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Honda eyes synergies in two-wheelers, cars

Murali Gopalan | Updated on: May 24, 2018
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New CEO of Honda Cars is keen on learning from the scooter and motorcycle experience

Gaku Nakanishi has been in India for less than two months but has seen enough to understand its potential. “I am excited to be in a market that is growing so fast,” says the President and CEO of Honda Cars India.

He is also not deterred by the fact that his company has a long way to go in what remains essentially a two-horse race, with Maruti Suzuki and Hyundai taking up over two-thirds of the market. On the contrary, he believes Honda has some inherent strengths in this part of the world.

“I would like to work closer with our two-wheeler and power product entities in India. The Honda two-wheeler brand image is very strong and has been around in India since the mid-eighties,” says Nakanishi. In comparison, the four-wheeler business is younger at 20 years.

“We want to study from our two-wheelers and maximise synergies,” he adds. Nothing has been envisaged yet but the Honda Cars chief believes that along with the power products business, a lot can be done from the viewpoint of enhancing brand Honda in India.

For instance, this could be practised in areas like corporate social responsibility where joint pooling of efforts will help in terms of budget and manpower outlay as well as promote the idea of one team. As Nakanishi admits, these are early days yet but clearly there is potential that can be leveraged optimally to benefit the brand.

Using the customer base

“I do not have a clear idea of other synergies but hopefully a two-wheeler buyer should stick to the Honda family. If we can use the two-wheeler customer base to upgrade to a four-wheeler, it will be a huge opportunity for our cars,” he says.

This is easier said than done given the huge price differential between a Honda Activa and the recently-launched second generation Amaze (or even the Brio). The average two-wheeler buyer will think twice before stretching budget to buy a car which costs nearly 10 times as much.

“We debate the subject of synergies often and realise that it is a tremendous strength we have in our other brands in India. Data is doubtless a huge plus for the future,” says Rajesh Goel, Senior Vice President and Director, Marketing and Sales.

This is where the two-wheeler arm, Honda Motorcycle and Scooter India (HMSI) has enough and more to offer, considering that it sells six million bikes and scooters every month. “At a brand level, optimisation of resources is one thing but the greater the affinity, the greater is the number of brand loyalists,” continues Goel.

Hence, even a small percentage of Honda two-wheeler buyers upgrading to a car will translate into a big number. And this is where the Amaze could play a role, especially when people are looking at this offering as their first car.

Wooing young buyers

“These are reasonably affluent customers and some could be graduating from the fun element of a two-wheeler to (a fun element of) a car,” he says. This, in fact, was one of the key inputs for the styling and design of Amaze in terms of wooing the young buyer.

“I believe youngsters would be inclined to looking at this as their first car from a two-wheeler. The Amaze’s design will also create a strong desire for a youngster to own it as part of the personality fit,” says Goel. Additionally, Honda has pulled out all the stops with Amaze in its maintenance and cost of ownership.

Of course, for those graduating from the Activa to Amaze, the automatic option also becomes a seamless transition in terms of handling traffic comfortably. Incidentally, Honda’s flagship brand, City, has a substantial number of buyers who opt for the automatic transmission, a clear reflection of changing behavioural patterns in India.

Growing car market

Of course, there is a barrier level in income for two-wheeler riders when it comes to buying a car. Nakanishi does not think this will be a permanent feature. “Affluence levels are growing by the year. In five to 10 years, people will move from bikes to cars. The current experience of customers through Honda motorcycles will then be a future benefit,” says Nakanishi.

He is also confident that the market for cars in India will “sooner or later” reach levels of five and 10 million units which, in turn, will make things exciting. “China and the US are, of course, bigger but the pace of growth and dynamics make India different. I believe we at Honda are improving day-by-day and year-by-year as part of a strategy,” he says.

Nakanishi also admits that it is not going to be a walk in the park given the ground realities of the two lead players dominating the arena as well as coping with other challenges. “Sometimes, there are difficulties to overcome but we are working based on our core Honda philosophy and DNA of performance, fun to drive and quality,” he says.

It is these parameters that the company believes will help it stand out in the market. “We want to show our difference and distinctiveness to people. Of course, there are top-class companies in India but we still strive to be different in terms of product quality and performance,” reiterates Nakanishi.

Will it Amaze?

The success of Amaze will be a key part of this growth strategy and, on the face of it, there is no reason why it cannot clock up good numbers. “When I drove the car and compared it to another model on performance and the fun-to-drive quotient, I felt confident about our product’s distinctiveness in performance, exterior design, space, acceleration, etc,” says Nakanishi.

The City, which has been Honda’s steady performer for 20 years, is still going strong with a loyal customer base. The current model is the fourth generation City. Through Amaze, Honda is keen on establishing a solid brand image.

Going forward, the plan is to launch six products in the next three years. The Civic could be relaunched, and also the CR-V, which has a potential buyer base. “We are keen on increasing the number of Honda loyalists and even though numbers may not be large, there are people who are waiting for a Civic or CR-V,” says Goel.

The next big frontier in India is the Bharat Stage VI emissions era, which will become a reality in two years. Honda believes this could translate into an opportunity to accelerate growth. “It is about our DNA in challenging the impossible and getting to the goalpost quickly. Never give up, never die is our motto,” declares Nakanishi.

Published on May 24, 2018

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