Honda Motorcycle & Scooter India Pvt Ltd (HMSI), which was predominantly a scooter maker, is now looking at strengthening its motorcycle offerings with a new mass-market entry level bike aimed mostly rural customers. For urban customers it is looking at new motorcycles for the mid-size segment, said the firm's new Managing Director, President & CEO, Atsushi Ogata.
HMSI which produces around 6.4 million units in India is also targeting to become No.1 export resource among Honda's plants globally within three years, up from its fifth position in Honda’s export pecking order currently.
The pandemic has opened up new opportunities for HMSI. "We've taken lots of cost-saving measures which will make HMSI's operations more stable and sustainable in the long term," said Ogata, who took over in May, but came to India in July.
He is optimistic about India's growth story and says one of the key drivers for growth will be demand for personal mobility as people shun public transport.
Today the company is India’s largest scooter maker. Scooters contribute around 67 per cent of its total sales.
To tap the opportunity, Ogata agrees that Honda needs to fill the gaps with new products, especially in the motorcycle segment to cater the rural market.
Of HMSI's overall network, some 35 per cent is in rural areas, but when it comes to sales, that market accounts for only 25 per cent. A key reasons for this is the lack of even more affordable motorcycles. Today its entry-level motorcycle is Honda CD 110. However it doesn't come under the most affordable category, which is now dominated by Hero, TVS and Bajaj.
"Our R&D teams in Japan and India, and our suppliers are looking at developing a product that will cater to this segment," said Ogata, while declining to give any time frame for the launch and to share other details.
The other thrust area is a mid-size sporty two-wheeler. The new product will be developed in India for the Indian market, he said.
The company has a market share of 70-80 per cent in all its markets, save China.
Competition in those markets comes from Japanese makers, not from local or Chinese firms, while in India competition is from local players.
“This is unique to India. Our market share is less than 30 per cent, so we have a big opportunity to grow,” he said adding that global strategy won't work, and they need to come up with unique, market-specific strategies for India.
On manufacturing, he said, the company's mid-term strategy of product launches and capacity additions has not changed. "We have not cut any capex or expansion plans," he said.
Due to Covid measures on safety and social distancing, HMSI's current capacity utilisation is 70-75 per cent and the company's plans to raise it further to cater the festival season demand and to cater export markets.
Of the total capacity around 3-4 per cent is currently towards exports and in the next three years it will increase “significantly”. However he did not share any numbers.
"In three year we want to be number one among the Honda plants when it comes to exports. Currently we are number five," said Ogata. He said besides capacity the other two major advantages for HMSI is cost and quality.
HMSIL traditional export markets were Sri Lanka, Nepal, markets in South America, but with BS-VI products the company is now looking at developed markets also.
On the electric vehicle, he said, today for the company it doesn't make any business sense, since for the customer cost and infrastructure still continue to be major challenges.
However, the company is looking at studying various models, including its ongoing model in Japan. The company tied-up four OEMs in Japan for complete eco-system and started catering to Japan Post. The company has supplied 2,000 EVs to Japan Post.