Monday, December 27, 2010

Honda not obsessed about going after number one position

Honda Motor Company, which is among the leaders in two-wheeler markets all over the world, has just split from the joint venture with Hero group which had gave a strong five million units to add to its numbers in the Asean region. But now the company’s subsidiary Honda Motorcycles and Scooters India (HMSI) has to start the lone march but the company insists it is not behind any numbers or top position yet.

According to a report in the business daily The Business Line, it was reported that HMSI expects to end this fiscal at around 1.6 million units, which is a modest number compared to Hero Honda's annual output of five million bikes and scooters. But the company is a leader in the scooters segment and has a strong base of customers. It is now looking at innovation and technology advancement in the motorcycles, it was reported. The report quoted an official saying “Even during the joint venture days, the Hero Group did most of the work on building a huge distribution network across the country. Honda's top priority was the product and the combination ensured a leadership slot for the joint venture.’’

The company is only looking at much bigger picture and not just attaining the numbers in Indian market but there is bigger Asean strategy in place, states the report. It was mentioned that Honda is the global leader in two-wheelers and has aggressive plans lined up in the Asean region. The key is that the company would rather take one thing at a time instead of planning an all-out product blitzkrieg. The report quoted an industry veteran saying “It is only in India where numbers become an obsession. Japanese companies like Honda are not up against any deadline to finish first. They typically draw up a long-term goalpost and take one thing at a time.’’

It was also reported that Honda would rather give priority to good, solid products which ensure greater brand recall. This is evident with HMSI's Activa, which is perceived as the best bet in gearless scooters and whose customers are willing to wait up to eight months for delivery. The report states that in contrast, the company's motorcycles have not quite created the same magic though it is quite willing to wait while sticking to its gameplan of premium, sporty bikes. It has already signalled its intent with the 250cc CBR, which will be launched in the coming months at less than Rs 1.5 lakh. Further, from Honda's perspective, India is part of an overall growth vision for Asia in the two-wheeler space. Thailand, where it has had its longest innings, is a key production hub. Indonesia, likewise, is an important market where it plans to achieve capacity of five million units by mid-2011. Vietnam is yet another key part of its growth plans in the Asean region, mentions the report.

According to the report, Honda is targeting two-wheeler capacities of 18 million units in Asia by end-2011. Without the Hero group, this number will reduce to 13 million units. Yet, it is substantial enough to leverage economies of scale in the Asean region and focus on aspects like sourcing and building a cost-competitive base. In Honda's view, this is the most important task on hand for emerging economies like India and China where it is up against tough local competition. Recognising that costs could be getting out of control in Japan, it could also source parts from India.

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