NEW DELHI – Honda Motor Co. is looking to take the top spot in India — the world’s largest motorcycle market — through a massive investment in production and sales on the crest of the growing popularity of scooters.
Honda has already seen success, becoming the No. 1 two-wheeler brand in 17 of 36 states and territories in the country last year. The firm calls that a “quantum leap” from 2011, when it held the top spot in just two areas. In 2010, the company agreed to end a joint-venture partnership with market leader Hero MotoCorp. Ltd.
The motorcycle market comprises motorbikes, mopeds and scooters. In recent years, a surge in scooter demand fueled by a rising number of women in the workforce has transformed the landscape. Even women in semiurban and rural areas — who are often considered socially conservative in a traditionally male-centric society — are riding scooters.
Honda Motorcycle and Scooter India Pvt. Ltd., a wholly owned subsidiary of the world’s biggest motorcycle maker, has prevailed in the southern and western states, both key markets for the scooter segment in the country, said President Minoru Kato.
In the 18 million-unit motorcycle market, scooter sales jumped 2.2-fold to 5.6 million units in the five years to March 2017, while motorbike sales grew 10.1 percent to 11.1 million, according to the Society of Indian Automobile Manufacturers.
Scooters now account for 33.7 percent of the entire market with motorbikes at 62.1 percent. In the year to March 2011, the percentages stood at 19.1 percent and 75.1 percent, respectively, according to data from the industry body known as SIAM.
P.K. Das, sales manager at one of Honda’s motorcycle dealerships in Cuttack, in the eastern state of Odisha, is busy dealing with customers inquiring about new scooter models.
“Compared to motorbikes, these scooters are in demand nowadays,” he said. “They now account for 70 percent of our total sales.” The segment is gaining traction in the city and its surrounding areas, where motorbikes had traditionally dominated the market.
So-called scooterization is also dominating small cities like Bharatpur in Rajasthan state, south of New Delhi. Some local singers have even released music videos highlighting the trend among women and girls to ride scooters.
Sanjeev Kuntal, a Bharatpur resident and Honda scooter user who directed a music video for a song called “Scooty Wali” — which translates to “girl with a scooter” — said in an interview that “large storage, ease of driving and affordability are the key factors driving customers toward scooters.”
Some local governments such as the northernmost state of Jammu, Kashmir and the northeastern state of Assam are offering automatic scooters to successful female students as part of a women’s empowerment movement.
Honda’s Indian unit has capitalized on growing demand for its automatic scooter models, and the company is emerging as an archrival of former partner Hero MotoCorp. The combined market share for the two companies is nearly two-thirds of the total, according to SIAM.
Honda has nearly doubled its motorcycle market share to 29 percent since the alliance with Hero ended. The Japanese company’s local unit boosted scooter sales to an estimated 4 million units in this fiscal year ending in March, a surge of more than threefold, with its share in the segment reaching 57.2 percent.
“This growth is coming on the back of increasing scooterization of traditionally motorcycle-driven Indian states, where scooters have become the fastest-growing segment,” said Yadvinder Singh Guleria, senior vice president for sales and marketing at the local arm.
Beyond the increase in female riders, the growth in the popularity of scooters has been driven by lower prices, better mileage and lower maintenance costs, according to a report by research and brokerage Ambit Capital Pvt. Ltd. The report also said more families are taking on scooters as a shared household vehicle.
Sugato Sen, deputy director-general of SIAM, echoed the findings in the report. “We are witnessing a new trend where families in India are now keeping double two-wheelers,” he said. Improved road infrastructure in semiurban and rural areas has also boosted scooter demand, according to the association.
For Honda, female buyers account for around 30 percent to 35 percent of total domestic scooter sales, said Yadvinder Singh.
The Tokyo-based company has not solely relied on the scooter segment. Its motorbike sales are on pace to reach 1.97 million units in the current fiscal year, a 2.5-fold surge.
Also in this fiscal year, top rival Hero has seen its overall market share erode to an estimated 36.2 percent, a drop of 8.9 percentage points. The firm remains primarily dependent on the strength of its mainstay motorbike segment, which has slower growth than scooters. The result is a narrowing in its the market share gap with Honda to 7.2 percent from over 30 percent, according to SIAM.
Deepesh Rathore, a London-based analyst and co-founder and director of research firm Emerging Markets Automotive Advisors, said in an interview that Hero’s “main problem was its historic dependence on Honda for technology” after the two sides formed a joint venture in 1984.
Hero is working hard to strengthen its brand in the scooter segment to cash in on rising demand as part of efforts to defend its leading position in the overall market, said Abdul Majeed, partner and auto expert at PwC India, a local unit of the global accounting firm.
Hero did not respond to a list of emailed questions about its scooter business.
The company presides over the market through over 6,000 dealerships in the country, according to Rathore. But Honda is catching up with a massive increase in dealerships, reaching 5,500 locations from 1,152 seven years ago.
Honda’s cumulative investment inflated to 80 billion rupees ($1.26 billion) after terminating the partnership with Hero — compared with 15 billion rupees by March 2011 during the partnership — pouring the capital into the addition of sales bases as well as building from a single plant to four, the latest of which specializes in scooters.
India, Asia’s third-largest economy, has not only become the top production base for Honda worldwide — with an annual output capacity of 6.4 million vehicles — but also the biggest contributor to its global sales, spanning more than 120 countries and regions, according to Shinji Aoyama, chief officer for regional operations (Asia & Oceania) at Honda.
India alone accounts for 28 percent of the firm’s global sales, and “the growing Indian two-wheeler market is top priority for Honda,” he said.
Honda said it is planning to add more dealerships “with special focus on semi-urban and rural areas” to seize the crown in India, which offers a huge potential demand from its population of over 1.3 billion.