Honda Motorcycle and Scooter India (HMSI), the scooter market leader and the No. 2 two-wheeler OEM in India, is set to completely overhaul its model line-up to meet upcoming BS VI emission norms. The company says that its major investments, both capex and from an HR perspective, in the short term are being done to significantly revamp the major portion of its existing portfolio, an approach it is adopting differently from the rest of the market.
While most two-wheeler OEMs are looking to incorporate electronic fuel injection (EFI), three-way catalytic convertor, an O2 sensor, electronic control unit (ECU) and an on-board diagnostic (OBD-I) module in their conventional four-stroke scooters and motorcycles, HMSI, which has a 26 percent share of the two-wheeler market, is taking a larger step and working on a major model revamp in its portfolio.
While HMSI will not only upgrade its powertrain technology to comply with the stricter emission as well as fuel efficiency norms, set to kick in from April 1, 2020, it is also working on new architectural platforms to re-energise a good number of its existing models.
YS Guleria: "Currently, all our focus is on BS VI because it not only requires a technological change in our line-up, but the models will be built on entirely new platforms too. BS VI is going to be a very big change for us."
In an exclusive interaction with Autocar Professional, Yadvinder Singh Guleria, senior vice-president and operating head - Sales and Marketing, HMSI, said, “Currently, all our focus is on BS VI because it not only requires a technological change in our line-up, but the models will be built on entirely new platforms too. Yes, there will be change in engines but along with that there will also be changes in terms of frame and chassis for the majority of our current line-up. This is what we have decided, which may not be true for the entire industry. BS VI is going to be a very big change for us."
Without quantifying any investment figures, Guleria added, “There is also the necessary tooling and equipment which is also being upgraded at our plants in order to prepare for the transition from BS IV to BS VI. This is the short-term investment for us. For the long-term, we will keep on studying about when to invest, in terms of initial capacity generation and all such parameters. Those plans are still on and we will announce at an appropriate stage once we move further into Q1 and towards Q2 of FY2020.”
Festive season to define BS VI product launches
Although HMSI hasn’t finalised a cut-off date for switching over production to BS VI, the transition, according to Guleria, “will vary from manufacturer to manufacturer and everyone will have their own strategy. This is because everyone has different number of products on offer and whether one wants to carry forward all the product lines into BS VI will be the first consideration point.”
“We believe that at least one quarter is required by everyone for carrying out this changeover. While we cannot disclose when we are going to launch our first BS VI model, suffice it to say the transition will be done over a period of time and the shift will happen in a step-wise manner,” Guleria told this correspondent.
Another influencing parameter is the infrastructural need at the service centres to enable them to cope with EFI and understand the relatively different technology in terms of maintenance and aftersales. “We need to train manpower and install the new servicing equipment at the dealerships, which is also going to take its own sweet time. We do have our plan in place for carrying that out,” said Guleria.
While the company is expecting a lot of pre-buying in Q4 of the ongoing fiscal, “The industry will need to keep a balance on how much BS IV volume one wants to carry forward. There will be some risk hedging involved. This shift will need a lot of strategy and critical planning in place, otherwise all that is extra on March 31, is dead stock.”
“The festive season of FY2020 has to play a key role in defining inventories and strategising the launch timing for BS VI in this financial year,” said Guleria.
All-new Activa in the pipeline
HMSI, which clocked sales of 5,520,617 units in FY2019, saw single-digit growth in FY2019 (+4.41%), impacted by the liquidity crisis in rural markets, increase in total cost of ownership with insurance premiums surging as high as 10 percent in the voluminous 110cc entry-level segment.
HMSI saw a 4 percent drop in sales of its best-selling Activa scooter (FY2019: 3,008,334 / FY2018: 3,154,030).
Responding to whether the Activa is feeling the heat from the competition which offers better equipment at a lower price point, Guleria said, "One thing which is still not at par with Honda is trust because customers very clearly know that the Activa, even today, offers the highest resale value."
"Even after declining 4 percent, it still emerged at the top of the Indian two-wheeler market at a time when more 100cc scooters were selling than ever before," added Guleria.
"Having said that, we do recognise that there are changing dynamics and new evolving customer needs. Since our customers have stood by us for so long, now it is time for us to give them back – I would say, just wait for the next Activa!"
Without disclosing any timeline for the launch of the new Activa, Guleria said scooter aficionados can maintain high expectations from the new product and that the company is closely monitoring new feature trends in the market. This includes a high level of connectivity.
Guleria said, "Connectivity is one of the things (on the new Activa). Similarly, there are many other new features that the customer might not be aware of and could come as a surprise. I would like to tell them, ‘Please wait for those surprises!’"
Considering that Honda is set to revamp its entire model line-up, it could be expected that it launches the next-generation Activa sometime early next year, in order to make the next avatar of the popular scooter readily available for retail across the country by April. So, if you thought scooters were taking the slow lane to growth in the next few years, think again.
Full interview with HMSI's YS Guleria appears in Autocar Professional's May 1-2019 issue