two-wheeler market in the world within the next five years.

Though China is the world's largest producer of motorcycles today, it is of little relevance to Honda thanks to the unrealistically low levels of pricing prevalent in the country.

“Honda always keeps quality as its top priority and it is difficult to meet the existing pricing structure in China. However, this is not the case in India where people appreciate our quality and are willing to pay a price for it,” Mr Shinji Aoyama, the outgoing President & CEO of Honda Motorcycle & Scooter India, told Business Line .

Incidentally, the Japanese automaker's two-wheeler operations in Indonesia and Vietnam are slightly ahead of India in terms of numbers though it is only a matter of time before the scales are tilted. “India has the potential in the near future to be the largest business operation for our bikes and scooters globally,” he said.

From Honda's point of view, this is but imperative considering that it has lost nearly five million two-wheelers annually to its former partner, the Hero group, after exiting the 26-year-old joint venture. As a result, its global numbers are down to 13 million bikes and scooters.

Its 100 per cent subsidiary HMSI will end this fiscal at a little over 1.6 million units, going up to 2.2 million units in 2011-12. To catch up with the Hero group would call for greater aggression with launch of mass motorcycles while ramping up capacity quickly. In the process, a third plant could become a reality by 2015-16.

“Our R&D capacity in India will be strengthened so that Honda can act faster and become more responsive to the needs of customers. By the end of this decade, India could hopefully account for half the output of Honda's bikes and scooters. It is our most important market and we will accelerate activity in Japan to improve our presence here,” Mr Aoyama said.

This fiscal is expected to see two-wheeler production in India at around 12 million units of which the Hero group will account for five million, followed by Bajaj Auto with 3.5 million units. TVS Motor will be closer to two million units with HMSI at 1.6 million bikes and scooters.

HMSI estimates that the next decade could see production of two-wheelers at over 20 million units by which time it aspires to be the market leader. Experts say this will be quite a challenge considering that there will be stiff competition from local players. “The Hero group, Bajaj and TVS are going to be as aggressive and it will be interesting to see how the leadership stakes pan out at that time,” they add.

Mr Aoyama also reiterated that the domestic market would be top priority for Honda. “HMSI will not become an export hub though it will do its bit in meeting demand from other countries which is the case now. Our operations in China and Asean will also play a role in exporting bikes whenever the need arises,” he said.

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