Minoru Kato: 'Commuter motorcycle consumers are still playing it safe.'

Minoru Kato, who took charge as Honda Motorcycle & Scooter India's president and CEO from April 1, 2017, reveals Honda’s strategies and growth outlook in the booming Indian two-wheeler market. 

In this interview, he talks to Sumantra B Barooah on growing the company in a highly competitive environment, sustaining the leadership in scooters, challenges in selling commuter motorcycles, and electric mobility.

How do you plan to take the growth story forward for HMSI?The motorcycle market in India still has big potential to grow further. We have plans to expand our overall sales volume. On the other hand, since starting operations 17 years ago, HMSI has witnessed rapid increase volume-wise through a growing sales and service network.

So now we want to focus on not only volume but also quality. Not only our product quality but also the quality of daily operations to take care of customers at our dealerships. That's our first priority – to maximise customer satisfaction. Otherwise, there's no meaning by being number one in terms of volume.

Honda has established itself as a strong leader in scooters. The segment is growing. What strategy are you adopting to protect HMSI's position?
We don’t want to say protect. We're very much open to competition. Many manufacturers have jumped into the scooter market. That’s good. It will accelerate the scooter category. Once a customer rides the scooter, that is another chance to increase Honda's presence.

What is your outlook for the scooter segment, which already contributes to over a third of the domestic two-wheeler industry?
It is difficult to say the exact numerical figure, but you can see even rural India, where a lot of the infrastructure is getting better and of course in what we call semi-urban cities. The number of female customers is increasing, and customers' income level is going up. Then, there are many customers who already have a motorcycle but buy a scooter when they need an additional two-wheeler to commute.

The Activa 5G, a new version of best-selling two-wheeler unveiled at 2018 Auto Expo, gets a full-LED headlamp and position lamp. 

On the motorcycle side, HMSI is doing well in the 125cc and above segments. The Shine is the leading 125cc motorcycle. But HMSI is not doing that well in the 100-110cc commuter motorcycle segment with the Dream series. Is that your focus area to improve performance now?
Sales are stable as we expected. But as you know well that this segment is dominated by our competitor which was once Honda’s joint brand. Many customers still believe that the Splendor is a Splendor with Honda’s technology. That kind of legend still exists and is still very much strong in rural India. So, that’s a reality.

R-L: YS Guleria, senior VP (Sales & Marketing); Minoru Kato, president and CEO; Shinji Aoyama; Takahiro Hachigo, president, CEO & representative director;  Noriaki Abe, chief officer for Motorcycle Operations and Yoshishige Nomura, president & representative director, Honda Motor Co.

Are consumers still buying a Splendor thinking it to be the same old Splendor?
We have been expanding our sales and service network in rural areas. Then gradually our Dream series' strength and benefits against our competitors will gradually penetrate. Once the customer rides our Dream series, she or he can understand Honda’s benefit. But still, the customer is playing safe and shying away from trying an alternative brand.

Do you plan to have more presence for Honda in the midsize segment, which is witnessing some good growth?
Yes, of course. But, as of today, please wait. It is to be expected at the right time.

You showcased the PCX electric two-wheeler at Auto Expo. India is going the electric mobility way. When can we expect an electric two-wheeler from HMSI?
So far, there’s no plan. We have just started discussions with the two-wheeler technical committee at SIAM (Society of Indian Automobile Manufacturers) to prepare our roadmap, to discuss with the government about setting the roadmap, to develop infrastructure/ regulations.

So, depending on the roadmap, by collaborating, by discussing with the government, accordingly, we are going to prepare by utilising our technology like PCX Electric. But still, as of today, we can say it is very difficult to meet customer’s expectations. For example, because of limited space in the case of motorcycle or scooter against a car. Setting a balance between performance and range make it challenging to meet customer’s expectation. And, of course, there’s cost. It seems it will take some time to improve everything – performance, range and cost, and strike the best balance to provide to the customer.

Honda showcased the PCX Electric scooter at the Expo. 

Has your R&D team started working on electric mobility?
The developments are taking place in Japan. In India, the responsibility is to get the customer's voice or get the competitor’s situation and government discussion.

Are you conducting any kind of market survey?
Yes, we have been doing it by utilising this opportunity to display the PCX Electric (at the Auto Expo) to get customer feedback.

Independently, since when are you conducting market research?
Since the past five years.

HMSI has become Honda’s no.1 subsidiary globally. What steps are you going to take to ensure that it remains no. 1?Depending on the other countries' situation and of course India’s economic growth. So the expectations of Honda Motor headquarters from India are getting higher. That is our next challenge!

At what rate do you expect the two-wheeler market to grow in India in the next 2-3 years? We are already 18 million now.
Growth during this fiscal year looks like very good because of low base effect due to demonetisation. That is an unusual figure. But, of course, one can expect further growth but the growth rate will be back to the normal. Then there are new regulations like brake norms and BS VI coming soon. Because of that, the total market itself may struggle to grow, but from a long-term point of view, India still has big potential.

(This interview was first published in the March 1, 2018 issue of Autocar Professional)