CD makes a comeback to kick off Honda’s new India growth strategy

The venerable ‘CD’ moniker, first emblazoned on the first motorcycle from Honda’s JV with Hero – Hero Honda – the Hero Honda CD 100 – has made a comeback. It is now on the latest set of wheels from Honda Motorcycle & Scooter India – the all-new CD 110 Dream, which is the latest 100-110cc Dream series commuter bike and aimed at buyers in rural India.

The new bike is priced at Rs 41,100 (ex-showroom Delhi) for the kick/drum/alloy version and will be despatched to dealerships by mid-July, with sales beginning from August. It is the third in the Dream series, after the Dream Neo and Dream Yuga.

HMSI aims at giving a big push to the sales of its bikes (primarily the Dream series), which, as experts say, are currently faring slightly below the company’s original expectations. Competing head on with Hero MotoCorp’s primary volume sellers – the Splendor and the Passion commuter bikes – both mainly powered by the single-cylinder, four-stroke, air-cooled, 97.2cc Honda-built engine known for delivering effective fuel economy, HMSI’s latest mass commuter bike, the CD 110 Dream will run on a single-cylinder, air-cooled, 109cc engine.

According to HMSI data, this engine churns out a maximum power output of 8.25bhp at 7500rpm and a peak torque of 8.63Nm at 5500rpm (figures same as the Dream Neo). While this engine will come equipped with Honda’s HET tech, the company claims that the CD 110 Dream will deliver a fuel efficiency of 74kpl.

While Hero MotoCorp's Splendor+ (kick start, drum brakes, spoke wheels) comes for Rs 43,550, the Passion Pro (kick, drum, spoke variant) costs Rs 45,250. The cheapest commuter from the stable of Hero, however, is HF Dawn, which comes for Rs 37,900 (kick, drum, spoke model). All prices are ex-showroom, Delhi. 

The CD 110 Dream, which costs Rs 2,000 less than the Dream Neo, will be the most affordable motorcycle from the Honda stable. Along with the CB Shine that sells around 75,000 units a month and is a popular choice in rural markets, the three Dream series bikes are targeted directly at rural buyers. This is a segment where HMSI has been slow in expanding its presence but one which contributes around 28-30 percent of the company’s total sales in the India market.

With the CD 110 Dream, HMSI is taking its battle right into the mass market where rival and former JV partner Hero MotoCorp has been steadily growing its presence with mass models. This thrust will now be taken forward on a new corporate campaign of which phase  1 is ‘Honda is Honda’, which will be followed by a 360degree ad campaign across visual and print media. 

Speaking at the launch today, Keita Muramatsu, president and CEO, said: “Honda is Honda is more than just a campaign, it is the start of a new era in India. Honda aims to be an integral part of every two-wheeler customer’s emotional landscape as it fulfils the mobility dreams of India.”

Interestingly, HMSI has clubbed this launch of its most affordable motorcycle as a Wave 2.0 strategic expansion entering the basic sub-segment of the 100-110cc market which accounts for 23 percent of the overall 70 lakh units sold annually in this category. Last week, India Yamaha Motor had launched its next-generation new FZ series models – the 110cc FZ version 2.0 and FZ-S version 2.0 bikes based on its Blue Core tech that provides higher fuel efficiency. Clearly, the fight in the mass commuter segment is turning tougher.

In comparison, Honda’s new CD 110 Dream is based on Honda’s Eco Technology (HET) that has been developed by the company’s tech centre at Manesar along with Japanese engineers and will deliver 74kpl. The long seats and high ground clearance of 179mm are specially designed to handle the rough and tumble of rural India.

In terms of market share, with the new Dream series bike, HMSI is gunning for a larger contribution from rural markets and hinterlands of up to 35 percent of the total from the current 30 percent, says Y S Guleria, VP (sales and marketing). At present HMSI holds a 10 percent market share in the 100-110 cc market.

HMSI has lined up a 4E strategy for rural markets – experience, extend this experience with channel partners, expansion and engaging with the local community in their local dialect to boost sales.

In the current fiscal, sales are expected to climb to 800,000 units from the 730,000 units sold in 2013-14. Meanwhile, Honda’s stable of gearless scooters has seen handsome demand and market share has risen 2 percent between April-June 2014 to 52 percent from 50 percent in the corresponding period last fiscal. The new 125cc Activa is seeing good demand and has garnered bookings of 10,000 units within a month of its launch.

HMSI has also worked out a rural-focused organisation within its marketing arm demarcated on the basis of regions and zones to speed up its rural network expansion. Last fiscal, 800 outlets were added to the network and 1,000 touchpoints are planned for FY’15 with 150 already added in the first quarter of FY’15. An investment of Rs 1,000 crore has been earmarked as capex for FY’15, taking up HMSI’s total investments to Rs 6,200 crore from Rs 5,200 crore in FY’14.

Photograph: Keita Muramatsu, president and CEO, and Y S Guleria, VP (sales and marketing), HMSI.