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SANJAY K SHARMA

NEW COURSE
When the plant becomes operational in September-October 2011, thecombinedcapacityatthetwomanufacturingunitstheotherbeingat Manesar(Haryana)wouldincrease by around 37 per cent to 2.2 million unitsperannum.HMSIsManesarfacility has the capacity to roll out 1.6 million units on an annual basis. Theadditionalcapacity,thecompanyadmits,wouldnotbesufficient to fully bridge the gap between demand and supply. HMSI products, at present, have a waiting period ranging from six weeks to six months. The company takes, for instance, around seven months to deliver a Honda Activa in south India. HMSI is considering a third facility, likely to be set up in the southern or the western part of the country, to speed up delivery of products. Aoyama points out, Tamil Nadu, Andhra Pradesh, Kerala and Karnataka account for 30 per cent of the overall demand for two-wheelers in India. Together, south and west India represent half of our business. It does not make any sense for us to limit our presence to north India when the business is spreading across the country. It is a natural de-

cision to move south to ensure speedy delivery. The demand-supply mismatch is expected to be leveled over the next two years. Industry insiders also raise concerns over Hondas ability to put in placeadistributionnetworkthatcan takeonthemightofHeroHondaand Bajaj Auto which have 4,500 and 3,600 touch points respectively. Rakesh Batra, analyst, automotive practice, Ernst &Young, informs, Hero Honda has cultivated marketing initiatives at the grassroots level over the last 30 years. To grow volumes,HMSIwouldhavetoreach out to customers in rural areas. The company also needs to put in place a cost-effective supply chain for delivering products. HMSIhasadistributionnetwork of 800 dealers and sub-dealers. The companyplanstoaddon100outlets in the current fiscal and an average of 200 new sales stations every year. Rattansays,Itiseasytosetupadealernetworkbutdifficulttoensurequalityservices.Eachofourbusinesspartnersisthecontrollerofmarketingactivitiesinhisownplace.Wehavededicatedpeoplewithspecificskillsand they are not mere investors. Ours is

asmallerbutasuccessfulmodel.We averagesalesof2,000unitseveryyear from each outlet. Also to be addressed appropriatelyareissuesrelatedtostrainedindustrial relations which have plagued HMSI. Soon after the announcement of the split with the Hero Group, production came to a halt at the Manesar factory on December 17 last year when workers protested an alleged assault on a casual worker by a security staff. In 2009, HMSI had suffered losses of over ` 300 crore after workers went on a go-slow strikethathadresulted inproductiondippingbyover50per cent for nearly three months. The biggest crisis was witnessed in 2005 when a violent strike by workers had rocked the GurgaonManesar belt. Labour problems is an open issue at HMSI and in the companys own interest, the matter has to be set right as soon as possible, adds an industry expert. Above all, experts say, HMSI needstoworkonre-establishingthe uniqueness of the Honda brand in the country so that consumer loyalty to HMSI does not get transferred to Hero Honda.

BY THE NUMBERS

How HMSI figures (domestic & export) compare with the overall industry sales 2001-02 2002-03 2003-04 2004-05 Scooters 55,500 166,300 341,400 486,150 Motorcycles 0 0 0 64,950 Total 55,500 166,300 341,400 551,100 Industry sales 4,321,000 5,053,000 7,948,000 6,576,000 Market share (in %) 1 3 4 8
Source: Honda Motorcycle & Scooter India

2005-06 499,900 100,700 600,600 7,580,000 8

2006-07 546,700 168,600 715,300 8,482,000 8

2007-08 629,090 278,110 907,200 8,087,000 11

2008-09 2009-10 2010-11* 666,450 751,900 790,572 403,750 520,000 759,428 1,070,200 1,271,900 1,550,000 8,481,000 10,569,000 11,000,000 12 13 14

* Forecast

out visors were not accepted in the HMSIknowsithasitstaskcutoutand market here. HMSIhasalsofirmedupplansto hasstartedaddressingalltheseissues. EarlierHondawasdividedonwhat launch the 250cc CBR250R in Apri toofferHeroHondaandwhattokeep this year. Following this, two/three initsportfolio,saysRattan.Thehori- models,includingpossibleupgrades zonwillopenupnow;somecoreprod- will be introduced every year in the uctswillbedevelopedforIndia.When country. Also on the cards is an au CB Shine was introduced there was tomatic scooter which would be in no125ccmarket.OvertheyearsShine troduced in 2011-12. In fact, it has no plans to take it has become a self-styled core product. More offerings would eventu- eyes offthe scooter market.Aoyama allycomeupinthe110ccand150cc says,Peopleusedtobelievetherun segment both of which are showing ning cost of scooters is more than thatofmotorcycles.Theconception healthy growth numbers. For India, HMSI will bring in has changed the current mileage productsthatwillhelpexpanditsre- of scooters is comparable to that o spectivecategories,saysRattan.The motorcycles. The weight of auto maticscootershasin HondaCBStunner,for creased from 12 pe instance,wasthefirst HMSI NEEDS TO cent to 25 per cent in affordablesportsbike WORK ON REthe overall two aimedatthecountrys youth and it opened ESTABLISHING THE wheeler market ove four years up a new category all UNIQUENESS OF THE the lastof automatic Weight by itself. People in seHONDA BRAND IN scooters will now be mi-urbanandruralareastoday,saysRattan, THE COUNTRY SO come bigger in over all two wheeler sale are aspiring for prodTHAT CONSUMER in the country. We ucts originally targetedatyoungstersinur- LOYALTY DOES NOT will continue to ac tively focus on the ban markets. HMSI may also GET TRANSFERRED segment. Lastyear,thecom consider a stepTO HERO HONDA pany sold 7.5 lakh through for the Indian market. Aoyama informs, We scooters and 5.2 lakh motorcycles have products in Europe and Viet- whichithopeswouldincreaseto8.6 nam with flat floors and larger 16- lakhunitsand7.4lakhunitsrespec inch wheels that are better suited tively this fiscal in tandem with cat for Indian road conditions. The con- egorygrowth.Accordingtodataavail cept can be tried out in India, though ablefromSIAM,1.9millionscooter but we do not have any specific have been sold in the country in the first 11 months of the current fisca plans at the moment. The$600(`27,000)bikethatisbe- whichisanincreaseof46.58percen ing developed by HMC in China is, as compared to the corresponding however, unlikely to find its way to period last year. Motorcycle sales in theIndianmarket.Aoyamaexplains, the period have risen by 23.57 pe The model is not suited to market cent to 7.4 million units. The goal is clear for Aoyama requirementshereandisbeingbuilt largely for sale in Africa. The re- Hondaisthenumberonetwo-wheel quirementsintheAfricanmarketare er brand worldwide and we want to very basic which is not so in India. bethenumberoneplayerinIndia a Till recently even headlights with- well, he says.

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