We can be No 1 if slump persists, says Honda

Japanese automobile major Honda Motor Company said on Monday it could become the number one two-wheeler manufacturer in the country over the next three years, if the slowdown persisted.

Shinji Aoyama, operating officer (motorcycle operations), said, “The current market size (for two-wheelers) in India is 14 million units. If it remains the same, (with) no growth happening, we might become number one by 2015-16.

But once growth happens, Hero and Bajaj have more capacity and room to produce at the present condition.

"They have an advantage in that connection but a lot depends upon the market conditions.”

Honda Motorcycle and Scooter India (HMSI) currently has annual production capacity of 2.8 million units across its two manufacturing units at Manesar (Haryana) and Tapukara (Rajasthan).

The company is set to commission its third facility at Narsapuram, Karnataka in the first quarter of the next financial year which would bring in added capacity of 1.2 million units. Aoyama informed that the company is scouting locations for a new facility.

Former partner Hero MotorCorp has production capacity of seven million units across its three facilities in Haryana and Uttarakhand and is now investing around Rs 1500 crore (Rs 15 billion) to put in place two new units to take increase overall capacity to nine million units over the next few years.

To increase its footprint in the motorcycle market HMSI is additionally working closely with engineers from its parent company at its Technical Centre in Manesar to introduce one new product every quarter in the Indian market.

“When we separated from Hero, we were quite sure that we can take Indian consumers more in terms of market share as they are confident about Honda product and technology and products sold under Honda name”,

Aoyama said.

At present, HMSI with a market share of 18.6 per cent, trails significantly behind rival Hero MotoCorp (with market share of 42.6 per cent) in domestic sales.

To close the gap with the market leader, HMSI is now looking at introducing indigenously developed products with high localization content at aggressive price points in the country.

HMSI had already declared its intention to topple erstwhile partner Hero MotoCorp and wrest the number one slot in the Indian two-wheeler market by the end of the decade.

The company on Monday termed Bajaj Auto as a more formidable rival than erstwhile partner Hero MotoCorp. Aoyama said, "In terms of numbers, still Hero is number one but very frankly speaking, the consolidated power, including R&D, sales network there, including many of these elements, I think Bajaj is very strong. Bajaj is very good at creating alliance.”

Honda Motorcycle and Scooter India Pvt Ltd (HMSI)-- the Indian two-wheeler arm of Honda-- is at second position in terms of sales of two-wheelers in the country, after Hero MotoCorp. Bajaj Auto occupies the third position.

The company on Monday unveiled its fourth offering in the 150cc segment, CB Trigger. Prices will be announced closer to the time of launch in April.

Despite sales slowing down to a meagre 3.85 per cent in the domestic two-wheeler market, HMSI has managed to clock in growth rate of 32.72 per cent between April and February this financial year.

The company has sold 2.37 million units till February.

Hero MotoCorp has reported a decline of 1.23 per cent to sell 5.46 million two-wheelers in the same period.