Honda Motorcycle & Scooter India (HMSI) is all set to commence local assembly of the CBR650F superbike in India. To kick off production at the Manesar plant in Haryana after 2 months, the CBR650F will have an initial run of two bikes per day with the number to grow based on demand. This big bike is likely to be rolled out in August as the two-wheeler manufacturer gears up for new product launches in June, July and August.

The CBR650F will have 95 percent import content with the remaining 5 percent constituting locally sourced small components. The volume of production and localisation will be ramped up in a phased manner with enhancement of worker skills and as local parts sourcing spikes up in line with stringent quality norms of the company, Keita Muramatsu, president and CEO, HMSI and president, Honda Motor India, said at a select media interaction in New Delhi today.

This will be the first time that a four-cylinder superbike of Honda will be locally assembled in India. The Benelli TNT 600i and TNT 600 GT that are currently assembled in India have however beaten Honda on that score.

To start with, the CBR650F’s in-line four-cylinder engine will be imported as a completely built unit along with other components from Thailand. Starting with a local content of just 5 percent at the time of launch, it will be stepped up in stages. HMSI has a long-term localisation strategy in place as it pushes for adding more locally assembled higher displacement engine bikes to its India product basket. A waiting period is also on the cards for the CBR 650F with the limited volumes that are to be produced at Manesar initially before further ramp up.

In an exclusive interaction with Autocar Professional, Muramatsu said that localisation of the CBR650F is not going to be easy and the next step would entail localising the frame parts, press parts and also the seat so that there is no further need to import these components.  “There will also be need for further investments like in a paint shop and a unique assembly. Our normal production has a very high tack time with one model produced in just 22 seconds. If we produce the big motorcycle on the same line for instance, maybe production of 400 Activa scooters will have to be reduced. Therefore, we will have to invest for a big motorcycle factory for increasing localisation of the larger bikes after the success of the CBR650F. We need more volumes to breakeven and invest in another factory for big bikes and we have started calculations for it,” he elaborated.

For this it would be imperative to start assembling the engines locally as well. But jumping from a single-cylinder to a four-cylinder engine is a big step forward as well. The HMSI chief also remarked that the company is looking to bring in higher-displacement bikes – above 1000cc – in a phased manner, once the CBR650F gets decent traction in the Indian market.

The next big bike for the company is likely to be brought from Japan over the next 1-2 years. As the superbike market in India is still in a nascent stage with imports making products very expensive, the next stage could well involve localising bikes that are currently imported as CBUs.

Muramatsu had at the inauguration of HMSI’s Tech Centre at Manesar last year told Autocar Professional that Honda would look to bring its higher displacement bikes to India. He now pointed out that localising the Honda CBR 1000 could be looked at next.

Meanwhile, the base development of the CBR 650F was undertaken at Japan two years ago with further adjustments to meet Indian regulations made at the Manesar Tech Centre.

On the retail front, the CBR650F will be sold and serviced through a new Shop-In-Shop distribution format in 20 high priority cities in India. Five HMSI personnel, who have received training in Japan on this motorcycle, will further impart training to service staff at outlets to handle the new product. The shop-in-shop concept will come up at existing outlets and will include setting up of new bays for servicing and repairs in workshops and hiring of additional skilled staffers for it.

HMSI, which sold a total of 44.5 lakh two-wheelers in 2014-15, is targeting sales of 47 lakh units this fiscal. The company’s growth mantra is ‘retain, expand, create’ this fiscal. Given the slackening rural market demand due to unseasonal monsoons, the company is also gearing up to handle market shifts and juggle production. It is creating 800,000 units flexibility between motorcycles and scooters in its plants. The company expects demand for scooters to grow further this fiscal with the existing scenario continuing. At present, scooters account for 59 percent of its total two-wheeler sales. HMSI expects this figure to grow by another 5 percent to 64 percent, according to YS Guleria, senior VP (marketing and sales).

Based on its growth strategy, Honda is pitching for sales to 64 lakh customers by end CY 2016 and increase of production capacity by 39 percent in two years. While the Activa scooter and the 125cc CB Shine continue to be its best sellers in their respective segments, it will blitz into a new segment with a new model to be exhibited at the Auto Expo 2016, says Muramatsu.

Aggressive new model game-plan for 2015
Meanwhile, the company is going ahead with its aggressive 15-model launch programme for CY2015 that it announced at the start of the year of which 7 are to be new platforms. In the first four months of the year, 6 models have already been rolled out starting with the new CB Shine, CB Unicorn 160, new Activa 3G scooter, Dio scooter and the Dream Neo commuter bike. The remaining 9 models are set to be unveiled in the second half of the year. Expect another six bikes and three scooters from HMSI of which four are likely to be new models, say officials. Three new models have already been launched and the others will further diversify the company’s product basket. A constraint however is the current production capacity at the three existing plants that are operating at peak levels.

While there is no spare capacity at the Tapukara and Manesar facilities, Honda is to expand capacity at its Narasapura plant in Karnataka by adding 600,000 units, which will augment total capacity from the existing 1.8 million units per annum to 2.4 million units per annum. The expansion programme will begin in mid-2016 and wrap up by the end of the year. In 2015-16, the company plans to invest Rs 1,775 crore in the construction of the new 12-lakh capacity Gujarat plant (which will go on stream in January 2016) and in new model development. This will also be the world’s largest scooter plant according to the company.

The new Gujarat plant once it goes on stream in January 2016 will take up the company’s sales to 47 lakh two-wheelers compared to 44.5 lakh notched in 2014-15. The lower growth is attributed to utilisation of existing capacity and addition of new capacity only in 2016.

The current fiscal will also be marked by strengthening of the company’s distribution network with the addition of 800 sales and service touch points taking up the total distribution network to 4,600 outlets.

The company notched one of its best performances in FY’2014-15, “with Honda alone contributing 60 percent to the 11.8 lakh volumes increase by the industry. We have carried the same momentum into FY2015-16 by becoming the highest market share and volume gainer in April,” claimed Guleria.

Honda closed 2014-15 with a gain of 3 percent in market share and grew 20 percent. HMSI contributed 25 percent to overall Honda sales globally of over 17 million units and is targeting the number one position within two years. At present Indonesia stands at number one with the Indonesian market stabilising and the Indian two-wheeler market on the rise, India is expected to overtake Indonesia in terms of contributing to Honda’s global sales underlining the importance of India in Honda’s global game-plan.