Japanese two-wheeler major Honda Motorcycle, which has been trying to grab the Number One position beating Hero MotoCorp in India, on Tuesday said it is tough and challenging as customers are loyal to a particular brand here.
Citing an example, Minoru Kato, President and Chief Executive Officer, Honda Motorcycle and Scooter India (HMSI), said: “'Splendor is a Splendor (manufactured by Hero MotoCorp) from the customers' point of view. Even after separation of Hero and Honda seven-eight years ago…Splendor is one of the strongest brands. Our challenge is to convince our customers strongly about our products.”
There are products in 110cc, 125cc and 150cc and in higher segments like 350cc or 500cc which are also growing in the Indian market and the company will play a role in each category, he said. But, having said that, it is tough to get Hero loyalists and HMSI has been trying to attract such loyal customers to it. “If there is one loyal customer, he can bring five,” he quipped.
Kato said Honda will bring 350cc and 500cc motorcycles in the future, and right now, the company was working on feasibility studies, especially on the pricing part.
“The market in that category is also growing, thanks to Royal Enfield. So we have some intention to produce such products in the future. But, the cost competitiveness…to compete with prices of Royal Enfield is a big challenge for us,” he said.
Therefore, to fight all these odds, the company is trying its best to make price competitive products without comprising on quality. Kato said HMSI has started doing that and out of 500 districts in India, HMSI is number one in 170 districts in motorcycle sales.
The company, since 2013, has been working hard to become the Number One player in India, with the predecessors of Kato saying ‘the company aims to be Number One by 2016’. When that did not happen, they moved their deadline to 2020.
For instance, last year, HMSI Chief Officer - Regional Operations (Asia and Oceania), Shinji Aoyama, had said that he expects HMSI to be the Number One two-wheeler maker in India by 2020.
Aiming high again, Kato said the company is working hard and expanding production capacity, and also expansion of its sales and service in rural areas. He added that with the BS-VI regulation coming in, it will be a big challenge for the two-wheeler industry and the market is expected to fall.
That is why the company is investing ₹800 crore this financial year to modernise the production lines in its plants. The company has four plants and is mulling for a fifth plant.
HMSI has a capacity of 64 lakh units per annum from all the plants and current utilisation is 61 lakh units per annum. With expansion, it may go up to around 67 lakh units.
Hero MotoCorp, on the other hand, has six manufacturing plants with 92 lakh units capacity.
HMSI sold around 57.75 lakh units of two-wheelers last year, while Hero sold around 73.83 lakh units.