Riding on scooter growth, to expand lead over rivals: Honda

Big shifts have been taking place in the motorcycle market - Bajaj Auto has lost 3% market share to Honda, which is now a very close third; including scooters, Honda now has a fourth of the 2 wheeler market. How long will it take before Honda displaces Bajaj auto? Yadvinder Guleria, Vice-President, Sales and Marketing, Honda Motorcycle and Scooter India joins CNBC-TV18’s Menaka Doshi, Senthil Chengalvarayan, Sonia Shenoy and Shubhabrata Marmar to talk about the same.

Also read: Two-wheeler race: Honda scooters help widen lead over BajajBelow is the edited transcript of the interview:Menaka: Can you run us through what you would identify as the top two or three reasons why you think Honda has gained in market share the way it has in the last quarter?A: I would like to mention that the growth for Honda is coming both from motorcycle as well as scooters. The good part is that the growth is almost equal. Even in the last month, we were having a similar kind of growth both from motorcycle as well as the scooter portfolio. As far as the priorities of Honda are concerned, we need to not only maintain but expand our leadership in the scooter segment which is the only segment leading the industry growth. While for motorcycles also, our portfolio expansion into 100-110cc through Dream series has got us good results. I would like to take this opportunity to even mention our CB Shine in 125cc category which continues to grow and we are now talking of almost 70000 units a month. For the same period in last 3-4 years, we also doubled our market share in the 150cc segment through CB Unicorn and also the new launch of CB Trigger in 150cc segment. In fact all segments we have been able to grow in motorcycles. At the same time we have been able to maintain our leadership in the growing automatic scooter segment.Sonia: Can you tell us exactly where the market share stands at now for Honda and what are your internal targets to grow your market share say in the next one year?A: While on market share, we are around 24 percent market share – April to February for this fiscal.Menaka: This is the full two wheeler market? Can you break it up for us into motorcycles and scooters?A: Motorcycles would be close to around 17-18 percent for us while in scooters, our market share is around 52 percent.Sonia: What would your target be as far as market share is concerned? How much would you grow it by?A: We haven’t announced any target as far as market share is concerned because as you know, nobody even expected that market would not be growing. It is only around 6 percent for this year in two wheelers. So, we cannot target market share. If you get the market share, the total volume is below that; which is also not a healthy situation for any company.Sonia: What are the new launches that you have lined up going ahead? The key question on most analysts mind is that after penetrating the 100cc and 125cc quite well, will you be sticking with this segment itself or are you looking at broadening your scope into other segments as well?A: We have already announced during the auto expo launch of new scooter in 125cc category, that is Activa 125. This is the first scooter from our portfolio which is having a different engine platform. Existing four models have the same engine platform of 110cc Honda engine. This infers that we would like to not only remain the leader in the automatic scooter, but we would like to expand our market leadership in automatic scooters.So, it would definitely be followed by new launches in motorcycle segment also. You can now expect us to have new launches in motorcycles every quarter.Shubhabrata: We have consistently seen that the 110cc end of the scooter market has done rather well. How do you think the 125cc scooter is going to do in terms of numbers, in terms of outlook and how the market is going to receive that scooter?A: We are expecting good numbers. We cannot say that it has to get the same volume which Activa 110cc is giving. However, within our own product portfolio we are seeing people who want to have some change in terms of the looks and also in terms of additional power and pickup in the city conditions. So, this segment we are closely looking at who would be keen on picking Activa 125cc. Secondly, since it is continuing the legacy of Activa 110cc, our scooter segment also witnesses many of users within the same family owning either third or fourth Activa. This is another segment – who are already owners of Honda scooter, looking for some change in terms of additional scooter in their family, we would like them to upgrade only to one Activa 125cc.Shubhabrata: What is happening in the premium end of the motorcycle space? The CBR250R is doing okay numbers. I think we need to see an upgrade for that, that is my perspective on that. You are going to bring the CBR650F which is going to be your first assembled product in India. It is an inline-4 engine that you have chosen. What is the contribution of this part of the market to your overall strategy and how does it all work?A: Most of the time these aspirational models are not the volume models for the company. We are also not looking at these models from business point of view. However, they are definitely an important launch for any company, especially for Honda to talk about our technology and keep the brand in top of our consumers’ minds.From volume point of view, I would still say that it will take a couple of more years to see their significant contribution in terms of volume to our overall business plan.Sonia: Since you are an unlisted player, you will be able to tell us little more frankly. Who are you gaining market share from in the market? Is it from Bajaj, is it from Hero, if you can give us more clarity on that?A: We are not in that analysis. I believe there are lot many analysts who are out there to work on this. Senthil: What are the analysts out there telling you?A: Analysts may be telling the investors but not to us.Menaka: A quick question on inventory. Both Shubhabrata and Sonia were pointing out that Bajaj's strategy has been to cleanup inventory at the dealers end in the last few months. We were wondering if that could be one reason why we have seen a dip in Bajaj's market share in the motorcycle market. Can you talk us through what your view on this would be?A: Rather than commenting on any competitors’ strategy, our take is that we need to have a control on overall inventory to have a long term sustainable business. Since dealers are our business partners, you cannot continue to increase inventory at the dealer level because it definitely has an impact on rotation of the working capital. We therefore need to keep a close watch on inventories. There have been some questions to us also in recent past on the overall increase in the inventory and we have clearly explained that this is because of the distribution model of hub and as far as the 100-110cc market is concerned, even today, our overall inventories are between 3-4 weeks at our dealership.