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Honda sees India as bright star in volatile world

| Updated on: Nov 26, 2015
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Shinji Aoyama, global COO, says HMSI will be the top player in motorcycles and scooters

Shinji Aoyama admits there is a fair degree of volatility happening in the global motorcycle business. As Honda Motor Company’s Chief Operating Officer for Motorcycle Operations, he is also hopeful that the turnaround will happen eventually. Countries which depend on commodities, especially crude oil, are getting hit because of low prices. As a result, Honda’s key markets are shrinking.

“In the short term, there is no major impact, especially Brazil and Indonesia where we have a dominating position. Once a market drops, there is really no short-term solution. However, we do not see it getting worse and fundamentally those countries should grow as there is momentum,” said Aoyama during an interaction at the recently held Tokyo Motor Show.

Honda had targeted sales of over 19 million two-wheelers worldwide in 2015-16 but has revised it downwards to last year’s levels of 17 million plus units because of the sluggish global economy. “Next year, we might have to look at a lower side but the exception is India where the market is stable,” he added.

Eyeing larger goals Aoyama, of course, is no stranger to this part of the world. He had headed Honda’s India operations and was around during the split with the Hero group. Since then, Honda Motorcycle & Scooter India (HMSI) has increased capacity nearly four-fold with new plants commissioned in Rajasthan, Karnataka and Gujarat now in the pipeline.

“Volume-wise, this financial year, India may be at the same level as Indonesia. Unless the market there recovers, India could become No 1,” he said. Once the Gujarat plant is fully commissioned, Honda’s capacity will be nearly 6.5 million units by end-2016 though attaining the top slot will, of course, depend on the state of the market and competition.

Yet, from Honda’s point of view, the larger goal is about maximising customer satisfaction. Suppliers and dealers become a key part of this plan in improving quality and service and chasing numbers as a solo objective will not make sense. “We may be No 1 or 2 but this does not matter to me in the short-term. So long as we can satisfy our customers, it is a job well done,” said Aoyama.

Going forward, the objective would be to lead the market though there is always former ally, Hero, to contend with in the leadership stakes. “Since we believe we can provide the best product to Indian customers, the logical result is that should sell the most. This is not always easy and we have to develop new products/technology and maintain top quality,” he reiterated.

Honda has been hugely successful in its India scooter business with monthly volumes comfortably clocking over two lakh units. Yet, the same cannot be said of its motorcycle portfolio where rivals are not unduly perturbed.

“According to me, the question on motorcycles is a matter of perception. The market perceives Honda as a successful scooter manufacturer and our penetration to rural areas is possibly not enough. However, we are trying to project a strong image in bikes also. It will take time but the current situation is in line with our plans,” said Aoyama.

Scooting away Interestingly, scooters are growing faster than expectations and in order to meet demand, Honda still needs to invest in machinery. This is adequate capacity for motorcycles a little more is needed for scooters.

“Scooter demand is even higher than motorcycles. We are really not sure how much longer this will continue since we do not know. I am confident that we will be No 1 in bikes also because of the belief we can provide the best. The question is only of time,” added Aoyama.

Beyond quality and price, Honda believes customer see a greater advantage in scooters than its motorcycles. One way of perhaps tackling is to provide better fuel consumption as part of the journey. Aoyama is equally excited about new challenges like electric vehicles which will change the landscape in key markets like India. In the process, the traditional practice of setting up a new factory and establishing a dealer network may change, albeit only over a decade.

With a complete move to electric vehicles, the structure of the supply chain and plants will themselves change. The battery and motor will take over from the engine and, likewise, there will be no need for high capacity die castings or machinery. Workshops will look different and at the retail end, dealers could even opt for change.

Honda is also part of a consortium with Yamaha and BMW Motorrad for developing cooperative intelligent transport systems. This will help in better integration of communication systems between vehicles and create a shared information network. In the process, two-wheeler riders can plan their rides safely. “We need to keep our eyes open wider about what may happen in the future,” said Aoyama.

Published on January 24, 2018

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