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HONDA - OVERVIEW

Honda Motor Co., Ltd. is a


Japanese public multinational
corporation primarily known as a
manufacturer of automobiles,
motorcycles and power
equipment.

Honda was founded in in


Hamamatsu, Japan in 1948.

Honda has been the world's


largest motorcycle manufacturer
since 1959, as well as the world's
largest manufacturer of internal
combustion engines measured
by volume.

Honda became the secondlargest Japanese automobile


manufacturer in 2001 behind
Toyota

Honda became the eighth largest


automobile manufacturer in the
world in 2011.

The company has assembly


plants around the globe in 20
countries including India.

In 2013, Honda became the first


Japanese automaker to be a net
exporter from the United States,
exporting 108,705 Honda and
Acura models while importing
only 88,357

HONDA INDIA-AUTOMOBILES

Honda Cars India


Ltd. (HCIL) is a
100 % subsidiary
of the Honda of
Japan for the
production,
marketing and
export of
passenger cars in
India.

It began
operations in
December 1995
as a joint venture
between Honda
Motor Company
and Usha
International of
Siddharth Shriram
Group.

In August, 2012,
Honda bought
out Usha
International's
entire 3.16
%stake for 1.8
billion in the joint
venture.

HCILs first
manufacturing
unit was set up at
Greater Noida,
U.P in 1997 while
HCIL's second
plant was setup
in Bhiwadi while
in Tapukara the
third plant is the
first car
manufacturing
plant in
Rajasthan.

Companys
Product Range
Includes Honda
Mobilio ,Honda
Brio, Honda
Amaze, Honda
City And Honda
CR-V Which Are
Produced At The
Greater Noida
Facility.

As of august 2014
it is the third
largest car seller
in the country.

HCIL GROWTH STRATEGY


Honda entered India with launch of Honda city in 1998 which positioned itself as a premium sedan in the Indian market

It launched Honda Accord in 2001 while Honda Civic was launched in 2005.

The Jazz compact car, launched in 2009 in India, was priced a little over Rs.7 lakh, but lower than the Honda City sedan,
unlike in other markets , it was considered expensive for a car its size.

The company enjoyed the segment leader position with the Honda City and Civic for years.

HCIL begun tweaking their global product development, pricing and marketing strategies to suit the Indian market to
increase their share in the country
HCIL began research and development initiatives in India in 2009 as it geared to introduce its Honda Brio small car in the
country, which shared parts with the Jazz .
HCIL known for its petrol engine technology, deviated from its global strategy to develop a diesel engine for the Indian market and
launched a diesel sedan, Honda Amaze, in the country based on the Brio platform, that has 90% of its parts made locally.

HONDA-INDIA-TWO WHEELERS
HONDA arrived in India as Honda Motorcycle and Scooter India Pvt. Ltd. (HMSI ) a 100% subsidiary of Honda Motor Company Ltd., Japan ,in 1999.

HMSI entered India in 2000 with ACTIVA a gearless scooter which captured the whole scooter market and has since remained market leader in the segment.

Subsequently HMSI launched ETERNO ,AVIATOR AND DIO range of scooters

First bike launched by HMSI was Honda Unicorn IN 2005.

It was followed by Honda Shine IN 2006.

All the products launched by HMSI were runaway hits in the market

Honda has become the largest two wheeler manufacturer as well as the second largest two-wheelers company in India as of now.

Challenges Faced
Control over investment
License system was followed to control concentration of economic power
Low interest in motorcycle
People were more inclined towards scooter because Motorcycle was considered as a
flamboyant thing and it doesnt suit working class
Dependent on Hero without self-image
Not familiar with local people, Hero was more visible partner of JV
Started operation of scooters again and launched Activa, which became instant hit
Competition with Hero
Hero & Honda products share the same engine & transmission system but Hero products are
cheaper hence more preferred
Trying to position themselves as mass company but still very tough to shed image of MNC

Cross cultural issues


Wanted to implement non union model but failed
Union was formed with the help of governing political party, this affected production and
also tarnished their image

Factors favourable to Honda with respect to Indian Market


Growing Population and Transportation Needs
India : Population of more than 1.21 billion people
Population density of 382 persons per square kilometre
which is double as compared to that of China

Government Support
The permission for 100% FDI in the automobile sector by the Indian government had led
to a turnover of 12 billion USD in the Indian auto industry
It has also lead to a turnover of 3 billion USD in the ancillary auto parts industry.

