Interview with Yadvinder Singh Guleria, Senior Vice-President, Sales and Marketing, Honda Motorcycle and Scooter India Pvt. Ltd.

July 2016 was a month of records for HMSI. Record sales, record exports, record market share, record scooter sales, did you see this coming? Do we expect such a phenomenal growth to continue for HMSI?

July 2016 has been especially remarkable month for Honda 2Wheelers India. Witnessing steady growth in customer demand, Honda’s market share zoomed to all time high of 29.1% in domestic market (1% up) in July’16. Led by Activa – India’s No. 1 selling two-wheeler of 2016, Honda’s automatic scooter sales crossed the 3 lac mark for the first time, growing a robust 19%. Foreseeing the future increase in the demand for scooters, we inaugurated our first scooter only plant with 12 lakh units annual capacity at Vithalapur in Gujarat. The first line started operations in February 2016 and within just four months the second assembly line with additional 6 lakh units was started increasing HMSI’s total annual production capacity to 58 lakh (5.8 million) units.

The favourable macro-economic sentiments backed by good monsoon and 7^th Pay Commission are expected to further boost demand in the upcoming festive season.  HMSI is well prepared in advance with appropriate inventory build-up and will ensure product availability till the last mile network. We aim to close this festive season with highest record sales.

Your scooter Activa has taken the country by storm and with its success a craze for scooters has emerged in a massive way. Your competitors too have followed suit with scooters of different kind. Are you satisfied with the manner in which you recreated India’s scooter segment single handedly?

Activa-India’s undisputed two-wheeler king, today represents the metamorphosis of the society. The superior convenience and unisex appeal coupled with product features (increased mileage, style and technology) have helped the resurgence of scooters and thus, drive the ‘Scooterisation’ trend.

Factors such as the increasing number of working women, improved infrastructure generating demand beyond urban markets, penetrating semi-urban and rural areas and increasing participation from elders as active members of the family is further propelling the growth of scooters in India.

Increased and growing acceptance of scooter for commuting in India is further leading to the sub segmentation of scooters. (For eg. Light-weight compact scooter-Activa-i, family scooter-Activa-3g, moto scooter-Dio, Premium 110cc scooter Aviator and Premium 125cc scooter -Activa 125)

With more than 50% market share, Activa continues to be in the forefront of scooter demand. To cater to the increasing customer demand, Honda 2Wheelers India has appropriately invested in a scooter only plant at Vithalapur in Gujarat. We believe the scooterisation trend has just started in India and Activa is the trendsetter of the segment today.

In 2001, Honda challenged to introduce Activa, a 4 stroke automatic scooter in a declining scooter market. And today, even after 15 years of it’s existence it is not just the category leader, but the No.1 selling 2wheeler in the country with continuous evolution in technology and innovation over the years.

Overall, do you see the Indian two wheeler market moving away from the commuter segment into a much more value added segment…more premium in nature? Or it will always be a market dominated by price? What about superbikes and premium bikes, do you see this segment growing?

This question reminds me of our tourism promotion punch line ’Incredible India’. In a homogeneous country like India, heterogeneous demand trends are projected by different geographical regions and states. While the emerging key trends are visible, however, we are still a long way from a total transformation from the commuter segment.

Having said that, we don’t mean the commuter segment shall remain the same in terms of features, style and aesthetics. Definitely we will see that changing a lot in years to come. But still we shall see around 70% contribution coming from 2wheelers up to 125cc engine displacement.

Premium bikes belong to a niche segment and their demand is restricted to Tier 1 cities to an extent, however demand is being created in Tier 2 cities for less than 1000cc bikes especially among the bike enthusiasts.

Now with your fourth plant in operation, what kind of capacity utilisation are you expecting at your plants?

At present, Honda 2Wheelers India is the only manufacturer producing at optimum capacity across all four plants.

The first line at our Gujarat plant started operations in February 2016 and in June the second line with additional 6 lakh units annual capacity was started making it the ‘fastest ever expansion’ to 100% capacity creation achieved in just four months of plant inauguration by Honda 2wheelers India.

We are targeting 54 lakh (5.4 million) sales this fiscal and are ready for the next level of expansion. We will be introducing a third line with 6 lakh annual capacity at our Karnataka plant by the mid of 2017. This addition will increase the annual production capacity of Honda 2Wheelers to 64 lakh (6.4 million) units.

With monsoons being normal this year, does it bode well for the 2 wheeler segment? Record sales for HMSI this fiscal?

A good monsoon is expected to translate into a surge in demand from rural markets. In addition, the festive spirit has begun to set in parts on India starting with Kerala, where the sales are expected to peak during Onam, followed by other regions of the country. There is a robust demand coming from across centres and we are geared up for the upcoming festive season.