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Honda steps up the gas in 2-wheelers

Murali Gopalan | Updated on March 12, 2018 Published on May 15, 2014

Honda’s big India push starts next year

Honda has made no secret of its leadership intent in India’s two-wheeler market. Ever since it called it quits with the Hero group four years ago, the company has been stepping up the gas in capacity expansion and launching new products.

On Tuesday, Honda announced at its 13th annual business meet in Tokyo that it was targeting a production of 4.5 million units in India this fiscal, a significant jump from 3.7 million units it recorded in 2013-14. In the process, it will inch closer to its former ally, Hero MotoCorp’s annual output of 6.5 million units.

Number talk

From Honda’s point of view, this enhanced target simply means optimal utilisation of capacity across its facilities in Haryana (1.6 million units), Rajasthan (1.2 million) and Karnataka (1.8 million). In February’s Delhi Auto Expo, it had also announced setting up a fourth plant in Gujarat which will add another 1.2 million units to its kitty. Effectively, this means that by the second half of 2015-16, Honda will be producing at least 5.8 million motorcycles and scooters, a near four-fold jump in numbers since it parted ways with the Hero group.

It is, therefore, quite likely that the Japanese automaker will target market leadership over the following two years when it sets up a fifth plant or perhaps even expand operations in Gujarat. In 2012, it had announced plans of producing 10 million units in India by 2020.

Tuesday’s announcement in Tokyo is significant as the business meet had in attendance six board members of Honda Motor Company. It clearly showed the importance of India, which is now tipped to overtake Indonesia by 2016 as the company’s largest two-wheeler market. It was here that Takanobu Ito, President, CEO & Representative Director, said, “Together, we will unleash a new era of Honda progression and customer satisfaction in India.”

Ito was present at the Delhi Auto Expo earlier this year to announce the setting up of the Gujarat plant. The coming months will see the company launch two bikes, of which one will be an addition to its Dream series and the other a sporty 160cc high displacement bike targeted at youngsters. Honda plans to get into overdrive with 1,000 new touch-points to its network which will see nearly 4,000 outlets in place by the end of this fiscal. These are largely expected to be in rural India which accounts for a significant part of overall two-wheeler sales and is, incidentally, Hero MotoCorp’s biggest strength.

So, what does all this mean in terms of leadership dynamics in the world’s biggest two-wheeler market? It is a no-brainer that Honda wants to take the top slot from Hero at the earliest. In terms of numbers, this seems inevitable, except that its former Indian partner is no easy pushover.

Not only does it have in its kitty the two most enduring motorcycle brands in the form of the Splendor and Passion, which jointly account for annual sales of four million units, but Hero has been firing on all cylinders too.

Looking ahead

Honda has been spectacularly successful in its scooter business led by the Activa but has not been able to replicate the magic with its motorcycles. According to sources, the 125cc Shine has been its top performer while the Dream series has not quite achieved those kinds of numbers yet. Perhaps, this has to do with the fact that its rural penetration is not as profound as Hero’s. In addition, Honda will have to convince its customers that it offers something better than the Splendor and Passion. This is what the Dream series had intended to do but this will need more time.

And even while it rapidly increases capacity in the coming years, Honda will also begin looking at geographies beyond India. Africa could be an interesting possibility especially from Gujarat which offers easy access to a port. A host of two-wheeler markers believe that Africa is the next big growth driver for low-cost bikes. It will be interesting to see if Honda produces such a motorcycle for Africa which could perhaps also be diverted to India.

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Published on May 15, 2014
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