It is a well-known fact that the speed at which Honda Motorcycle and Scooter India (HMSI) is growing in the Indian two-wheeler market, it may emerge as the market leader in the years to come. The gap between the number one player — Hero MotoCorp, and the number two player — HMSI, in monthly sales, which used to be between 100,000 and 150,000 units, came down to just 12,377 units in April 2017.
Honda Motorcycle sales grew by 34 per cent at 578,929 units while Hero MotoCorp’s sales declined by 3 per cent at 591,306 units in the first month of the new fiscal.
In the domestic market, HMSI sold 551,884 units last month as compared to 414,035 units in April 2016. This is the first time that the Indian arm of the Japanese auto major crossed the 550,000 unit monthly sales.
The company reported that the rapid growth (40 per cent) is driven by the sales of its automatic scooter brands, which have recorded retails of over 350,000 units for the first time in April.
Over the years, demand for Honda two-wheelers has grown on the back of great demand for its scooters, particularly in urban India, where the impact of demonetisation was very minuscule. Gradual rise in income of urban consumers and paradigm shift in two-wheeler usage also boosted Honda’s sales.
In the FY 2016-17, Honda reported sales of 4,725,067 units while Hero MotoCorp sold of 6,483,655 units. Honda trailed Hero by 1,758,588 units for the 12-month period.
In FY 2015-16, Hero had reported annual domestic sales of 6,421,913 units while Honda sold 4,283,690 units. The margin between the two was even larger at 2,138,223 units.
Experts say that two back-to-back drought and demonetisation had an impact on Hero’s sales as major portion of Hero’s sales come from rural India where it is the undisputed king. “Hero was having an excellent FY2017 till demonetisation came in. A good monsoon and increase focus on scooter market can help Hero to strengthen its market leadership position. Hero is still way ahead when it comes to motorcycle sales,” an analyst said requesting anonymity.
Honda also says that it has a lot of catching up to do to reach near Hero. In an recent interview, Noriaki Abe, chief executive officer of Honda’s global motorcycle business said, “In motorcycle operations, we are gaining market share and volumes but still a long way to go to reach Hero.” Honda has set a target of selling 6 million two-wheelers in FY2018.
Hero said that the trend of robust sales will continue in May 2017 as well due to the ongoing marriage season. The company has raised prices across its portfolio in the range of Rs 500–Rs 2,200 which will effective from 1 May 2017.
BW Reporters
The author is Senior Correspondent with BW Businessworld
