Honda developing low cost bikes for India

Riding on the success of its Indian operations, Japanese auto major Honda Motor is developing a new range of affordable motorcycles and scooters for Indian customers to gain market leadership even as its narrows the gap with its partner-turned-rival market leader Hero MotoCorp in the 15 million units domestic two-wheeler market.

These new range of low-cost motorcycles and scooters, that are expected to hit the streets in two to three years, are currently being developed at its Manesar-based Research & Development facility that houses over 200 engineers, mostly sourced from India.

Honda Motorcycle and Scooter India (HMSI), the fully-owned local subsidiary of the world's largest two-wheeler maker by value, has outlined these details tailored on the need of its sales, engineering, design & bough out (SEDB) concept that would allow the rollout of Indian customer-centric bikes and scooters.

"We are working closely with our technical centre to develop motorcycles and scooters keeping in mind the local customers that would change the Indian market in terms of pricing, but would not be a lowcost product. These would be extremely innovative next-gen mobility vehicles bearing the Honda stamp and based on materials sourced from local Indian market that would help us control costs, but maintain high aspirations like most of our brands," HMSI president and CEO Keita Muramatsu said.

Honda looks to gain an edge over its Indian rivals and is widely perceived to overtake current market leader Hero MotoCorp. It is the fastest growing two-wheeler company since it parted ways with its Indian partner in 2010 and has almost doubled its market share to around 26 per cent from 14 per cent in the current fiscal. Growing at 25 per cent, it outpaced Hero's modest 8 per cent growth in sales during the current fiscal in the domestic market that grew 12 per cent to 10.93 million units in the first eight months of the fiscal.

Honda executives admitted that they are facing huge capacity constraints that is coming in the way of its aim to grow its share in the two-wheeler market. "We have a customer booking backlog of around one lakh scooters and bikes and are constantly falling short of capacity to meet this demand. We are almost saturated on the 4.6 million installed capacity and can only cater to the demand only when the fourth plant in Gujarat comes up in FY'16 and starts rolling new products," HMSI vice president for marketing and sales YS Guleria said.

Honda would not be sourcing any technical know-how for the new range of bikes from its China operations, where it makes bikes for African market that are sold in the price band of $600. Indian two-wheeler company Bajaj Auto also makes bikes in China that are sold in Africa and other markets.

"We would be improvising on the existing platforms, or if possible, developing new products that are ideally priced for the Indian market. It isn't easy to launch low-cost two wheelers, and we are constantly working on cost reduction measures through technology intervention. Costs are constantly rising in India and our in-house overheads have risen 15 per cent in the past one year," Muramatsu said.

Its main rival Hero MotoCorp is also working on low-cost bikes though CEO Pawan Munjal did not disclose any timeline for the debut of the product. Another Japanese two-wheeler company Yamaha is also plans to introduce a low-cost bike in India, though its local operations are small and it is only a fringe player.

While there have been no instances of low-cost bikes in India, several carmakers tried to introduce low-cost cars in the past, but flopped. Tata Motors' Rs 1-lakh Nano as well as Nissan's Datsun Go hatchback have not been endorsed by customers. Utility vehicle maker Mahindra & Mahindra had tied up with its European partner Renault and launched the Logan sedan which also failed to click here.