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India becomes Honda's biggest 2-wheeler market

Business Standard:  September 05, 2016

New Delhi: Riding on a sustained double-digit growth in scooter volumes, Japanese automobile major Honda has seen India emerge as its biggest two-wheeler market this financial year.

Honda Motorcycle and Scooter India (HMSI) recently overtook the company’s volumes from the Indonesian market.

Into the sixth year of the split with its Indian partner Hero, HMSI sold 1.23 million units during the April-June quarter, 16 per cent more than the 1.06 million units sold in Indonesia.

The corresponding volumes for India and Indonesia last year was 1.01 million and 1.03 million units, respectively. With this increased volume, India now brings 29 per cent of Honda’s global two

wheeler sales, compared to 25 per cent a year ago.

Many of the top two-wheeler markets in Southeast Asia, such as Vietnam, Indonesia and Thailand have already matured. Honda is a market leader in many of these.

In Indonesia, for instance, it commands 80 per cent share; the share in Vietnam is 70 per cent.

“Considering the low two-wheeler penetration in India, we believe it will continue to lead the global two-wheeler market, as new demand will continue to come from rural and semi-urban areas in the future. The road infrastructure is increasing rapidly while public transport is not able to meet daily commuting needs of millions,” said Y S Guleria, senior vice-president, sales and marketing, HMSI.

Honda is the second-biggest two-wheeler player in the Indian market.

It is also present in the passenger vehicle market, where it is the sixth-largest player and has a five per cent share.

In the two-wheeler market, however, Honda enjoys a 28-per cent market share though Hero MotoCorp is the leader with a 37-per cent share. In the scooter segment, Honda sits on a strong 59-per cent share. It is this segment that is driving the company’s India volumes.

Scooters account for two-thirds of HMSI’s India sales, up significantly from 54 per cent a year ago.

The scooter market has grown 24 per cent this year so far on a rising base, helped by double-digit growth for last two consecutive years. Motorcycles, as a segment, did not do well for last two years due to weakness in rural markets on sub normal monsoon. That is set to change this year.

Improved sentiments in rural markets due to good rainfall and higher wages of the government employees will be positive growth triggers for the industry. Guleria said the Indian market has been showing constant growth in recent years while other big markets such as Indonesia and Brazil have been showing downtrend due to their economic slowdown.

HMSI saw a capacity addition in June this year with the opening of its dedicated scooter plant in Gujarat that added 1.2 million unit annual production capacity. HSMI aims to end this year with total sales of 5.4 million units, up 26 per cent from last year’s 4.28 million units.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.