Japanese two-wheeler maker Honda and its Indian partner, the Hero group, wish to further their 25-year-old partnership.
Both sell two-wheelers, including motorcycles and automatic scooters, in the same segments, with some cannibalisation already taking place, according to executives in Hero Honda, India’s largest two-wheeler producer.
Both companies may look at sharing details of new products with each other, including engines, design sequences and vehicle platforms.
Honda Motorcycle and Scooter India (HMSI), the country’s fourth-largest two-wheeler maker, has already helped Hero Honda Motors (HHML) in areas like design and styling for a couple of products.
Speaking to Business Standard, Shinji Aoyama, president and CEO, HMSI, said, “We enjoy a very positive association with Hero Honda. We shared the basic vehicle design with them for their new CBZ and Hunk (motorcycles). We may look at sharing engines or platforms in the future but there are no confirmed plans yet.”
Currently, HMSI and HHML share a supply chain and details related to production capacity.
Recently, Pawan Munjal, managing director and CEO, HHML, said since both operated in the 100-150cc segment, there had been some cannibalisation of products. Hero Honda sells as many as 14 products in the local market and HMSI sells six.
According to an earlier understanding between the two, HMSI was to look at capitalising only on the scooter segment, while HHML was to focus on the motorcycle segment. However, when the motorcycle market grew faster than the scooter, HMSI was forced to change strategy.
With the launch of Unicorn (150cc model) in 2004, HMSI announced its entry into the motorcycle segment. Thereafter, it launched two more motorcycles, both in the 125cc segment.
The company will also launch a 100cc motorcycle, a segment which accounts for about 70 per cent of the entire market and where Hero Honda has a near-monopoly. The bike will be launched by December this year or early next year.
According to data from the Society of Indian Automobile Manufacturers (Siam) for March 31, Hero Honda has almost 60 per cent share in the motorcycle segment, while Honda commands 57 per cent in the scooter segment.
Hero Honda’s revised strategy is to focus on the largely-untapped rural market, while Honda will focus on aggressively-styled products that are better suited to the urban consumer.
Both fared well last year despite the downturn in the domestic market. HMSI, for the first time, sold more than a million units in the domestic market, a growth of 16.5 per cent. The company has projected a growth of 18 per cent this financial year, with sales of 1.2 million units in the Indian market.
It is also hoping to increase its growth in the motorcycle segment by 25 per cent by next year, aided by as many as five new launches.
A city-based analyst said since both companies competed in the same space, they could save through sharing technology and better production management.
