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HONDA - OVERVIEW
Honda Motor Co., Ltd.is aJapanese public multinational
corporation primarily known as a
manufacturer of automobiles,motorcycles and power
equipment.
Honda was founded in in
Hamamatsu, Japan in 1948.
Honda has been the wlargest motorcycle manuf
since 1959, as well as the
largest manufacturer of icombustion engines me
by volume.
Honda became the second-largest Japanese automobile
manufacturer in 2001 behind
Toyota
Honda became the eighth largestautomobile manufacturer in the
world in 2011.
The company has asseplants around the globe
countries including In
In 2013, Honda became the firstJapanese automaker to be a net
exporter from the United States,exporting 108,705 Honda and
Acura models while importing
only 88,357
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HONDAINDIA-AUTOMOBILES
Honda Cars India
Ltd.(HCIL) is a
100 % subsidiaryof the Honda of
Japan for the
production,marketing and
export ofpassenger cars in
India.
It beganoperations in
December 1995as a joint venture
between Honda
Motor Companyand Usha
International ofSiddharth Shriram
Group.
In August, 2012,
Honda bought
out UshaInternational's
entire 3.16%stake for 1.8
billion in the jointventure.
HCILs first
manufacturing
unitwas set up atGreater Noida,
U.P in 1997 while
HCIL's second
plant was setup
in Bhiwadi whilein Tapukara the
third plant is thefirst car
manufacturingplant in
Rajasthan.
Companys
Product Range
Includes HondaMobilio ,Honda
Brio, HondaAmaze, Honda
City And Honda
CR-V Which Are
Produced At TheGreater Noida
Facility.
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HCIL GROWTH STRATEGY
Honda entered India with launch of Honda cityin 1998 which positioned itself as a premium sedan in the Indian
It launched Honda Accordin 2001 while Honda Civicwas launched in 2005.
The Jazz compact car, launched in 2009 in India, was priced a little over Rs.7 lakh, but lower than the
unlike in other markets , it was considered expensive for a car its size.
The company enjoyed the segment leader position with the Honda City and Civic for years.
HCIL begun tweaking their global product development, pricing and marketing strategiesto suit theincrease their share in the country
HCIL began research and development initiatives in India in 2009 as it geared to introduce its Honda Briocountry, which shared parts with the Jazz .
HCIL known for its petrol engine technology, deviated from its global strategy to develop a diesel engine for the launched a diesel sedan, Honda Amaze, in the country based on the Brio platform, that has 90% of its parts ma
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HONDA-INDIA-TWO WHEELERS
Honda has become the largest two wheeler manufacturer as well as the second largest two-wheelers company in Ind
All the products launched by HMSI were runaway hits in the market
It was followed by Honda ShineIN 2006.
First bike launched by HMSI was Honda Unicorn IN 2005.
Subsequently HMSI launched ETERNO ,AVIATOR AND DIO range of scooters
HMSI entered India in 2000 with ACTIVA a gearless scooter which captured the whole scooter market and has since remained mark
HONDA arrived in India as Honda Motorcycle and Scooter India Pvt. Ltd. (HMSI ) a 100% subsidiary of Honda Motor Company
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Challenges Faced
License system was followed to control concentration of economic power
Control over investment
People were more inclined towards scooter because Motorcycle was considered as aflamboyant thing and it doesnt suit working class
Low interest in motorcycle
Not familiar with local people, Hero was more visible partner of JV
Started operation of scooters again and launched Activa, which became instant hit
Dependent on Hero without self-image
Hero & Honda products share the same engine & transmission system but Hero products arecheaper hence more preferred
Trying to position themselves as mass company but still very tough to shed image of MNC
Competition with Hero
Wanted to implement non union model but failed
Union was formed with the help of governing political party, this affected production andalso tarnished their image
Cross cultural issues
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Factors favourable to Honda with respect to Indian Market
Growing Population and Transportation Needs
India : Population of more than 1.21 billion people
Population density of 382 persons per square kilometre
which is double as compared to that of China
Annual per capita travel in India is estimated to be close
to 900-1000 km compared to 500-600 km in China.
India is worlds second largest market for two-wheel vehicles.
The output of scooters, motorcycles and two-wheelers in India ranked first in the world,
exceeding the output of Japan.
G
The permission for 100% FDI in the automobile sector
to a turnover of 12 billion USD in the Indian auto indu
It has also lead to a turnover of 3 billion USD in the anc
The government p
potential benefits
Generation of emp
technical and nont
achieved not only
through the growi
industries
India as Export hub
Honda can cater to the growing demand of two
wheelers in African market with India as its export
hub
The foreign firms such as Honda have not only a higher level but also higher export
intensity as well (on an average two times as that of domestic players)
MNCs can actually use India as a base for their
exports
A significant progress has already been made by different MNCs like Yamaha, Honda,and Suzuki etc.
The spurring 19% growth in the nations scooter sales
personal transport in Indias villages and small towns,
Honda aims to incre
40-42% from the cu
HMSI in 2013-14, so
and hopes to sell 4.5
2014-15.
It had 2,800 dealer o
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Promising Niche Market growth in future
Factors favourable to Honda with respect to Indian Market
By Niche market we mean market for Top-end bikes, which include the likes of Suzukis
Hayabusa, Hondas CBR1000RR and Yamahas R1, that are typically bikes with a large
displacement of around 1,000cc that allows them to accelerate quickly and maintain speeds
up to 300km per hour if road conditions permit
Cost 9.5-12.5 lakh, theyre only bough
The major market for these type of bikes would
Mumbai, Delhi, Kolkata, C
Slowing economy has not hit sales of this segme
constant space
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Factors unfavourable to Honda with respect to Indian Market
Economic slowdown
In India, an economic recession, high borrowing costs and swelling fuel prices have dec
According to the report of Society of Indian Automobile Manufacturers (SIAM) the comIndia remained flat at 57,51,267 units in the five months from April to August for 2013,
units in the same period a year ago
After expanding at such an abrupt pace for several years, sales rose by a mere 3% in fis
Absence of dedicated
finance arm
In India, Honda does not have a dedicated finance arm to provide loan facility to vehicl
Hero & Bajaj have their dedicated finance arm named as Hero Fincorp and Bajaj Auto f
Honda is by far handling the deficiency by having partnerships with banks and finance
High Pricing of Honda
vehicles
About 65-70% of Indian population lives in rural areas of India. In order to attract this hHero (Splendor) and Bajaj have kept the prices of their bestselling models at par with ttarget customers
Hondas high pricing as compared to its competitor proves gives it an edge in urban mapullback factor in rural scenario
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Recommendations
Follow Multi Domestic Approach: Increase local sourcing of com Explore New Markets: Explore into hybrid and fuel-efficient vehi
strengthen its current position and step into new markets such aaircrafts
Strategic Alliance with competitors: To achieve economies of scagain technological knowledge in new segments
Partnership with Institutes & Institutes: Avoids problems of lack and maintain quality standards
Strengthen Supply Chain: Export Honda vehicles to other compaefficient supply chain