Hondas creates long-term strategy to zoom ahead of the competition

Saturday 23 June 2012, 01:13 AM by

Within just one year of parting ways from Hero MotoCorp, Honda Motorcycles & Scooter India Pvt. Ltd. (HMSI) seems ready to take up the mantle of India's second largest two wheeler manufacturer from Bajaj Auto Ltd (BAL). Although the Japanese two wheeler manufacturer has been present in the Indian auto market for the past 11 years, it emerged as a serious contender in the motorcycle segment only recently. This development comes at a time when the company does not have a vehicle with Honda technology to compete against in the market.

HMSI Vice President and Operating Head (Sales & Marketing), Yadvinder Singh Guleria said, “Our goal is to be the no. 1 player in the market. To be there, we have to graduate to no. 2 from the current no. 3 spot. We are bracing up to move in that direction by augmenting capacity, broadening portfolio, strengthening sales network and lowering ownership cost. In 2012, HMSI has finished no. 2 in March as well as May." He said that the manufacturer had set itself a clear target and was going to leverage upon a host of initiatives in order to attain its goals.

The Japanese two wheeler giant's Karnataka plant will operate at full capacity from mid-2013, with rise in installed capacity from the existing 2.8 million units to 4 million units. Its product portfolio currently consists of three scooters and eight motorcycles. This includes the latest Dream Yuga, which is the company’s first mass market product. So as to reach its customers, the company plans to increase its network by 500 touch points this year. Honda R&D Pvt. Ltd (HRID), a HMC subsidiary, is establishing a unit at the Manesar facility in order to lower the lead time between products and allow vendors to come up with quality products at a cheaper rate.

Reportedly, HRID will help the company locally develop its low-cost motorcycles that it presently offers in the African auto market. HMSI plans to offer these bikes, which are incorporated with 100 and 110 cc engines, at a lower price range, thus enabling it to efficiently compete with other big players of the segment. With this approach, the company will be on track to achieve its sales target of 10 million units by the end of 2020.

Hero MotoCorp, which was earlier known as Hero Honda, holds the first position in Indian two wheeler segment and is also the world's largest two wheeler maker. In fiscal 2012, the company delivered more than 6 million units. On second position, Bajaj’s last year sales record stood around 4 million units. In the first two months of this fiscal, HMSI's sales surged 50 per cent, much higher than the industry’s growth, which stood at 4 per cent.

Guleria further added, “HMC has already invested Rs. 3,500 crores in HMSI and a further Rs. 1,500 crores is lined up in the new plant this fiscal. Once the 4-million capacity is in place mid-next year, we have to look at a fourth plant. But it is still some way off.”

During the last fiscal, the company delivered 2.1 million units and is currently aiming at 2.75 million units by the end of this fiscal, with scooters leading the bandwagon. In this fiscal, HMSI believes that the sales of the company will be uniformly distributed in various sectors of the industry. HMSI enjoys a decent market share of 46 per cent in the scooter segment, whereas its share in the motorcycle market is limited to 8 per cent.