Trade Resources Economy Honda Made Strong Strides in The Segments in India and Overtaken Its Former Partner

Honda Made Strong Strides in The Segments in India and Overtaken Its Former Partner

A little over a year since the termination of the JV with the Munjals promoted Hero MotoCorp, Japanese auto major Honda Motorcycle and Scooter India has made strong strides in the 2 wheeler segments in India and overtaken its former partner in premium motorcycle sales in the 150cc segment.

According to Society of Indian Automobile Manufacturers data, Hero's sales in bikes with engine capacity between 125cc and 150cc declined by a steep 53% to 80,303 units between April and October in FY13, while HMSI's volumes went up by 76% to 134,650 units.

Interestingly, HMSI sold 54,347 units more in the 125cc to 150cc segment than Hero, despite not having introduced any new products in the category.

In the corresponding period last year, Honda was trailing behind Hero by 92,861 units. The category contributes over 11% to overall motorcycle sales but has strong revenue implications as product prices are 45% to 92% higher than that of a model in the entry level mass segment, which translates into higher margins for companies.

Mr Yadvinder Singh Guleria VP of HMSI said that "Our sales in the segment have been driven by strong demand for CB Unicorn, particularly in southern and western markets. We had back orders last year due to capacity constraints, but now with the increase in production, sales of the model have increased by nearly 90% in the first 7 months of the fiscal."

Till October in the current financial year, Honda sold 122,894 units of CB Unicorn compared with 65,007 units sold in the same period last year.

Mr Anil Dua senior VP of Hero MotoCorp said that "2 of our volume models, Hunk and CBZ X-Treme were undergoing a rebranding exercise because of which we had no dispatches in August and September."

But a closer look at the numbers reveals HMSI had actually overtaken Hero in segment sales in May 2012, and has maintained the lead since. HMSI's market share in the segment has increased to 20% from the earlier 8.9%, while Hero's has slid to 12% from 19.6%. Of course, Bajaj Auto with the Discover and the Pulsar continues to remain the market leader in the category with a share of over 46%.

Mr Deepesh Rathore MD of IHS Automotive India said that "Hero still relies on the Splendor and the Passion for sales, HMSI has a fresh portfolio. Earlier, HMSI had distribution issues, but that gap is narrowing now. Hero used to have a lot of repeat customers, some of whom are now opting for HMSI products because of the Honda brand. Long term, I do see Honda overtaking Hero as the number one two wheeler maker in India."

Mr Rathore's contention is validated by the fact that even in the 110cc to 125cc motorcycle segment, HMSI has closed the sales gap with Hero MotoCorp to a mere 3,418 units compared to 26,542 units in the same period in the previous year. HMSI's growth has been led by CB Shine, which saw sales increase by 54% to 358,711 between April and October 2012.

Mr Guleria said that "Our growth is being driven by DNA Demand for our products, Network expansion and appropriate Advertising and marketing. We started the fiscal with 511 full fledged dealerships and have added 75 outlets the last in 7 months. That is the pace at which we are expanding."

Despite sales slowing down to a moderate 4.5% in the domestic 2 wheeler market, HMSI has managed to clock in a growth rate of 47% between April and September in FY13. It had sold 1.53 units till October, whereas Hero reported a 1.8% decline to sell 3.41 million units in the same period.

 
Source: http://www.steelguru.com/indian_news/Honda_Motor_overtakes_Hero_MotoCorp_in_125cc_to_150cc_segment/293218.html
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Honda Motor Overtakes Hero Motocorp in 125cc to 150cc Segment