HMSI Is Riding The Two-Wheeler Growth Wave

Interaction May 2018 HMSI Honda Two-Wheeler Growth Wave
HMSI Is Riding The Two-Wheeler Growth Wave

Honda Motorcycle and Scooter India Pvt Ltd (HMSI) has been steadily moving up the sales charts and gaining ground in the scooter as well as in the motorcycle segments. The company recently claimed the number one position in 15 states and two union territories, and its best-selling Activa brand has emerged as the largest selling two-wheeler in India. Auto Tech Review caught up with Minoru Kato, President & CEO, HMSI, to discuss about the company’s future roadmap and Honda’s India plans.

STRONG MARKET CREDENTIALS

HMSI is well acquainted with its Indian customers – its 26-year partnership (ending in 2011) with Hero paved the way for it emerging as a market leader in the 100 cc commuter segment with the Splendor. Its foray as HMSI, a wholly-owned unit in 2000, saw the Activa becoming an instant hit with customers and continues to set new benchmarks for the scooter segment in India. Kato said that he is excited about the growth opportunities offered by the Indian market.

HMSI added one million incremental sales last fiscal, posting a 22 % growth over the same period. This emboldened the company to announce an investment of around ` 800 cr this year to ramp up its India presence.

The company’s India operations are the largest in the world and it comes as no surprise that customers are lapping up HMSI’s products at record rates. The company intends to reward existing and potential customers by announcing this year that a brand new model will be added to HMSI’s India line-up and 18 new upgrades will be carried out across product segments. HMSI set the ball rolling by launching the X-Blade 160 cc motorcycle in March this year. The bike is expected to bridge the gap between the CB Unicorn 160 and the CB Hornet. From a network perspective, HMSI would be expanding it to 6,000 touch points by the end of this fiscal.

With replacement period of two-wheelers coming down from 5-7 years to 3-5 years, Honda’s existing customer base of 36 mn is expected to drive new growth opportunities. Looking to dominate the two-wheeler market in terms of customer satisfaction, Honda will introduce a customer loyalty programme – Honda Joy Club – this year, Kato said.

BUSINESS PLANS

Given the increasing demand in both domestic and export markets, Kato said the company is working towards scaling up its current production capacity as well as expanding its sales and service across rural areas. HMSI has a production capacity of 64 lakh units per annum from all its plants and its current capacity utilisation is 61 lakh units per annum. With expansion, the company’s capacity is expected to go up to around 67 lakh units.

As part of future preparedness towards meeting the new BS VI norms in 2020, Honda’s cross-functional BS VI taskforce from sales, engineering, R&D, purchase and quality has been proactively working on the primary objective of strengthening quality, product planning with cost competitiveness. Honda has initiated the modernisation and unification of production activities across all plants. This will help Honda reap the benefits of higher productivity with efficiency and product quality matching world standards, Kato said. The company has proactively announced its BS VI roadmap with its suppliers to ensure a smooth and timely product portfolio upgradation.

Talking about a specific technology, Kato mentioned that BS VI OBD-2 will be introduced in India from 2023. It generates an error code if the emission management system does not work efficiently. HMSI is looking forward to the introduction of this feature in their vehicles, once mandated.

Volume-wise, HMSI is the biggest contributor to the parent company in Japan and its export volumes are currently around 300,000 units a year. Going forward, Honda Motor Japan expects to increase export volumes from India after the introduction of BS VI emission norms. Kato said that HMSI has drawn up plans to further open up its export markets post 2023. Honda globally has several export hubs in Japan, China, Thailand and Vietnam, depending on the model and emission norms. India will be one of the candidates to become an export hub after 2023, he stated. The company currently only exports to neighbouring countries from India.

THE ROAD AHEAD

Electrification trend is catching up in India and HMSI is engaged in talks with SIAM (Society of Indian Automobile Manufacturers) to create a sustainable roadmap towards the conceptualisation, development and production of EVs. The company currently has no plans to venture beyond the ICE segment. Kato said that the cost-quality ratio will play a critical role in defining the future of EVs in India. However, he is confident that once there is clarity about the government policies regarding charging infrastructure and battery technology, Indian customers will be quick to lap up this form of mobility.

HMSI today is well sorted in the 110-160 cc segment in India, and it plans to tread cautiously with regards to bringing in higher displacement products. Producing these products or even bringing them as CKDs will not be commercially viable given the low demand and limited market potential, Kato signed off.

TEXT: Anwesh Koley