There is a sense of a new dawn at Honda Motorcycle & Scooter India (HMSI), the wholly owned two-wheeler subsidiary of the $92-billion Honda Motor Company, after the latter’s separation from the Munjal family-promoted Hero group. “The challenge has become bigger,” says Shinji Aoyama, president and CEO of HMSI. “We need to hurry up to change our product portfolio. We aim to be No. 1, but it will take time, maybe a decade.” Aoyama is not being modest, just practical.
Having severed the umbilical cord with Hero — Honda will continue to support Hero with technology for new bikes and spare parts for existing bikes up to 2014 — HMSI is now free to plan its future independently. But turning No. 1 bike-maker is easier said than done. Experts are divided in their opinion. “Honda will command respect, but it will be very difficult for it to be No. 1 in India on its own,” says automotive expert Tutu Dhawan. Angel Broking, on the other hand, is bullish: “We expect the domestic two-wheeler segment to record a compound annual growth rate (CAGR) of 12 per cent during FY2012E. However, we expect HMSI to increase its market share going ahead at the expense of Hero Honda, Bajaj and TVS.”
For now, the picture HMSI paints for its path ahead seems more tactical than strategic. Next fiscal, the company — No. 3 in motorcycles and No. 1 in scooters — will only launch one new scooter and a 250-cc bike. It will focus squarely on meeting the huge demand for scooters; there are waiting periods stretching from two months to eight months for products such Activa, which it plans to address with the imminent launch of its new, 600,000-unit plant in Rajasthan. It will launch commuter bikes — low-frills, conservative bikes of 100-cc displacement, which make up the bulk of the market — later.
The More, The Better
Overall, HMSI has four motorcycles in India — the 110-cc CB Twister, 125-cc Shine and Stunner, and the 150-cc Unicorn (not counting the high-end 1,000-cc-plus bikes like CB1000R, CB1000RR and VFR1200F). Including variants, HMSI has 11 motorcycles. Hero Honda has eight bike brands (a total of 14 including variants). Bajaj Auto has four motorcycles and 11 variants. However, HMSI doesn’t have a single commuter motorcycle, a segment Aoyama calls “the centre of Indian customer demand”.
Motorcycles comprise three-fourths of the 10-million unit two-wheeler market in India, of which commuter bikes comprise 72 per cent. More than 70 per cent of this segment is owned by Hero Honda, through models such as Splendor, Passion and CD-Dawn (Splendor sells more than a million a year). The No. 2 player in this segment, Bajaj Auto, has 27 per cent share, with Discover 100-cc selling more than 800,000 units annually. Another strong player is TVS Motors, which has 7.5 per cent market share in the segment, with three bikes — the 100-cc Star City and Sport, and the 110-cc Jive.
HMSI has only one product in this segment, the Twister, which sells about 160,000 a year. Aoyama is satisfied with this number, and says Twister is “too stylish for normal people to accept, and not designed for the mass segment. We will bring in no-frills, conservative 100-cc bikes to India”. He adds that bikes like Twister will see more takers in future, but the core of the market will remain in the conservative bikes.
