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Honda aims to challenge market leader Hero MotoCorp with China made models

Thursday, 05 January 2012

06 Jan 2012;economictimes.indiatimes.com:Chanchal Pal Chauhan & Lijee Philip:NEW DELHI: A year after they parted ways, the world's largest two-wheeler maker, Honda, has thrown down the gauntlet at its former partner of 27 years, the Hero Group, with a plan to launch motorcycles at game-changing prices. Hero MotoCorp, the new avatar of Hero Honda, which accounts for 46% of all bikes sold in India, dominates the market with models like the 100cc CD Dawn, Splendor, Passion and the 125cc Super Splendor. The Japanese giant, which operates in India through wholly-owned subsidiary Honda Motorcycle & Scooter India (HMSI), hopes to sell 125cc made-in-China models with an ex-showroom price in Delhi of a little over Rs 30,000 - almost Rs 4,000 cheaper than the CD Dawn and Rs 17,000-18,000 cheaper than the Super Splendor. Honda currently sells such models in African markets like Nigeria. Tatsuhiro Oyama, senior managing officer & director motorcycle operations at the Japanese giant, told ET: "We are working out plans to gain leadership in the Indian two-wheeler market." Honda has just launched a 110cc bike, Dream Yuga, to compete in the mass market. "Going forward we are conducting a feasibility study for our low-cost bike that is currently made in China and could be manufactured in India," added Oyama. RAMPING UP CAPACITY TO MATCH HERO Along with cost-competitive models, Honda is also busy ramping up capacity to match that of the Munjals-owned Hero MotoCorp. Oyama told ET the company plans to set up a fourth plant in India with an initial capacity of 1.2 million units, entailing an investment of Rs 1,000 crore. The fourth plant will take its cumulative capacity to 5.2 million, not far behind the Munjals, whose current capacity stands at 6.15 million per year. "We are aiming to sell 10 million two-wheelers in India by 2020 and target a 30% market share to achieve leadership in India. We are market leader in scooters and now the focus is to replicate the same in bikes," said Oyama.