Honda, Bajaj and Hero plan to take on Royal Enfield in its turf2 min read . Updated: 01 Oct 2020, 09:31 PM IST
- Market leader Royal Enfield has been dominating the premium segment for the last decade and has been successful in its effort to register more than 30% operating margin till FY 18, indicating the high margins the company commands on its products
With mass motorcycle manufacturers like Hero MotoCorp, Honda Motorcycle and Bajaj eying a pie in the 300-cc and above segment, India’s premium middle-weight bike segment is likely to witness intense competition in next two years.
As volume growth in the commuter category motorcycles is expected to taper off in the next few years, most of these manufacturers are planning to move up the value chain to improve their profitability and penetrate deeper in the urban market.
Market leader Royal Enfield has been dominating the premium segment for the last decade and has been successful in its effort to register more than 30% operating margin till FY18, indicating the high margins the company commands on its products. With 97% market share by the end of FY20, the Siddhartha Lal-led company dominates this segment.
Honda Motorcycle and Scooter India (HMSI) – country’s second largest two-wheeler manufacturer – on Wednesday, announced its entry in the middle weight motorcycle segment – 300 cc and above - with the launch of Highness CB 350. The company's latest offering will compete with market leader Royal Enfield’s Classic 350 and other products in the segment.
In 2019, Pune based Bajaj Auto and Britain’s Triumph Motorcycles formed a non-equity joint venture to manufacture 300-700 cc motorcycles which are expected to hit the market in 2021.
Triumph is looking to leverage Bajaj Auto’s vast supply chain ecosystem and large scale manufacturing of small bikes to bring down the cost of operations and prices of the offerings.
Country’s largest motorcycle manufacturer, Hero MotoCorp is also in the process of developing a range of mid-size motorcycles to expand its portfolio of premium motorcycles.
“The CB350 will have close to 90% local content and we plan to increase it further with more mid-size bikes coming," said Y S Guleria, director sales and marketing, HMSI, hinting at Honda’s plan to roll out more locally manufactured motorcycles in the premium category.
“Honda’s local research and development unit took lead in development of this motorcycle and worked with the global R&D based in Japan," he added.
The new premium offering will also be the cornerstone of Honda’s premium motorcycle business in India and will be available from its premium BigWing dealerships.
According to a senior industry executive, Honda and Bajaj Auto’s plan is to go after midsize motorcycle market, which has most customers opting for Royal Enfield 350cc models costing less than ₹2 lakh. This segment is expected to expand in next 2-3 years as local development parts by Honda and Bajaj Auto is likely to aggressive prices for their respective offerings.
“Honda has benchmarked Royal Enfield’s 350cc models across key parameters including the classic bike appeal, upright seating position, engine displacement and performance and exhaust notes," he said, adding that Honda’s new 350cc, single-cylinder engine produces 20bhp, which is very close to that of Royal Enfield’s 350cc engine performance.
According to Siam data, motorcycles in 251cc-500cc category peaked at 833,112 units in FY2018. The volumes declined to 658,924 units in FY20, as economic slowdown hit sales across the country.