HMSI FY23 turnover crosses record US$ 3.08 billion, profits hit a peak of US $223 million

Honda Motorcycle & Scooter India has posted over an 87 percent increase in profit after tax for March ending FY23, as higher operating leverage and cost reduction exercise helped the Japanese two-wheeler major to post its record profits.

The net profit for FY23 stood at Rs 1862.18 crore or US $223 million versus Rs 999.82 crore net profit posted by the company in FY22. A 14 percent increase in volumes for the last fiscal year drove the revenues to Rs 25,615.22 crore or US $3.08 billion, registering a growth of 21 percent, as per the financials sourced from market intelligence firm Tofler.

Noting the key performance highlights for FY23 earnings, the Director’s report stated bringing the synergies of new product development to catalyse consumer sentiment while unlocking new capabilities in areas like exports business, HMSI continued to move ahead in FY23.

"While the first quarter was about driving optimism across dealer networks and markets in view of the staggered reopening of the economy, the second quarter hinted towards growth as we entered the festive season with renewed spirits. Rising resiliently above past challenges, the third and fourth quarters witnessed green shoots of progress while closing FY23 with sales of 4.3 two wheelers," recapped the note.

Building India as a key exports base

With an aim to establish India as a global export hub for Honda, the company had established its new Overseas Business vertical by integrating its SEDBQ (Sales, Engineering, Development, Purchasing & Quality) functions in FY22.

On the overseas export’s expansion, during FY23, HMSI commenced exports of its 125 cc motorcycles to Australia and New Zealand. HMSI also made its first foray into the African continent by starting exports of Unicorn to Nigeria.

Defined EV roadmap

On its EV business, the company announced its EV roadmap for developing EV business structure in India, which includes new EV technologies and infrastructure. The company also announced its future business direction for expansion of overseas business and production capacity in the upcoming financial year.

The company had announced an entry into EV space in March 2023. Autocar Professional had reported that the company is readying an ambitious plan of introducing 10 all electric two wheelers in the coming decade, that will cater to the entire spectrum of zero emission vehicles in the future.

Honda Motorcycle will be amongst the last key mainstream players to enter the EV market in 2024, however, it may be the first Japanese two-wheeler brand to enter the fledgling EV market which is witnessing rapid adoption.

To kickstart the electric vehicle gameplan, the work on two projects codenamed - GJNA and K4BA has already started. One of them is the Activa Electric which will be based on a fixed battery construct, whereas the other is a Moped which will come with a swappable alternative.

The first EV from Honda Motorcycle will hit the roads in March 2024, followed by another model in September 2024. Both these models have been developed with a volume of the potential of half a million units cumulatively over a three-year period. As more models are introduced till 2026-2027, the maker of Activa and Shine hopes to take up volumes close to million units.

As part of its clean energy initiatives, Honda Motorcycle inaugurated its third wind turbine system in Jagalur - Davanagree district in Karnataka.

Expanding dealership footprint

On its premium motorcycle business - HMSI stated that the company has further strengthened its Silver Wing business with inauguration of its 100th touch points - across both Big Wing Topline (for entire premium motorcycle range from 300 cc to 1800 cc models) and Big Wing (exclusively for mid-size motorcycle segment) retail formats, stated the company.

Like FY22, the company has rapidly expanded its network to cater to urban and rural areas by opening 18 new authorised main dealers, bringing the total count to 1037 at the end of FY23. Additionally, the company has established 167 additional associate dealers and 252 authorised service centres, taking the secondary network to 5071.

The Director’s report informed that the company achieved the number 1 position in the Dealer Satisfaction Survey conducted by Federation of Automobile Dealers Association for the second year in a row.

Reviewing the business and sales milestone - the company informed that it inaugurated a new zonal office in Kochi - one of the biggest two wheeler demand centres of Kerala. The new Kochi zonal office is the 24th zonal office in the country for HMSI.

Building market share

Overall, HMSI closed FY2022-23 with total sales 4,350,943 units. This includes domestic sales of 4,025,486 units and exports of 325,457 units. Noteworthy, Honda Motorcycle & Scooter India registered a 14 percent year to date growth in FY’2022-23.

During FY23, Honda Motorcycle & Scooter narrowed the gap with Hero MotoCorp for the number 1 two-wheeler maker spot. The incremental volumes of the new 100 cc shine helped the company hold on to its 25 percent share, whereas the market leader saw its share drop about 150-175 basis points to 32.5 percent, which was the lowest ever share for Hero.

In the scooter segment, Honda Motorcycle & Scooter India saw a marginal slip in share to 46.61 percent from about 48.31 percent whereas the brand remained absent from growing electrification space, which has gathered steam in the market place.

The company last year had entered a sizable 100cc segment with the launch of the Shine 100 to challenge Hero MotoCorp yet again to make a dash at the number 1 two-wheeler makers slot, which brought in incremental volumes.