Three licencees, one brand; that's Honda India's tale so far. Now, will it be able to motocross solo on the Indian terrain?

By Ranju Sarkar

On the 14th floor of the International Trade Tower in South Delhi's Nehru Place, at the headquarters of Honda Motorcycle & Scooters India, Marketing Director Kojiro Iguchi, 45 his face inscrutable, tells you the obvious: ''India is very significant for Honda. That is why we are here.'' In August, 1999, eight months after breaking up its 14-year joint venture with India's Kinetic group, the Japanese automotive giant, set up shop here on its own.

Not that the company is willing to talk too much about its plans. President and CEO Haruo Takiguchi refused to spell out the plans, and when his colleague Iguchi finally did so-of course, with Takiguchi's approval-he gave away little. Yes, Honda would get off the block by launching a scooter-a four-stroke variomatic version-sometime in mid-2001. And yes, by 2004, when the No-Objection Certificate (NOC) for its existing partnership in the motorcycles market with the Munjals of Hero kicks in, it will also launch mobikes. (The partners have kept open the option of renewing the JV agreement.) But press the Honda brass for anything more and all you get is a quiet smile.

Yet, the atmosphere in the Honda office is frenetic as in an ant colony. Honda's India team (comprising 16 Japanese and 200 Indians) is working overtime and understandably so. By mid-2000, Honda wants to get its venture off the ground and roll out its first two-wheeler-a four-stroke scooter-on Indian roads. For that to happen, its factory (capacity: 1 lakh scooters), which is coming up from scratch at Manesar, near Gurgaon, has to be up and ready by December-end.

Operation Kick Start

Of course, CEO Takiguchi is in a tearing hurry to enter (or should we call it re-enter) the Indian two-wheeler market, where demand is estimated to top 5 million vehicles by 2005. For one, Honda's burpy relationship with Kinetic has ended, and it would like to get back into the scooter market as quickly as it can. Although the Indian market for two-wheelers will be smaller than China's (approximately 8.86 million two-wheelers were sold in China last year), Takiguchi wants to cash in on Honda's brand equity in India.

Honda has three subsidiaries and one technical collaboration in China, but it doesn't enjoy a significant presence in what is a highly fragmented market. In India, Honda already enjoys more than 50 per cent marketshare in motorcycles (through Hero Honda), and needs to quickly re-enter scooters and, possibly mopeds. Then again, with Honda's two-wheeler business under pressure globally, India becomes crucial.

Of the products that Honda will launch in India, all Iguchi will say is that ''the critical factors, which will influence the choice of the product would be price, fuel economy, and easy maintenance''. In the first four years, Honda wants to launch three scooter variants, priced Rs 25,000-40,000, and then, from 2004 on, mobikes. Starting with 50 dealers, Honda, says Iguchi, will appoint 200-250 of them, adding 50 for each new model it launches. Of course, the dealers will have to fit Honda's famous 4s template: sales, service, spares, and safety riding.

But what's more important is Honda's penchant this time for indigenisation: it wants to launch the first model with 100 per cent local content and is working with a clutch of 170 vendors to make that possible.

Says Iguchi: ''Our key concern is Quality, Cost, and Delivery. As long as the vendors meet these criteria, we don't care whether they are a Hero Honda vendor or a Bajaj vendor.''

But will scooters give Honda the kind of market dominance it is looking for? Motorcycles have been outstripping scooters in the Indian market, with their marketshare in 2005 slated to be 60 per cent. Does that mean Honda will eventually bank on motorcycles for its India strategy? If it does, what models can it come up with?

As much as 80 per cent of the motorcycle market comprises the 100-cc utility bikes, and although Honda has a huge range of these in its stable, the best models in this segment have already been licenced out to Hero Honda. Says Iguchi: ''What models would have to be brought can be discussed mutually and a conflict could be avoided. It's not that there won't be any level of overlapping. But we would strive to minimise it.'' Accepts R. Chandramouli, 41, Vice-President, TVS-Suzuki: "Honda has enough models to draw from its stable."

Then there's also the matter of consolidation. World wide, Honda operates in all its product categories from under one umbrella, but in India its strategy is hybrid. For cars, it has a 95 per cent stake in Honda Siel Cars India; for gensets, it has a 67 per cent subsidiary in Honda Power Products; and finally, in two-wheelers, it has 26 per cent in Hero Honda, a licencee arrangement with Kinetic Motor, and now, a fully-owned venture.

Wouldn't the Japanese giant like to see all these merged into one? Muses Iguchi: ''If you talk of a plan, there's none. But if you talk of a dream, yes. We would like to see all the businesses together. How it can be beneficial has to be evaluated.'' For the moment, of course, he has just no time to dream. Hands firmly on the wheel, he's revving to go full throttle.

Issue Contents  Write to us   Subscriptions   Syndication 

INDIA TODAY |  INDIA TODAY PLUS | COMPUTERS TODAY
TEENS TODAY | NEWS TODAY | MUSIC TODAY | ART TODAY | CARE TODAY

© Living Media India Ltd