New Delhi: Honda Motor Co. has formed a team of engineers from Japan and Thailand to work in India and develop a global middleweight motorcycle to compete with Eicher Motors Ltd’s Royal Enfield, a top executive said.
“We (have) already allocated the people, some from Thailand and some from Japan to India to make a new concept mid-sized motorcycle in India," Noriaki Abe, president and chief executive officer (CEO) at Asian Honda Motor Co. Ltd, said in an interview. Abe will take over as CEO of Honda’s global motorcycle business on 1 April.
The planned middleweight motorcycle will compete with the ones from the stable of Royal Enfield, he added. “If we can make that product, we can export that to even Japan."
Royal Enfield has a cult following in India, where Eicher sold 592,558 units of the bike between April last year and February, an increase of 32% year-on-year.
Siddhartha Lal, CEO of Eicher, has now set his sights on overseas markets, where he sees a sweet spot for Royal Enfield in middleweight motorcycles—bikes with engine capacity of between 250cc and 750cc and priced between $3,000 and $7,000. Between April last year and February, Royal Enfield sold 13,819 bikes overseas, an increase of 70.56%.
A spokesperson for Royal Enfield did not respond immediately to an email seeking comment.
“We have always had a market between 250cc and 400cc in Japan but the motorcycle market in Japan is shrinking. There, it is very difficult for us to have a very competitive model in such a displacement...cost-wise," Abe said. “But they (Royal Enfield) have a huge scale in the Indian market and dominate that segment alone. So, it is a very interesting business model."
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The global motorcycling market is divided between extremes—the commuter segment, with a size of around 50 million, and the leisure biking segment in which one million big and bulky machines are sold every year.
“If we decide, we have technology to compete with them (Eicher). Our priority was not there. But, we notice that they have very, very interesting growth. So we are preparing for that," Abe said.
That makes sense, said Deepesh Rathore, co-founder of London-based Emerging Markets Automotive Advisors. “Honda will just have to make a better bike and India is the right place to do that. If they develop it anywhere else, costs will go out of control and in India, there is no dearth of suppliers or engineering talent either."