How Honda plans to race ahead of Hero to no. 1 position

How Honda plans to race ahead of Hero to no. 1 position
Honda Motorcycle and Scooter India (HMSI), currently a distant number two in the two-wheeler space, has laid out aggressive plans to race ahead of its erstwhile partner, Hero MotoCorp.

The two companies dissolved their partnership in December 2010. Two years down the line, HMSI has already dislodged domestic auto major Bajaj Auto as India's second biggest two-wheeler maker.

Here's how Honda plans to topple Hero from the pole position:

Focus on motorcycles: Honda's overall market share in the two-wheeler space is close to 19 per cent, but its share in total motorcycles sales is only 11.6 per cent compared to Hero's 53.3 per cent and Bajaj Auto's 24.5 per cent. To increase sales, Honda has become aggressive on new product launches, post its divorce with Hero. It launched a 150 cc bike, CB Trigger, this week.

The shift in strategy is clearly evident in numbers. In February, motorcycle sales jumped 31 per cent (from the corresponding month last year) to 1.08 lakh units, while scooter sales dropped 2.51 per cent to 1.2 lakh units.

New launches: Honda plans to launch three-four products every year. The company needs 2-3 entry level products (100 cc) in the motorcycle category. It has already launched the 100 cc Dream Yuga and plans to launch more to take on Hero's successful bikes such as Splendor and Passion.

Cutting edge technology: Honda is introducing technologies that no other company offers, YS Guleria, vice president (sales and marketing) at Honda Motorcycle & Scooter India, told NDTV Profit on Friday. Honda has launched the combi-brake system for the first time in the 150 cc category. Earlier, it had launched the Unicorn that had a single suspension. Customers will be surprised by the overall package, Mr Guleria added. (Watch: How Honda plans to topple Hero)

Capacity expansion: HMSI's new Bangalore factory, with a capacity of 1.2 million units, is likely to be operational in the next three months. This will help Honda hit a target of 4 million (39.3 lakh to be precise) units in the fiscal year 2013-14 and close to the number one position, Mr Guleria said. Hero, which sold 6.24 million two-wheelers in FY12, is likely to end FY13 on a flat note.

Expanding network: The success of Hero has often been attributed to its entrenched network of dealers spread across the country. Hero has an enviable 5,000 touch points across India.

HMSI is expanding its network aggressively. "We are inaugurating one-two touch points every day to reach the hinterland," Mr Guleria said.

According to the latest (February) sales data, HMSI's market share increased by 130 basis points from last month to 19.3 per cent, while Hero's share declined by around 140 basis points. Bajaj Auto's market share remained stable.

For fiscal year-to-date, Hero retains the number one slot in the domestic market with a 43 per cent share, while HMSI has an 18.6 per cent share. Bajaj Auto has an 18 per cent share.

When Honda split from Hero, Shinji Aoyama, the-then president and CEO of HMSI, announced that HMSI will become India's number one two-wheeler maker in a decade. For some analysts, that was a tall claim given Hero's dominance in the domestic market - it is also the world's largest manufacturer of two-wheelers.

Mr Aoyama, who has since moved to a senior position in Japan's Honda, said earlier this week that HMSI could become the number one two-wheeler maker in India by 2015-16 even if the current slowdown continues.

This time around, analysts are taking HMSI's claims more seriously.

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