Everything seems hunky-dory for Honda Motorcycle & Scooter India (HMSI) since it rode into the commuter segment. The 109cc Dream Yuga, true to its name, is on a dream run notching sales of 85,000 units in just four months since its launch and is gunning for a record-specific model benchmark in its segment.
In fact, the recent announcement by Honda CEO Takanobu Ito, on September 21, confirms its India plans of striving to further grow its motorcycle business through launches of highly-competitive 100cc models. This is, by far, the largest motorcycle market segment in the country.
With its upcoming Narsapuram (Karnataka) plant, set to go on stream in the first half of 2013, new Honda models in the mass segment will get a further leg up. ‘Start small, grow big’, will be Honda’s approach to local production going forward, embedding its roots in small markets at an early stage of their growth and offering local customers with strategic models based on global resources.
In line with this philosophy, its Narsapuram plant will increase production capacity to four million units when operational with an annual production capacity of 1.2 million. However, Honda will still be way behind its immediate competitor and former partner Hero MotoCorp, which has set itself a target of touching 10 million units in five years from the existing 6.5 million and has already announced an expansion plan of Rs 2,500 crore in Neemrana, Rajasthan and in Gujarat.
Keita Muramatsu, president and CEO of HMSI, in an interaction with Autocar Professional earlier this year, had said: “What is more important than quantity is quality and customer satisfaction, specifically quality products and the quantity of sales and service and we wish to improve them still further.” But with Hero MotoCorp on a growth path, HMSI cannot be too far behind. It has to step up its scale of operations speedily to come anywhere close to Hero before it can overtake the leader.
Gunning for big sales
Relying heavily on the Dream Yuga, HMSI is gunning for sales of 300,000 units of this model in FY13 with overall sales pegged at 2.75 million and a 30 percent growth forecast for the current fiscal. According to Y S Guleria, vice-president, sales and marketing, HMSI is on target with sales of 1.11 million so far.
HMSI has grown 51 percent between April and August this year over the same period last year while the automotive industry has been struggling with flat growth. Pending Dream Yuga bookings are believed to be close to 3,500 as of now and with HMSI in preparedness at the backend to immediately respond to market requirements, the manufacturer has enough capacity both at the plant as well as at its vendors’ end. Production ramp-up, by 50 percent, has just been completed in early September to reach 1,200 units per day to meet rising demand for the Yuga.
Since the Yuga is the first commuter segment bike for Honda, new models are expected to follow suit. The company’s vision 2020 is to attain leadership position in the two-wheeler market and hence the need to piggyback ride in the volume market.
Guleria feels it is imperative that HMSI looks at each and every segment while expanding its product range and dealer network across segments. He is aggressively targeting expansion of service and dealer networks to 2,000 touchpoints and 650 dealers in FY’13 from the current 550-plus dealers and 1,600 touchpoints to make this possible.
There are a lot of expectations from the Dream Yuga while Honda has completed expansion at Tapukara in Rajasthan for the 125cc CB Shine bike that is averaging monthly sales of 50,000 units. In the 150cc segment, the CB Unicorn has shown a 100 percent growth over the last year and is a promising prospect as a growth driver. This makes Honda confident of turning the equation between bikes and scooters to an almost 50:50 ratio this fiscal from the 60:40 for scooters and bikes recorded last year.
Localisation will play a key role in this gameplan as Honda indigenises further from 90 percent to over 95 percent in future. However, sports models like the CBR series, being based on common international platforms, continue with their high import content.
Meanwhile, waiting periods for popular models like the Honda Activa scooter, and CB Shine and CB Unicorn that have a week’s wait in certain markets will shrink further after the commissioning of the third plant. But the Tapukara expansion has removed some of the blips in capacities as exports are pitted to rise from 110,00 units last year to 145,000 units in FY13 with the CB Twister, Shine and Stunner leading the race in 50 markets including Sri Lanka, Latin America and the European Union.
So what should the customer look forward to from Honda this festive season? More value-added services rather than discounts is what Guleria is looking at while Honda will benefit from increased footfalls and natural retail movement at outlets.