Honda Motorcycle & Scooter India (HMSI) has big plans to beat Hero Honda Motors in ten years’ time to become the No. 1 player in India, the second largest two-wheeler market globally, its outgoing chief executive Shinji Aoyama said.
HMSI, currently the fourth largest player by volume, aims to topple No. 3 player TVS Motor in two years, Aoyama told Financial Chronicle.
Aoyama will take over as GM for motorcycle business planning at Honda in Japan from April 1. Keita Muramatsu, GM of motorsport division at Honda Motor, will replace him.
Asked to react on HMSI’s claim, Venu Srinivasan, chairman of TVS Motor, said, “Any company is free to have a dream. We know what to do with our product strategy.”
The firm is sounding aggressive after its parent company began to exit the 27-year-old joint venture with Munjals-owned Hero Group by selling back its 26 per cent stake for Rs 3,841 crore.
HMSI plans to boost production to 2.1 million units per annum beginning July 2011 by adding a new factory with a capacity to make six lakh units in the first phase. “This capacity expansion is the beginning of our effort to minimise the gap with Hero Honda, Bajaj and TVS. It won’t be in a few years; it will take ten years. We will introduce the best products, including ones meant for the mass market, in a step-wise manner,” Aoyama said.
HMSI aims to sell 1.65 million two-wheelers in the financial year ending March 2011 compared with TVS’s two million units, Bajaj’s 2.5 million and Hero Honda’s target of more than five million units.
HMSI’s new facility in Tapukara, Rajasthan, will be able to produce an additional six lakh units a year in the second phase and will require an investment of Rs 1,000 crore. “Not only the second plant, a third, fourth and fifth plant must be there. Each will require an investment of about Rs 1,000 crore,” Aoyama said, adding, “A deep (feasibility) study is on for a third plant.”
Aoyama also said that if it hadn’t been for production constraints, HMSI could have sold 2.2 million units this fiscal. This means that the firm’s products are already generating more demand than its nearest rival TVS Motor, and is generating more than 40 per cent demand compared with top player Hero Honda, despite its capacity standing at a third of Hero Honda’s 5.4 million units.
HMSI plans to launch a 100 cc motorcycle priced below the Rs 42,000 for its 110 cc CB Twister to challenge Hero Honda’s Splendor and Passion and Bajaj’s 100 cc Discover. It will also launch a new scooter model that will further strengthen its dominance in the scooter market in which it has more than 50 per cent share. “We may enter other mass segments soon,” Aoyama said.
Rajiv Bajaj, MD of Bajaj Auto, was unavailable for comment. Pawan Munjal, MD & CEO of Hero Honda Motors, did not return calls for a reaction on HMSI’s claim.
“After the launch of a 100 cc motorcycle planned in 2011-12, the scope could be for a much bigger displacement mass model like Bajaj’s (Pulsar 150 cc),” Aoyama said.
HMSI plans to go on a massive network expansion drive to increase the number of sales and service outlets to 1,500 in 2011-12 compared with Hero Honda’s 4,000 and Bajaj Auto’s 3,000. Though more than two-thirds of its sales come from urban markets, it is pinning its hopes on semi-urban and rural areas to garner more numbers by 2020.
Aoyama said that motorcycles would account for more than 50 per cent of total two-wheeler sales in two years. At present, scooters constitute over 55 per cent of HMSI sales.
HMSI on Monday showcased its ‘fun’ motorcycle, the CBR250R, priced at Rs 143,000 (ex-showroom, New Delhi) that will be sold beginning next month. “We plan to sell 30,000 units in the first year,” said NK Rattan, operating head (sales & marketing), HMSI.