Early this year, March 26 to be precise, Honda Motorcycle & Scooter India (HMSI) had issued a press release stating that it was planning to produce 6.4 million units by end-2016.

This would involve expansion of its Karnataka plant to 2.4 million units coupled with setting up of a new facility in Gujarat with a capacity of 1.2 million units. The units in Manesar (1.6 million) and Rajasthan (1.2 million) units would complete the picture.

The picture has changed slightly now with HMSI scaling down its target for 2016 to 5.8 million units. The Karnataka expansion of 600,000 units has been deferred while commissioning of the Gujarat plant is on schedule.

Keita Muramatsu, President and CEO, believes the company has enough in its kitty to meet the demand. It makes more sense to adjust capacity to the prevailing market situation. In addition, HMSI will have its hands full in meeting the new emission regulations which will kick off in April 2017.

His colleague, Yadvinder Singh Guleria (Senior Vice-President, Sales and Marketing), clarifies that preparation work for the Karnataka plant expansion is almost complete but the decision to go ahead “will be based on market dynamics”. In the meantime, the Gujarat plant which has been earmarked solely for scooters will be commissioned in 2016.

Expansion mode From Muramatsu’s point of view, Honda has been in the midst of a breathless expansion in India since the time it split with the Hero group four years now. During this time, its capacity has grown nearly three-fold and will close at 4.6 million units by the end of this fiscal.

In the process, India is set to become the company’s largest two-wheeler producing nation ahead of Indonesia. As Muramatsu adds laughingly, this has been the most rapid expansion for Honda and some people in Japan thought the pace was crazy.

“Sometimes I worry about this speed and we must consolidate for the future,” he says.

HMSI is already the second largest two-wheeler maker in India and the Gujarat plant will bring it even closer to Hero MotoCorp. Muramatsu is aware that quality should keep pace with this frenzied expansion, which means keeping a close eye on the supply chain.

HMSI recently moved to a new corporate office in Gurgaon near Delhi and all functions consequently shifted out of its Manesar facility. “Manesar was fine till a point when we were operating out of one factory. Now we have three and it makes more sense to have a nodal structure,” explains Guleria. Along with the new corporate office, HMSI has shifted its head office for the central region from Lucknow (which will continue to be a zonal office) to Noida which will control operations. HMSI has 12 zonal and five regional offices and the future could see more zonal offices coming up in the East and South.

There are a host of issues that accompany a gigantic manufacturing operation. Planning has to be done in advance for factory shifts and holidays as different States have their own set of rules. Also with more customers coming in, expectations from products and service only increase.

Priority Guleria says the top priority is to constantly advance service preparedness and get retail networks in place. Even existing dealers have to increase their service base to cater to additional customers. For interior regions, the company has 14 additional service vans which are equipped to train mechanics and handle customer vehicles.

This has been a hectic calendar for HMSI with 15 launches, the latest being the CB Hornet 160R. “We learnt a lot along the way and now understand better what the customer wants in his bike. The rural economy suffered in the first half of this year and predicting a recovery is hard,” admits Muramatsu.

In his view, adjusting for the real market has been the biggest learning this year in terms of pushing and planning products. “As we run fast, we need to create a foundation, pause for breath and race again,” adds Guleria.

The big job on hand is to prepare the product range for the new BS 4 norms which kicks off in April 2017. This is not the easiest of tasks especially with four plants and a host of models across assembly lines. Going forward, the recently launched Livo, Shine and Hornet will be the key growth engines in motorcycles.

The Dream series has not made the impact sought in the commuter space but HMSI is still optimistic.

“We have exciting plans for bikes and will focus on the 125cc and 150cc space,” says Muramatsu.

Guleria believes that with BS 4 norms due in 2017, there is an “opportunity in totality beyond the engine”. Though Livo is closer to the 125cc price point, it still has its own customers and is a unique identity within the 100cc space, he adds.

HMSI could also be right in assuming that scooters could just take over the elusive entry commuter space in bikes. They already account for 35 per cent of the 100cc space and could lead the category over the next four years. Muramatsu is still keen to drive the leadership stakes in scooters while simultaneously reworking the 100cc strategy in bikes. It is going to be a busy 2016 for him.

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