Annual per capita travel in India is estimated to be close


to 900-1000 km compared to 500-600 km in China.
India is worlds second largest market for two-wheel vehicles.
The output of scooters, motorcycles and two-wheelers in India ranked first in the world,
exceeding the output of Japan.

India as Export hub


Honda can cater to the growing demand of two
wheelers in African market with India as its export
hub

The government planners have recognized the


potential benefits from the auto industry
Generation of employment for the readily available
technical and nontechnical workforce has been
achieved not only through the core industry, but also
through the growing complementary and supplier
industries

Expanding rural market


The spurring 19% growth in the nations scooter sales is due to rising demand for
personal transport in Indias villages and small towns, especially among women

MNCs can actually use India as a base for their


exports

Honda aims to increase its rural market sales figures to


40-42% from the current 30-32%.

The foreign firms such as Honda have not only a higher level but also higher export
intensity as well (on an average two times as that of domestic players)

HMSI in 2013-14, sold around 3.7 million two-wheelers


and hopes to sell 4.5 million by the end of financial year
2014-15.

A significant progress has already been made by different MNCs like Yamaha, Honda,
and Suzuki etc.

It had 2,800 dealer outlets as of 31 March 2014

Factors favourable to Honda with respect to Indian Market


Promising Niche Market growth in future
By Niche market we mean market for Top-end bikes, which include the likes of Suzukis
Hayabusa, Hondas CBR1000RR and Yamahas R1, that are typically bikes with a large
displacement of around 1,000cc that allows them to accelerate quickly and maintain speeds
up to 300km per hour if road conditions permit

Cost 9.5-12.5 lakh, theyre only bought by passionate bikers

Slowing economy has not hit sales of this segment of bikes and is growing at a
constant space

The major market for these type of bikes would be the Metropolitan cities i.e.
Mumbai, Delhi, Kolkata, Chennai.

Factors unfavourable to Honda with respect to Indian Market

In India, an economic recession, high borrowing costs and swelling fuel prices have decelerated sales growth

Economic slowdown

According to the report of Society of Indian Automobile Manufacturers (SIAM) the combined two-wheeler sales in
India remained flat at 57,51,267 units in the five months from April to August for 2013, as compared to 57,10,176
units in the same period a year ago
After expanding at such an abrupt pace for several years, sales rose by a mere 3% in fiscal 2013

In India, Honda does not have a dedicated finance arm to provide loan facility to vehicle purchasers

Absence of dedicated
finance arm

Hero & Bajaj have their dedicated finance arm named as Hero Fincorp and Bajaj Auto finance respectively
Honda is by far handling the deficiency by having partnerships with banks and finance companies

High Pricing of Honda


vehicles

About 65-70% of Indian population lives in rural areas of India. In order to attract this humungous population both
Hero (Splendor) and Bajaj have kept the prices of their bestselling models at par with the financial status of their
target customers
Hondas high pricing as compared to its competitor proves gives it an edge in urban market but might prove as a
pullback factor in rural scenario

Recommendations
Follow Multi Domestic Approach: Increase local sourcing of components
Explore New Markets: Explore into hybrid and fuel-efficient vehicles to
strengthen its current position and step into new markets such as those of
aircrafts
Strategic Alliance with competitors: To achieve economies of scale, and
gain technological knowledge in new segments
Partnership with Institutes & Institutes: Avoids problems of lack of labour
and maintain quality standards
Strengthen Supply Chain: Export Honda vehicles to other companies using
efficient supply chain