Waiting for Activa will soon be passé

  By November, customers can hopefully get their Activa off-the-shelf with Honda Motorcycle & Scooter India ramping up capacity at its Gujarat plant.

According to YS Guleria, Senior Vice-President (Sales & Marketing), the second scooter assembly line with a capacity of 50,000 units per month will be commissioned by end-June. The models produced here will be the Activa and Dio. The first assembly phase with the Activa kicked off in February.

Once things are fully on stream, the Gujarat facility should be churning out 100,000 scooters every month by November.  In the process, the customary two-week waiting period for the Activa will be passé. HMSI’s favourite mascot has been the top-selling two wheeler brand for nearly six months now ahead of Hero MotoCorp’s Splendor motorcycle.

And while these are early days yet, scooter production at HMSI should logically be 300,000 units each month by the beginning of 2017-18 which could only hasten the transition phase from motorcycles in the market. At present, scooters account for nearly a third of India’s total two-wheeler output (estimated at nearly 17 million last fiscal).

Staying hopeful In all fairness though, motorcycle sales have been severely hit in rural India thanks to two successive drought years.  This has been particularly rough for the value-driven commuter segment which includes brands like the Splendor, Passion, Discover etc. However, the things could be a lot better this year thanks to the positive monsoons forecast which will boost incomes in rural India and, subsequently, the spending pattern. Guleria is confident the rains will have a good rub-off on HMSI too which is now pulling out all stops in its rural drive. In addition, there are other good signs like more money coming into the system from the Pay Commission recommendations as well as separate hikes for army personnel. This is also the reason why rural India will take centrestage this fiscal in HMSI’s initiative to add another 850 retail outlets which will bring its net tally to 5,450 outlets by the end of this fiscal.

The company will, however, be hoping that its portfolio of motorcycles can replicate the Activa frenzy. The Shine has been a top performer in the executive space while there is a greater sense of optimism about the recently launched Hornet and Livo. And even while the Activa has overtaken Splendor in recent months, Hero still remains a formidable force to reckon with. This is borne out by the fact that after nearly five years of parting ways with Honda, the company shows no signs of giving up its pole position in the market. At the time of the split, a section of industry observers felt that it was only a matter of time before Honda would emerge tops.

While this has not happened, HMSI will have reasons to feel pleased with its growth story thus far. At the time of its Hero divorce, it was operating out of a single plant with an annual capacity of 1.6 million units. Since then, it has added facilities in Rajasthan, Karnataka and Gujarat and is expected to wrap up this fiscal with a little over 5.4 million units.

Going forward, HMSI will increase capacity at its Karnataka plant by 600,000 units which will make it the single largest facility with 2.4 million units. In the process, overall capacity should be at 6.4 million units by 2017-18 which will make HMSI the second best after Hero.

Yet, the top management is only too aware that this frenetic pace of expansion will be accompanied by its own set of challenges ranging from logistics, manpower, training and so on. Whether this will prompt HMSI to get into pause mode till the end of this decade remains to be seen though this seems quite unlikely given the aggressive focus on market leadership.

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