Mumbai: Honda Motorcycle and Scooter India Pvt. Ltd (HMSI), India’s second largest two-wheeler maker, will launch four completely new models—including the Africa Twin—in the current financial year, but is putting on hold plans to develop a middleweight motorcycle to take on Royal Enfield, a top company executive said.
The new models HMSI plans to launch include the 1000cc Africa Twin that sports the advanced dual clutch technology and three more undisclosed brand new models—a bike and two scooters, said Minoru Kato, president and chief executive officer, HMSI.
HMSI has already started assembling the completely knocked down kits of the Africa Twin. The model will go on sale next month.
In March, Noriaki Abe, then president and chief executive officer (CEO) at Asian Honda Motor Co. Ltd, who took over as CEO of Honda’s global motorcycle business on 1 April, outlined in an interview with Mint Honda’s plans to develop a middleweight motorcycle to compete with Royal Enfield.
Kato indicated on Thursday that the plans had been put on hold for now.
“So far, from my point of view, the cost competitiveness as of today is not enough to compete in that segment,” Kato said. HMSI is very cost-competitive in big-volume models like the Activa scooter, which comes in 110cc and 125cc versions, but it doesn’t have the experience of developing motorcycles in the above-250cc (up to 450cc) segment, he said.
HMSI is targeting the sale of 6 million scooters and motorcycles this financial year in a market that has just recovered from the impact of high-value currency invalidation. It is pinning its hopes on a normal monsoon that would boost rural demand.
The two-wheeler maker sold 4.7 million units in the domestic market year ended March, up 10% from the previous year. Overall sales of bikes and scooters expanded 6.89% in the financial year; motorcycles grew at a slower pace of 4% in the same period, according to the Society of Indian Automobile Manufacturers (Siam).
Even as scooters, a market that HMSI leads, selling every second model in the country, will be the key volume driver for the company, the share of motorcycles as a percentage of sales is expected to go up, said Kato.
HMSI, which emerged as the biggest contributor to Honda’s global sales in 2016, is also planning to make India an export hub once the BS-VI emission norms take effect in 2020, company officials told reporters in Mumbai. It has also formed a cross-functional team to lead the migration to BS-VI.
HMSI plans to invest Rs1,600 crore this year to launch new products and enhance capacity. Its fourth Indian factory, being built in Karnataka, will commence production in July, taking its annual capacity to 6.4 million units.
With sales of scooters growing at a faster pace than motorcycles, HMSI will have an edge over bigger rival and former partner Hero MotoCorp Ltd, said Nitesh Sharma, an analyst at Phillip Capital India Ltd.
“Even as Honda is unlikely to dent Hero’s share in the motorcycle segment, where the latter has a dominant position, robust growth in the scooter market will help Honda increase share in the overall two wheeler market,” he said. Despite predictions of a normal monsoon and the lower base of last year, Sharma expects the two-wheeler market to expand by a mere 7-8% in the current financial year.