Honda gears up to launch 2 new products in FY18, strengthen rural network

 

 

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Honda Activa

 

  The financial year (FY) 2017 will be a memorable year for Japanese auto major Honda's Indian arm on various counts. Not only has it become the first 100 per cent two-wheeler subsidiary of Honda to achieve five million sales in a short span, but it has also reported an increase in its market share constantly, even as its peer Hero MotoCorp has seen a drop. 

 

The company is targeting 6 million units in FY18 sales and plans to launch at least two vehicles, besides strengthening the rural network to take on Hero, which is strong in rural India.
 

 

Market leader Hero's sales in 2015-16 was 6,483,655 units as compared to 6,431,686 units, an increase of around six per cent.

Yadvinder Singh Guleria, senior vice president , sales and marketing, HMSI said that a mix of export, aggressive branding, investment in scooter capacity and new products have helped HMSI.

In the beginning of FY17, especially after monsoon and 7th Central Pay Commission, the industry was hopeful of double-digit growth, and although Honda targeted around 5.4 million units sales, it ended the year with five million units. 

The second half of FY17 was challenging due to demonetisation, low sentiment in rural markets, and the two-wheeler industry closed the financial year with only five per cent growth, said Guleria.

Despite the challenges, Honda was the highest market share gainer of the industry. Among the top four two-wheeler companies in India, Honda was the only one to gain market share in the last six years. Honda's market share rose by 14 per cent point to 27 per cent in 2016-17 from 13 per cent in 2010-11. While all the other automakers, including Hero MotoCorp, Bajaj and TVS saw a dip. 

In FY17, HMSI market share grew by one percentage point to 27 per cent, while market leader Hero saw two percentage point drop to 37 per cent from 39 per cent, Bajaj's share dropped to 11 per cent from 12 per cent in the previous year. Other gainer was TVS Motor, whose market share rose to 14 per cent from 13 per cent during the period.

HMSI agrees that it need to do a lot of work in rural areas to take on Hero. HMSI expects to gain traction this yearin the northern India, such as Uttar Pradesh and Punjab where the motorcycle market is strong. However, scooters would continue to lead the two-wheeler industry of India as infrastructure is getting better in rural markets.

In FY17, HMSI marked 600-plus touch points to sell vehicles. Out of this, it fulfiled 70-75 per cent of target in tier II cities and beyond. In FY18, plans to add around 400-500 touch points, out of which 75 per cent will be in rural markets. Currently, HMSI has around 5,100 touch points across the country.

The company also plans to launch one new scooter and motorcycle in FY18 to strengthen its offerings.

“We are confident that 2017-18 will be a landmark year and Honda will change the way India and the world will ride home,” said Guleria. He said at a time when the motorcycle market saw a dip, in the third quarter, Honda saw three per cent growth.

On exports, which is one of the key strategies for HMSI, Guleria said, despite the industry incurring losses by around -6 per cent in FY17, Honda’s exports grew by 41 per cent increasing from 200,114 units in FY16 to 283,153 units in FY17. The company is expecting a 10-15 per cent growth in exports to 3.3 to 3.5 lakh units, and there is a chance of reviewing and reviving it based on the new launch. 

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