8/4/2019 Hero Honda 2

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Whenthe plantbecomes opera-tional in September-October 2011,thecombinedcapacityatthetwoman-ufacturingunits—theotherbeingatManesar(Haryana)—wouldincreasebyaround37 percentto2.2million

unitsperannum.HMSI’sManesarfa-cility hasthecapacitytorollout1.6

millionunitsonanannualbasis.Theadditionalcapacity,thecom-

panyadmits,wouldnotbesufficienttofullybridgethe gapbetween de-mand and supply. HMSI products,atpresent,have a waiting periodranging from six weeks to sixmonths.Thecompanytakes,forin-stance,aroundsevenmonthstode-liveraHondaActivainsouthIndia.HMSIisconsideringathirdfacility,likelytobesetupinthesouthernorthewesternpart ofthe country, tospeed up delivery of products.Aoyama pointsout, “TamilNadu,Andhra Pradesh, Keralaand Kar-natakaaccountfor30percentofthe

overalldemandfortwo-wheelersinIndia.Together, southand west In-diarepresenthalfofourbusiness.Itdoes not makeanysenseforus tolimitour presence tonorthIndiawhen the business is spreadingacrossthecountry.Itisanaturalde-

cision to move south to ensurespeedydelivery.”Thedemand-sup-plymismatchisexpectedtobelev-eled over thenexttwoyears.

Industryinsidersalsoraisecon-cerns over Honda’sabilitytoput inplaceadistributionnetworkthatcantakeonthemightofHeroHondaand

BajajAutowhich have4,500 and3,600 touch points respectively.Rakesh Batra, analyst, automotivepractice,Ernst &Young, informs,“Hero Honda has cultivated mar-keting initiatives at the grassrootsleveloverthe last30years.Togrowvolumes,HMSIwouldhavetoreachouttocustomersinruralareas.Thecompanyalsoneeds toputin placeacost-effectivesupplychainforde-livering products.”

HMSIhasadistributionnetworkof800 dealers and sub-dealers. Thecompanyplanstoaddon100outletsinthe currentfiscal andan averageof200newsalesstationseveryyear.

Rattansays,“Itiseasytosetupa deal-ernetworkbutdifficulttoensurequal-ityservices.Eachofourbusinesspart-nersisthecontrollerofmarketingac-tivitiesinhisownplace.Wehaveded-icatedpeoplewithspecificskillsandthey arenotmereinvestors.Oursis

asmallerbutasuccessfulmodel.Weaveragesalesof2,000unitseveryyearfromeachoutlet.”

Alsoto be addressed appropri-atelyareissuesrelatedtostrainedin-dustrial relations which haveplaguedHMSI.Soon after thean-nouncement of thesplit withthe

HeroGroup,production cameto ahalt atthe Manesar factory onDe-cember 17 lastyear whenworkers

protestedanallegedassaultonaca-sual worker bya securitystaff.In2009,HMSI had sufferedlosses of over `300croreafter workerswentonago-slowstrikethathadresultedinproductiondippingbyover50percentfor nearlythreemonths.

Thebiggestcrisiswaswitnessedin 2005 when a violent strike byworkershad rocked theGurgaon-Manesar belt. “Labourproblemsisanopenissueat HMSI andin thecompany’sowninterest,thematterhasto beset rightas soon aspossi-

ble,”adds an industryexpert.Above all, experts say, HMSIneedstoworkonre-establishingtheuniquenessof theHonda brandinthecountrysothatconsumerloyal-tyto HMSI does notgettransferredtoHeroHonda.

Fast forwardHMSIknowsithasitstaskcutoutandhasstartedaddressingalltheseissues.“EarlierHondawasdividedonwhattoofferHeroHondaandwhattokeepinitsportfolio,”saysRattan.“Thehori-zonwillopenupnow;somecoreprod-uctswillbedevelopedforIndia.WhenCBShinewas introduced there wasno125ccmarket.OvertheyearsShinehasbecome a self-styledcore prod-uct.”More offeringswould eventu-

allycomeupinthe110ccand150ccsegmentboth ofwhichare showing

healthygrowthnumbers.For India, HMSI will bring in

productsthatwillhelpexpanditsre-spectivecategories,saysRattan.TheHondaCBStunner,forinstance,wasthefirstaffordablesportsbikeaimedatthecountry’syouthand itopenedupa newcategoryallbyitself.Peopleinse-mi-urbanandruralar-eastoday,saysRattan,areaspiringfor prod-uctsoriginallytarget-edatyoungstersinur-banmarkets.

HMSI may alsoconsi der a step-through forthe Indi-an market. Aoyamainforms, “Wehaveproducts inEurope andViet-namwith flatfloors andlarger 16-inch wheelsthat arebettersuitedforIndianroadconditions.Thecon-ceptcanbetriedoutinIndia,though

but we do not have any specificplans at themoment.”

The$600(`27,000)bikethatisbe-ingdeveloped byHMC inChinais,however,unlikely to findits waytotheIndianmarket.Aoyamaexplains,“Themodelis notsuitedto marketrequirementshereandisbeingbuiltlargely for sale in Africa. The re-

quirementsintheAfricanmarketarevery basicwhichis notsoin India.Tillrecently even headlights with-

outvisors were notacceptemarkethere.”

HMSIhasalsofirmeduplaunchthe250ccCBR250Rthisyear. Following this,twmodels,includingpossibleuwillbe introduced everyyecountry. Also onthe cardstomaticscooter which woutroducedin 2011-12.

Infact,ithas noplanstoeyesoffthescootermarket.

says,“Peopleusedtobelieveningcostof scootersis mo

thatofmotorcycles.Theconhaschanged—thecurrentmofscooters iscomparable tmotorcycles. Theweight

maticscootercreased fromcentto25pethe overalwheelermarthe last fouWeight of auscooterswillcomebiggeralltwowheein the counwill continutively focus

segment.”Lastyear,pany sold 7

scootersand 5.2lakh motowhichithopeswouldincrelakhunitsand7.4lakhunitstivelythisfiscalintandemwegorygrowth.AccordingtodaablefromSIAM,1.9millionhave beensoldin thecount

first11 monthsof thecurrewhichisanincreaseof46.58as comparedto thecorrespperiod lastyear. Motorcycletheperiodhaverisenby 2centto7.4millionunits.

The goal is clear for A“Hondaisthenumberonetwo

erbrandworldwide andwebethenumberoneplayerinwell,”hesays.

NEWCOURSE

CONTINUED FROM PAGE 1

HMSINEEDS TO

WORKONRE-

ESTABLISHINGTHE

UNIQUENESS OFTHE

HONDA BRAND IN

THECOUNTRY SO

THAT CONSUMER

LOYALTYDOESNOT

GET TRANSFERRED

TOHEROHONDA

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11*

Scooters 55,500 166,300 341,400 486,150 499,900 546,700 629,090 666,450 751,900 790,572

Motorcycles 0 0 0 64,950 100,700 168,600 278,110 403,750 5 20,000 759,428

Total 55,500 166,300 341,400 551,100 600,600 715,300 907,200 1,070,200 1,271,900 1,550,000

Industry sales 4,321,000 5,053,000 7,948,000 6,576,000 7,580,000 8,482,000 8,087,000 8,481,000 10,569,000 11,000,000

Market share(in%) 1 3 4 8 8 8 11 12 13 14

Source: Honda Motorcycle & Scooter India * Forecast

BY THE NUMBERSHow HMSI figures (domestic & export) compare with the overall industry sales

SANJAY K S