Getting Honda bike owners into the car fold

It is a brand that resonates strongly with both car and two-wheeler buyers. And this is something that Katsushi Inoue, President & CEO of Honda Cars India, is only too aware of. “When Honda bike and scooter buyers come to our cars, it will translate into a lot of potential for us,” he says.

His colleague and Senior Vice-President (Sales & Marketing), Jnaneswar Sen, then refers to a recent initiative called Honda Buddy/Loyalty Programme (HBLP). Here, Honda two-wheeler owners can buy the same branded cars and get loyalty points in the process.

HBLP, which can be accessed on the Honda Cars India website, comes in two parts. Under ‘Loyalty’, the Honda owner puts in all his/her personal details including the registration number of his two-wheeler (or car). The scanned document is then verified by the car dealer and once everything is in place, the new vehicle is billed in the name of the same user. His account is then uploaded with loyalty points once the purchase is finalised.

These points can then be encashed by printing vouchers and presenting them at Honda Cars dealerships for service, spares, accessories, insurance and so on. These services can be taken only against the new car bought by a two-wheeler customer and new/existing car for his four-wheeler counterpart. The ‘Buddy’ programme is only applicable to Honda car owners.

HBLP will run its course through this fiscal and clearly, this initiative will help Honda get useful data on its buyer base, both for bikes and cars. Its two-wheeler arm, HMSI (Honda Motorcycle & Scooter India) is already the country’s second largest manufacturer while the car business is quickly establishing itself as the premium alternative for customers.

Yet, it is not as if there will be a mass transition overnight from two-wheelers to cars. There are hard facts to support this argument. The Indian car market is 2.5 million units annually of which less than 40 per cent comprise first time buyers. This base largely includes two-wheeler owners which means only less than a million are upgrading to a car each year.

Sen admits, though, that while these are still relatively low though now, things could change with mass motorisation in the coming years. “HMSI is known for quality and in the long run, there could be huge opportunities for us,” he says.

According to Inoue, joint projects/synergies are already underway in the two Honda businesses of cars and two-wheelers. These include common purchasing and sourcing which are useful initiatives from the viewpoint of economies of scale. Likewise, there is joint participation in the IT space too.

“We can do a lot together and both product segments are important to Honda,” he says.

“It is an opportunity to offer young buyers in India the chance to drive Honda Cars. It is a dynamic market and things look good for us,” he says. India is the company’s fourth largest market after Japan and it remains to be seen how quickly it goes up the ranking ladder during the reminder of this decade.

Headquarters in Japan has also seen a change at the helm with Takahiro Hachigo taking over from Takanobu Ito. The new CEO has made it clear that the focus will be on quality and pushing Honda’s “uniqueness” even ahead of volumes. It is a view that Inoue agrees with too and is keen to implement in India.

As he puts it, this is just not a matter of product quality alone but the total supply chain quality comprising logistics, components, assembly, delivery, processes etc.

“We have a good heritage of quality for many years in India but this is a growing market which needs volumes. Here, quality with quantity will become my top priority,” adds Inoue.

While Hachigo has also hinted that Honda’s surplus capacity worldwide is something that needs to be addressed, this concern may not necessarily extend to India.

Honda Cars is already thinking of a third plant scheduled to be commissioned in Gujarat but the good thing is that, like Rajasthan, the HMSI facility will be part of back-end synergies. This will help streamline sourcing and give suppliers more business.

Inoue has made it clear that the Indian domestic market, by virtue of its sheer size, is top priority for the car business.

Yet, things could change once free trade agreements gather momentum in the ASEAN region which could see more shipments head out from India. In addition, new growth regions in Africa and Latin America may also be serviced from here.

While Maruti-Suzuki continues to be the clear market leader, Inoue believes Honda Cars can hold its own by not taking its eye off long-term business goals. One of the key components here is the quality drive. “It is time to review operations and think of quality again. Today, we have a good standing but must continue improving,” he says.

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