HMSI targets 20% growth in FY18, aims for 6 million sales

Honda Motorcycle & Scooter India (HMSI), which became the first-ever subsidiary of Honda to sell 5 million units in a single fiscal year, is bullish on growth in India, particularly in view of the emission norm upgrade by April 2020.

Speaking today in Mumbai, Minoru Kato, the newly appointed president and CEO of HMSI, said: “The Indian market today is at the cusp of its biggest-ever paradigm shift. It is going to see substantial change in 3-4 years. BS VI norms will make India quality match the world’s most stringent quality standards. Honda’s vision is to build exponentially over our solid foundation. Our new business direction is to be leading in India and the world, with quantity and quality.”

“BS VI holds a big opportunity for Honda. It will help our Indian  operations become Honda’s export hub of the world,” said Kato.

To meet BS VI norms, HMSI will bring in advanced technology like PGM-FI (Programmed Fuel Injection), which is Honda’s proprietary digital electronic fuel injection system employed for internal combustion engines. This system helps inject the specific amount of fuel per cylinder based on specific engine data.

HMSI has set up a high-level BS VI task force which is cross-functional and sourced from different divisions like sales, engineering, R&D, purchase and quality to lead the migration into the BS VI regime. The focus of this task force is on strengthening quality and product planning with cost competitiveness.  

With BS VI acting as a technology leveler to exports to markets worldwide, HMSI is looking to substantially increase its exports. In FY2016-17, the company crossed the 300,000 unit mark, up 41 percent year on year.     

To launch 4 new models in FY18, 6 million sales targeted
HMSI also revealed plans to launch four new models – two automatic scooters and two motorcycles – in FY2017-18. The first of these is the Africa Twin with DCT, trail assembly of which has begun in India.

Honda, which is the No. 2 two-wheeler player in India after Hero MotoCorp, sold a total of 4,725,067 units in the domestic market (+10.30%) and exported 283,163 units (+41.72%), thereby crossing the 5-million units mark for the first time in a fiscal. HMSI produced a little over 5 million units (5,044,518) across its four plants with an overall manufacturing capacity of 5.8 million units. 

According to Kato, HMSI will also drive future business from the large pool of 30 million existing customers in India. This is in view of the replacement period of two-wheelers coming down to 5-7 years. 

For FY2017-18, the company has targeted all-time high sales of 6 million units. To facilitate this growth, the company will expand manufacturing capacity by 600,000 units at the fourth assembly line in its Karnataka plant by July 2017, taking cumulative capacity to 6.4 million units. 

Honda, which has till now invested Rs 7,800 crore in its two-wheeler manufacturing programme in India, is to invest an additional Rs 1,600 crore this fiscal, which includes Rs 1,000 crore to expand capacity at its Karnataka plant.  

New IPR division
In a bid to enhance its technology leadership in the country, HMSI is also setting up a new Intellectual Property Rights (IPR) division to protect Honda's technology and design in India and allied export markets. It is understood that Honda has over 5,000 patents globally, more than any two-wheeler manufacturer worldwide, with about 400 from its India operations. Honda has already applied for a patent on low rolling resistance tyres, which have been introduced on the Livo and CB Shine SP models. 

HMSI is expected to benefit from the expected return of good times for rural India this fiscal. The IMD has forecast a near-normal monsoon, which would translate into improved fortunes for the farming community and in turn sales of commuter motorcycles. Furthermore, rapid scooterisation across both urban and rural India will continue to pay dividends to Honda which is the scooter market leader by a huge margin.