ASIA NEWS NETWORK

WE KNOW ASIA BETTER

» Business

Honda battling back in India

Publication Date : 03-01-2013

 

Seeking to take back the top spot from a dominant local rival, Honda Motor Co. has launched a major sales drive in India to regain lost ground in the world's second-largest motorcycle market.

Honda fell from No 1 to No 4 in that country after dissolving a joint venture with a leading domestic company. But by focusing on improving sales and production, Honda has recovered to within striking distance of the No 2 slot.

However, India's leading motorcycle manufacturer, New Delhi-based Hero MotoCorp, still holds a comfortable lead over Honda, leaving the Japanese automaker with a bumpy road in the days ahead.

Amit Taneja, manager of a Honda dealership in Gurgaon on the outskirts of New Delhi, said that during a festival period in November--which is considered a lucky time to shop--his outlet sold more than 300 motorcycles on the first day alone.

As this was a 40 per cent increase in sales from the same day the year before, and equivalent to half the sales in an average month, Taneja said he was convinced the popularity of Honda products was growing.

Honda formed a joint venture firm with the midranking Indian business conglomerate Hero Group in 1984.

In 1999, Honda dominated the Indian market with a share of about 60 per cent when the sales of the venture and products made by its local subsidiary were combined. But Honda ended the partnership in March 2011 over differences in corporate management policies, selling its entire stake back to Hero Group. This took Honda's market share down to about 10 per cent.

The Indian motorcycle market, second only to China's, is projected to grow from 11 million units sold in 2010 to about 25 million units in 2020.

As motorcycle sales account for a significant chunk of Honda's overall earnings, the firm cannot afford to fall behind in India. Tatsuhiro Ohyama, Honda's senior managing executive officer, said his company aims to have the largest market share by 2020.

To strengthen its sales team in the country, Honda sent five veteran salesmen in their 30s, 40s and 50s who have proven track records in Africa and Southeast Asia.

One member of this elite team, Takeshi Senda, handles central India, an area with a population of 300 million.

Senda, who travels with his own spoon and boxes of mosquito coils, spends many days on the road looking for new markets, sometimes driving six or seven hours on a single trip.

"India is a society where a product's reputation spreads through word of mouth. The key to success will be my ability to get customers to say, 'Honda's products are good,'" said Senda, 54.

Honda is scrambling to open new dealerships and promote its new fuel-efficient model, the Dream Yuga, which went on sale in May 2012. In July, its market share topped 20 per cent on a monthly basis for the first time since the joint venture with Hero ended.

Honda will open its third plant in India in May, allowing it to produce more than 4 million units per year. Honda also has plans for further expansions in the months ahead.

However, the country's leading motorcycle seller, Hero MotoCorp, which holds a market share of more than 40 per cent, maintains a powerful presence in local areas by using trucks carrying motorcycles for advertising and direct sales.

Anil Dua, vice president of marketing and sales at Hero MotoCorp, said his company will launch a new model in 2014 and hopes to increase sales to about 10 million units per year by the 2016 business year, which would be 60 per cent more than was logged in the 2011 business year.

Meanwhile, Yamaha Motor Co. has been intensifying its female-focused marketing strategy, and could give Honda a run for its money as it seeks to take back the top spot.

 

Mobile Apps Newsletters ANN on You Tube