Honda in full throttle as 2-wheeler sales soar

Shinji Aoyama is not entirely surprised with Honda reporting its highest ever two-wheeler sales in India.

On Tuesday, the company announced that it had sold 3.29 lakh motorcycles and scooters in September, a 35 per cent jump from last year.

“Demand for Honda products is so good that we are able to clock these numbers. The new plant in Bangalore is also helping us meet this demand,” Honda’s Operating Officer told Business Line over telephone from Japan.

Top priorities

Aoyama is no stranger to India and headed Honda’s two-wheeler operations here till a couple of years ago. It was during his tenure that the Japanese automaker parted ways with its ally of 26 years, the Hero group, in 2010.

Honda was perhaps producing half its present numbers at that point and Aoyama had then reiterated that it was important for the company to “hurry up” and do a whole lot of things, especially with more India-specific models.

“The priorities are new models, expanding sales channels, strengthening the vendor network and increasing manpower across the chain,” he said.

Building capacity

Today, as Operating Officer worldwide, Aoyama’s priority is to create capacity to be able to meet the growing demand in India. Bangalore is the latest addition to the company’s plants after Manesar (Haryana) and Tapukara in Rajasthan. By the end of this fiscal, Honda’s total capacity would be four million units from these three facilities. A fourth is scheduled to be commissioned in Gujarat though there has been no official confirmation from the company yet.

Honda has already sold 1.7 million units here for the first half of this fiscal, a near 25 per cent jump from 1.35 million in the same period last year. Its Activa scooter still has a waiting list in some parts of the country and is its biggest brand success. While there have been talks doing the rounds that the company has overstocked motorcycles at its dealerships, rivals concede that it is on schedule with a carefully thought out strategy.

Way forward

“Honda has planned its production well with capacities of 1.2-1.8 million units in each plant,” an industry official said. Gujarat will also follow this trajectory with three more facilities likely to follow over the next six years. In the process, Honda will have created an ecosystem in each plant to ensure an optimal business model for labour, sourcing supplies and costs.

Its former partner, the Hero group, continues to be the market leader with projected sales of over six million units in 2013-14. Honda had earlier indicated that it was aiming for the top slot in India by 2020 by which time its overall production would be 10 million two-wheelers.

Globally, it is targeting over 25 million motorcycles by 2017 and India will play a pivotal role in this ambitious plan. Aoyama had recently said the top position in India could even be achieved by 2015-16, assuming that the market would see flat growth till then, an unlikely possibility.