Auto focus

For Honda, BS VI regime will mark new chapter in two-wheeler growth script

Murali Gopalan | Updated on November 01, 2018 Published on November 01, 2018

Minoru Kato   -  Bijoy Ghosh

Company confident of making a strong statement in technology to drive home the leadership message

Minoru Kato grins when asked if Honda will contemplate another two-wheeler plant in India.

The company already has four facilities with total capacity targeted at seven million units by 2020. “From my personal point of view, the total two-wheeler market in India will explode in the near future, which means that we must consider another factory,” says the President and CEO of Honda Motorcycle and Scooter India (HMSI).

Of course, this will happen only after 2020, when the country will have entered a new emissions era in the form of Bharat Stage VI. Yet, there is no taking away the fact that demand for two-wheelers will continue to rise thanks to better road networks in rural areas coupled with growing income levels.

Kato also points to the fact that penetration levels in India are still lower than markets in the ASEAN region, which have reached a stage of maturity. Despite this, the fact that India ranks number one for Honda sales globally is only an indication that this is still the tip of the iceberg.

Robust sales

For the April-September period, Honda’s two-wheeler sales in India were nearly 3.3 million units (translating into an average of 5.5 lakh units each month) with Indonesia in second place at 2.47 million. Till not-so-long ago, the slots were reversed but India has surged ahead even while Indonesia is now staging a strong economic revival.

Vietnam is in the third place with 1.3 million followed by Thailand with 7.4 lakh units, which pretty much puts the Asia picture in perspective. It also explains why Honda recently announced its intent to expand its Gujarat plant capacity to 1.8 million units by 2020.

In the process, it now has in its kitty its world’s largest two-wheeler plant in Karnataka with a capacity of 2.4 million units, followed by Manesar in Haryana with 1.6 million (which will slip to third place in 2020 with Gujarat’s expansion). Rajasthan is in the last spot with 1.2 million units and this facility is within the same ecosystem as Honda Cars.

Since the time it parted ways with the Hero group seven years ago, the Japanese auto-maker has been going flat out in increasing plant capacity even while its former ally continues to be the market leader. Kato steers clear of any reference to leadership aspirations in the future but says that things are looking good for Honda right now.

“Basically we expect more growth in the future and even with BS VI coming soon, we think there is big potential for Honda,” he says. The challenge in the new emissions era will largely pertain to investments in technology, which will lead to pricier motorcycles and scooters.

Clean emission technology

Kato admits that demand could be impacted as a result for the entire industry especially when it involves a price-sensitive market like India. Yet, this will still present an opportunity for HMSI to showcase its prowess in technology. This will see the launch of new engines with “next generation model change to include everything”.

As Kato elaborates, from the customer point of view, there will be a price increase for sure but this will be backed by an increase in product value. “We hope that with advanced and the latest Honda technology in BS VI, we will make a difference,” he says.

The company plans to leverage its global competencies to meet the emissions challenge head-on, which will largely involve the costing structure. In the process, it can make a strong pitch for the top slot, which goes beyond numbers to being perceived as a company that is ahead of the rest in fuel injection technology.

As Honda’s global President and CEO Takahiro Hachigo says in his recent message to shareholders, “In the motorcycle business, Honda introduced four-stroke engines and fuel injection systems, ahead of competitors. We are working to improve the fuel efficiency of gasoline-engine motorcycles. This includes R&D to improve combustion efficiency and reduce body weight.”

Kato, likewise, is obviously keen that the company make a strong statement with BS VI, which will see a huge transition happening across the production lines in its four plants. “As of today, it is difficult to discuss detailed features but every kind of model line-up will change with BS VI regulation. There will be fuel injection as well as new performance and development projects happening from Japan and India side,” he says.

Once the new emissions regulations come in, the country’s role will increase beyond being the largest producer of two-wheelers for Honda. Exports to ASEAN and Europe could increase substantially as the demand for cleaner vehicular emissions become more vocal by the day.

With the second phase of BS VI onboard diagnostic systems for emissions control (OBD 2) also due to come in 2023, this will put India at par with regulations in Europe, which means the same product made here can be exported there. Kato then adds good-naturedly that HMSI will “raise its hands” to get the attention of its parent in order to play a more global role and expand its export business.

Electric mobility

He becomes a lot more thoughtful when the topic veers around to electric bikes and scooters. “We have a strong intention to develop good (electric) products that meet customer expectations not only in India but globally. As of today, I can say it is still very challenging because of the cost, range, performance, etc,” admits Kato.

There is then the added challenge of readying charging infrastructure in India as well as offering fiscal sops to make these products cost-competitive. Besides Honda, the likes of TVS, Bajaj and Hero will be part of the electric bandwagon though the roadmap is still hazy in terms of policy and incentives.

Honda recently launched the PCX hybrid scooter in some ASEAN countries (Vietnam, Thailand and Indonesia) and Japan. The PCX electric was on display at this year’s Auto Expo in Delhi and it remains to be seen if it will make its way to India eventually. However, there are still a whole lot of issues to be considered before a call is taken to launch it in a big way here.

Yamaha partnership?

Speculation has been rife that the two former foes, Honda and Yamaha, may come together to join hands in electric mobility especially when they decided to bury the hatchet recently and make sub-50 cc scooters for the Japanese market. The logic for this rapprochement was that there was really no point replicating investments for a small product category where collaboration was clearly a better option.

Experts believe that this will extend to new areas like electric mobility too, which will involve big investments and it makes sense to pool skills jointly. Japanese companies have seen some interesting alliances lately like Toyota-Suzuki and Nissan-Mitsubishi, which leads industry observers to believe that a Honda-Yamaha marriage is equally conceivable sometime in the future.

Kato refuses to comment on this speculation and believes that it is important for Honda to put its best foot forward in electric. “With our high technology levels globally, customer expectations constantly increase. How to meet and exceed this is the challenge for us in both from the product and features point of view,” he says.

Published on November 01, 2018
This article is closed for comments.
Please Email the Editor