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Four years after Hero split, Honda gains ground rapidly

Murali Gopalan | Updated on March 12, 2018 Published on December 05, 2014

Growing fast. Honda’s plant in Manesar was its first in India   -  REUTERS

The challenge is to launch a bike that can take on the top-selling Splendor



It was precisely four years ago when Honda and Hero parted ways in their two-wheeler joint venture.

At that point in time, the Japanese automaker had a single plant in Manesar, Haryana, which was rolling out 1.6 million units each year. Further, following the split with Hero, it ceded nearly four million units annually of the Splendor and Passion motorcycle brands to its erstwhile Indian ally. Consequently, Honda had 12 million bikes and scooters to report as its global sales in 2010-11.

Notable changes

Things have changed quite dramatically since then. The company has added two more plants in its India kitty and is poised to wrap up this fiscal with sales of over 4.5 million units. This will be a fourth of its global numbers expected to be a little over 18 million two-wheelers by the end of 2014-15.

Indonesia continues to be its largest market with annual sales tipped to be around five million units this year. Once the fourth plant in India is commissioned towards the last quarter of 2015-16, Honda will be doing nearly six million units.

It is very likely that the subcontinent will emerge its largest two-wheeler market, ahead of Indonesia.

All this is a remarkable feat from a company which parted with two valuable brands in the form of the Splendor and Passion and, yet, made up lost ground in little time. And even while Hero is still the largest player in India’s two-wheeler segment, Honda is fast catching up and could emerge tops by the end of this decade.

Major player

Within the auto industry, rivals concede that the company is a formidable force to reckon with and has the astonishing ability to gather momentum without much fanfare. When its Indian arm was first set up to manufacture gearless scooters nearly 15 years ago, nobody would have thought that brand Activa would take the market by storm. Today, the scooter averages sales of over two lakh units each month and does nearly three times the numbers as its closest rival.

The gearless scooter journey, of course, began a lot earlier in the mid-1980s when Honda joined hands with the Kinetic group and unleashed this revolution on wheels. By then, it was also setting a base for its motorcycle business where Hero Honda would emerge the lead player in India by the turn of the 21{+s}{+t}century. After parting ways with Kinetic, it was only a matter of time before Honda took charge of the gearless scooter segment.

Will the company be able to pull it off as comfortably with motorcycles and surpass Hero with whom it had a 26-year partnership? The latter has made it clear that it will be no easy pushover and is determined to hold on to its leadership status in the years to come. A large part of this is also due to the fact that the Splendor and Passion continue to draw buyers by the droves to the showrooms.

Dream big

Honda has now got its Dream series bikes in place to take on these formidable brands which it had unleashed in the market with Hero years ago. Rivals in the two-wheeler space insist the Dream Yuga and Neo are yet to make a considerable impact and that the company’s top bike brands continue to be the Unicorn and Shine. Honda, though, is confident that the sales of the Dream series are on an upward curve and numbers will build up as it extends its network into rural India. At one level, the relatively slow growth of its motorcycle brands should not be a major cause for concern to the company given that scooter sales in the country are on the rise and account for nearly 30 per cent of two-wheelers sold. Going forward, auto industry observers believe this component will increase rapidly and could even touch 45 per cent over the next 2-3 years.

Honda’s new plant in Gujarat, for instance, will roll out 1.2 million scooters annually when it is commissioned in early 2016. Other companies like TVS Motor, Hero, Yamaha, Mahindra and Suzuki are, likewise, focusing on growing their scooter business through this decade.

All this will be music to Honda’s ears as it endeavours to grab the leadership mantle from Hero. What it would welcome even more is being able to hit the sweet spot with a brand that can take on the Splendor. By doing so, it will have finally achieved in motorcycles what it did more comfortably with the Activa in scooters.

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Published on December 05, 2014
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