Honda Motorcycle & Scooter India (HMSI) doesn’t appear to be in a rush to grab market share, despite having a behemoth such as Hero Honda Motors to compete with.
True to the Japanese philosophy, Honda’s two-wheeler business in India is poised to grow “step by step” but no indications are available yet on the quantum of investments planned for the near future.
At present, HMSI’s dealership and service network are just a little over a fourth of Hero Honda’s. It has a single product in the 100-110cc space whereas Hero Honda is a well-acknowledged leader in the entry-level bike market. HMSI’s presence in semi-urban and rural areas is also minimal at present whereas Hero Honda rules these territories.
By president and chief executive officer Shinji Aoyama’s own admission, the semi-urban and rural market account for just a third of bike sales for the company now with 2/3rd of sales coming from urban areas. “But this situation is expected to be reversed in the coming decade, when semi-urban and rural areas will account for 2/3rd of bike sales. We need to scale up our presence in these markets....at present we have negligible presence here”.
Nothing at HMSI will move in a hurry, though. The second manufacturing plant at Tapukara (Rajasthan) is geared to produce 6 lakh units annually and should commence production in the early second half of 2011, but will have to be expanded almost immediately to 12 lakh units. HMSI’s total investment in India will stand over `2,000 crore by then. Aoyama acknowledges the challenges ahead, saying sales and service network will be enhanced from 1,200 to 1,500 outlets and investments will come in for expanding further. But he expresses his inability to share investment details for the future, saying HMSI is aiming to take market leadership only a decade from now.
Meanwhile, Aoyama is moving to Japan for a larger role in Honda’s global motorcycle business. He is credited with adding 70 lakh new customers to HMSI and is launching the second manufacturing plant at Tapukara.The new incumbent, Keita Muramatsu, will have to add capacity at a furious pace to keep up with market dynamics as there will eventually be a shift towards bikes instead of the focus on ungeared scooters at present.
HMSI hopes to close this fiscal with 16.5 lakh units, a 30% jump over 2009-2010.
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