Honda ‘working hard' to overtake Hero in Indian 2-wheeler arena
Motor Company has once again reaffirmed its intent to overtake
Hero MotoCorp
in India's two-wheeler arena the fiscal.
The Japanese automaker made this known at a recent Q&A session with analysts following its first quarter results in Japan. The transcript has been uploaded on the Honda website.
'We are working hard this term with the goal of surpassing
Hero
MotoCorp and becoming the best. There are some areas where we have deviated from the plan but we are on track. We will be introducing models to the market, so we will be working hard on this,' said
Eiji Fujimura
Director, Managing Executive Officer.
Last year saw a rush of demand due to the impact of OBD2 regulatory changes, resulting in a significantly high figure.Eiji Fujimura
He added that the Q1 showing in India was weak compared to the same period last year in India. 'However, last year saw a rush of demand due to the impact of
OBD2
regulatory changes, resulting in a significantly high figure.'
Masao Kawaguchi
Operating Executive, Head of Accounting and Finance Supervisory Unit, said that compared to last year, sales were about 180,000 units lower in India, but the operating profit margin had actually increased compared to the past and still in the double-digit ROS (return on sales) range.
Vietnam, Brazil offset India drawback
Vietnam and Brazil, contrast, 'have very high profit margins' which offset the decline in India. While acknowledging the risks of tariffs affecting the economies of each country in the future, 'we are confident that if India recovers steadily, countries such as Vietnam and Brazil will provide a boost, enabling us to achieve stable operating profit margins'.
Will Honda finally fulfil its long-awaited desire of getting past Hero in the leadership tug-of-war? The company cannot be faulted for not trying but its former ally has still managed to stay comfortably ahead for over 15 years now even while the gap has been narrowing down in recent times.
Also read:How Honda rebuilt its 2-wheeler brand in India after the Hero divorce
Since the time it parted ways with Hero way back in 2010-11, Honda has been going flat out to increase capacity across its plants. The Indian arm, HMSI (Honda Motorcycle & Scooter India) started operations at a single plant in Manesar, Haryana, but over the years has expanded its presence to Rajasthan, Karnataka and Gujarat. Its total capacity is over six million units and could well cross the seven million mark in the next couple of years.
Yet, the larger objective of not being able to get past Hero has been a constant source of angst for HMSI even while its leadership team has proclaimed on more than one occasion that it is only a matter of time before this is done. Perhaps, the company underestimated the strengths of Hero when it came to its huge retail network along with the twin jewels in its kitty —
Splendor
and Passion — which have kept its sales charts afire for many years now.
Activa vs Splendor
It is to HMSI's credit though that it has emerged the second largest player in India now and has even gone ahead of Hero in some months when its Activa scooter triumphed over Splendor. Other rivals like Bajaj Auto and TVS Motor have attempted in the past to overtake Hero but the might of Splendor was a little to difficult to take head-on.
There were serious attempts made by Bajaj to reboot its Discover motorcycle in different avatars but Splendor eventually prevailed and it was finally a scooter, Honda Activa, which ended up being its closest rival and even taking the top spot on some occasions.
The Splendor has a long history which has been appreciated by people in India. The product still remains good.Masao Kawaguchi
Following the split with Hero, a senior Honda official had told this writer that dislodging a brand like Splendor was not the main objective or scope of Honda's business in India. 'The more we sell in the current market, the more we will take customers from competitors. As a result, some OEM brand may see a reduction in market share or volumes. While respecting all competitors, we should create a healthy industry and market especially from the viewpoint of road safety,' he said.
He was also quick to acknowledge that many Indian buyers 'think highly' of a reliable product or brand. 'The Splendor has a long history which has been appreciated by people in India. The product still remains good,' said the Honda senior official.
Drawing more customers
According to him, the sales performance of the Activa was 'far better' than Honda's expectations. 'Additional supply also helps create more and more customers. Today even in rural areas, the scooter segment boasts of high sales. This naturally accelerates demand for our scooter range,' he explained.
Honda, continued the official, was still busy expanding capacity to meet the growing demand for scooters. 'I agree that the image of the brand is stronger in scooters than motorcycles. However, this will change over a longer time period,' he said.
Also read:Honda targets two-wheeler leadership in India this fiscal
It was also the official's view that motorcycles would remain the top preference for Indian customers. 'However, this situation may change after a decade. Year after year, the scooter is becoming more important in the market since it offers greater versatility when it comes to usage,' he elaborated.
Since the time of this interview which happened some years ago, the two-wheeler terrain in India has changed quite a bit with electric now being an integral presence. It is here that legacy players like TVS Motor and Bajaj Auto are leading the race along with Ather and Ola following behind.
Different ballgame with electric
Hero has not replicated the success it has had in the ICE (internal combustion engine) space while Honda has been a late entrant and not quite made any sizable impact yet with its Activa-e: and QC 1 electric scooters. In the ICE arena, of course, it is firing on all cylinders and keen on overtaking Hero this fiscal.
During the course of a press meet in Japan earlier this year, Honda officials had said the company would strive to become the leading player in India's electric two-wheeler market. It said it would sell its electric models in the price range where the cost of ownership for three years would be equivalent to that of ICE models.
Also read:For honda, its time has 'finally come' to race past hero
'To achieve this target, Honda will begin operating a dedicated electric motorcycle production plant in India in 2028. A wide variety of electric models will be produced by combining modules that are common for multiple models. Additionally, for batteries, Honda has been working with manufacturers to establish specifications suited to the characteristics of two-wheeler and ensure stable procurement,' said the company representatives.
Specifically on India, Honda said it would pursue various initiatives to strengthen its business including the automation of production plants and active cultivation and utilisation of local suppliers. In addition, it planned to implement efficient product strategies globally, such as exporting high-value, highly-competitive products nurtured in India to the South American market where customer needs are similar.
India as global hub
'Honda is expecting to see a further increase of motorcycle demand also in ASEAN countries, Pakistan, Bangladesh and Brazil due to an increase in the working population that overlaps with the motorcycle user population. Seizing this opportunity, Honda will further solidify its motorcycle business by fully leveraging its strengths in products as well as sales, service, procurement and production operations on a global basis,' said its leadership team at the meeting in Japan.
Interestingly, neither TVS Motor nor Bajaj Auto seems as obsessed any longer with the leadership stakes in India which has pretty much boiled down to a tug-of-war between Hero and Honda. Bajaj, over the years, has been paying more attention to its global ambitions where partnerships with KTM and Triumph are playing a key role in exploring new geographies. In addition, its own motorcycles and three-wheelers are being shipped out worldwide.
TVS Motor, likewise, has been on a global trail with brands like BMW Motorrad and Norton fuelling the cause. It also has successful homegrown brands like Jupiter and Apache which are also doing well in India and other countries. TVS has also been among the first to pick up the electric vehicle gauntlet where it is the leading player this fiscal.
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