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Honda eyes 2-wheeler, car synergies in India

Murali Gopalan Mumbai | Updated on January 09, 2018

New initiative being planned which will roll out in 2018

Honda is looking at greater synergies between its car and two-wheeler businesses in India to help expand its buyer base.

Its two-wheeler arm, Honda Motorcycle and Scooter India (HMSI), is the closest rival to market leader, Hero MotoCorp, with sales of over five million units annually. Its Activa scooter has emerged the largest selling two-wheeler brand with sales of 300,000 units each month.

In contrast, Honda Cars India has had a more modest track record though its City brand is still going strong since the time it was launched two decades ago. Maruti Suzuki and Hyundai have over two-thirds of the market and Honda is among a list of other carmakers like Tatas, Mahindra, Toyota and Renault which make up for the balance.

Clearly, HMSI is the more dominant face of Honda in the country and this is where some potential synergies are being contemplated especially at the marketing level. It is not the first time that such an effort has been attempted.

In 2015, the car arm launched the Honda Buddy Loyalty Program (HBLP) with an eye on wooing two-wheeler users to cars and rewarding them with loyalty points.These could then be enchased for added services like spares, service, insurance and so on.

Honda Cars is now looking at another initiative which will be more “engagement-oriented” unlike HBLP which was more transaction-centric. There will also be greater interaction with customers with digitalisation playing a big role.

“We are working on this but have not come up with anything concrete yet. Once things are in place, you could see something interesting happen towards the second half of 2018,” a top company source told BusinessLine.

Clearly, tapping into the vast customer data of HMSI will be one possibility which will the “fastest and easiest way” forward for Honda Cars. Equally, its own customer data can help the two-wheeler subsidiary in terms of accessing buyers for its top-end premium bikes with heftier price tags.

Another area on marketing synergies could involve the HMSI distribution though this is easier said than done especially in small towns where space is a constraint. Perhaps, this can be more viable in Tier 2/3 regions where two-wheeler dealers have larger showrooms but this will “still have to be carefully thought out”.

Honda knows only too well that it is not as if synergies will yield positive results overnight. A motorcycle/scooter customer is distinctly different from a car buyer who has higher levels of disposable income.

Yet, it is perfectly natural to hope for the two-wheeler rider to graduate to an entry-level car from the same brand when he/she is ready to make the change. In the case of Honda, this will ideally mean that an Activa user should transit to the Brio compact car.

Theo only hitch here is that there is large price gap between these two options which are now being filled with models like the Suzuki Alto, Renault Kwid and Datsun redi-GO. The Brio is more expensive in contrast and Honda will have its task cut out in convincing two-wheeler customers to stick to its brand in cars too.

Incidentally, this is equally true for Suzuki which is the monarch of the automobile arena, where Maruti has a share of 50 per cent, but is way behind in two-wheelers. Beyond Hero and Honda, the other players which are ahead of Suzuki include TVS, Bajaj, Royal Enfield and Yamaha.

“Eventually, customers will go in for successful brands in cars, bikes and scooters. It is immaterial if the manufacturers are different,” says an auto industry observer. To that extent, Honda will need to pull out all the stops to make things work in this synergies drive.

Published on December 25, 2017

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