Honda Motor Co., the world’s biggest motorcycle maker, will expand its network of dealers and service outlets in India by 25 percent and introduce new models to gain sales in the nation.
The Tokyo-based company may introduce a new 100cc motorbike as early as next financial year, hoping to add on to its sales target of 2.1 million units for this fiscal year, said Naresh Kumar Rattan, vice president for sales, marketing and corporate affairs, in an interview in Gurgaon, India. Honda sold 1.5 million two-wheelers in India last year.
“India is the market for Honda, especially in motorcycles,” said Rattan. “The Indian market is growing across the board in all categories.”
Honda is expanding its operations in India after separating from former partner Hero Motocorp Ltd. in March to focus on its own fully owned local unit. The company will spend as much as 10 billion rupees ($221 million) on its third factory near Bangalore in southern India that will be ready in 2013, Rattan said. Honda will also introduce a new scooter and a new motorcycle model in India this year, Rattan said.
Sales of 100cc motorcycles account for about 50 percent of total motorbike sales of 9.02 million in India, according to Rattan. About 91 percent of the 4.9 million motorcycles that Hero, the maker of more than half the motorcycles sold in India, sold last year were below 125cc models, according to data from the Society of Indian Automobile Manufacturers.
Motorcycle sales in the world’s second-most populous nation will grow about three times to about 30 million in 2020, according to Ernst & Young LLP. Rural sales will increase to 45 percent of the total in that period from the current 40 percent, as distribution expands and incomes rise in those areas.
“As per capita incomes rise in villages, the first aspiration is to buy a personal mobility solution,” said Rakesh Batra, who leads the automobile practice at Ernst & Young in New Delhi. “In villages, there is no public transportation and the alternative is to walk, ride on the back of a tractor or a bicycle.”
Hero dominates the motorcycle market in India, with sales of 4.9 million motorcycles accounting for almost 54 percent of total deliveries in the year that ended March 31, according to data from the automakers association. Bajaj Auto Ltd., the second-biggest maker in India, sold 2.4 million units in the same period. Third-ranked Honda had sales of 658,067 motorcycles.
Honda, which can make 1.6 million motorcycles and scooters in India a year at its factory in Manesar near New Delhi, will double the capacity of its second plant to 1.2 million by the end of this fiscal year. When its third manufacturing facility is completed, the company will be able to produce 4 million units a year.
Honda is planning to expand its network in rural and semi-urban areas and is organizing camps and marketing campaigns to boost brand awareness, Rattan said.
“In this category, it is more experience of the product and word of mouth represent a bigger say,” he said. “That will be our focus.”
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