For Honda, its time has ‘finally come’ to race past Hero
“In India, we have finally come to the level where we will take the number one position in terms of market share. The reality is that in some months in the past year, the volume has been higher than that of Hero MotoCorp, the number one company,” the Honda leadership team told analysts in Japan recently following the third quarter results.
Hero and Honda were partners in India for 26 years till they decided to part ways in early 2011. Even as a section of the market believed then that the Japanese automaker would overtake its former ally quickly, Hero has held on to the top slot for the last 14 years even while there have been the occasional months when it has lost out to Honda.
Things are clearly changing now and the lead between the two companies has been narrowing down in recent times. Honda is now confident that it will now overtake Hero which has been facing more competitive pressure from other players like TVS Motor Company.
Passing on the crown
“I believe that we will be number one in India this year or so, and our profitability in India has also improved significantly compared to the past. The current situation in India is that it has become easier to take the lead in terms of price, including the implication that the leading position is becoming much stronger,” a top management representative added during the Q&A session of February 13.
It is no secret that Honda has been itching to take over the top mantle in India for a while now except that Hero was in no mood to relent. The company had its prized Splendor and Passion brands to ensure that it constantly stayed ahead of the race even while it constantly went the extra mile strengthening its retail network that extends to every nook and corner of India.
Since their split in 2011, Honda went into overdrive mode setting up new plants and expanding capacity near four-fold in the process. Its portfolio which previously consisted of a solo facility in Haryana soon grew to include other plants in Rajasthan, Karnataka and Gujarat which in turn led to a huge increase in capacity to over six million units.
Yet, this did not deter Hero which remained on top since there was just no challenge to its supremacy in the commuter motorcycle space. Bajaj and TVS tried hard with competitive products but just could not upset the Splendor applecart while its closest rival remained Honda’s Activa scooter.
Hero’s relentless drive
According to an industry observer, Hero has pretty much run its course now and the time has come for a change in leadership equations. “It is to Hero’s credit that it is still number one after all these years which is testimony to its own hard work at the retail end along with super durable brands like Splendor. However, it is now over to Honda,” he said.
The Japanese two-wheeler maker had also indicated at a press meet in Japan last month that it had been building and enhancing an “attractive product lineup” to accommodate the diverse needs of Indian customers.
The lineup includes Activa, Dio, a scooter for young people; Shine, a light motorcycle model used for a wide range of purposes mainly in rural areas; and SP, a high value-added light motorcycle model.
Additionally, by strengthening sales measures such as enhancement of the sales network and services, Honda “has steadily increased sales volume to the point where the largest market share in India is within reach”. This view has now been reinforced by the top management at the recent Q3 session with analysts.
Honda will now pursue various initiatives to strengthen its business in India, including the automation of production plants and “active cultivation and utilisation" of local suppliers.
India as global hub
It will further expand its motorcycle business by implementing efficient product strategies globally such as exporting high-value and highly-competitive products nurtured in India to the South American market where customer needs are similar (to that of India).
Honda is expecting to see a further increase of two-wheeler demand also in ASEAN, Pakistan, Bangladesh and Brazil due to an increase in the working population that overlaps with the motorcycle user population.
The company will further solidify its business by fully leveraging its strengths in products as well as sales, service, procurement and production operations on a global basis.
For the current fiscal year ending March 31, 2025, Honda’s global motorcycle unit sales are expected to reach 20.2 million units, which is approximately a 40% share of global motorcycle sales. The Asian market, including India, Indonesia, Thailand and Vietnam, accounts for 85% (17.17 million units) while Japan, Europe and the US take up 6% (1.2 million units).
Further growth
Honda is envisioning further growth in global demand for motorcycles and scooters, mainly in southwest Asia, whose largest market is India, as well as Indonesia, the Philippines; and Brazil and other Central and South American countries.
With this expected trend, the industry-wide global motorcycle sales, currently at a scale of 50 million units, is projected to grow to 60 million units by 2030, including electric vehicles.
The company will continue to launch more competitive products, pursue carbon neutrality through various measures, including electrification, and further solidify its two-wheeler business, with a long-term target to capture a 50% share of the global market.
In electric, Honda has recently launched two scooters in India and will strengthen its after-sales services and maintenance by leveraging its presence of 6,000 dealerships. By introducing more electric models powered by a fixed battery, the company will use this network to enhance the battery charging network and “eliminate customer anxiety” of running out of battery power.
Top slot in electric
With these initiatives, Honda will strive to capture the largest market share in India’s electric two-wheeler market. It is also working to reduce the total cost of ownership (TCO) in electric and is looking at a price range where three years of ownership will be equivalent to that of internal combustion engine models.
As part of this drive, Honda will begin operating a dedicated electric motorcycle production plant in India in 2028. A wide variety of electric models will be produced by combining modules that are common for multiple models. The company has also been working with battery manufacturers to establish specifications and ensure stable procurement.
