Bike market: Honda sales up, Hero, Bajaj lose ground

Japanese auto major Honda’s pursuit for the number one position in the Indian two-wheeler market is not only hurting its erstwhile partner Hero MotoCorp but also Bajaj Auto in the motorcycles segment. According to the latest data released Society of Indian Automobile Manufacturers (SIAM), while both Hero MotoCorp and Bajaj saw their bike sales decline in April, Honda Motorcycle and Scooter India (HMSI), the wholly-owned arm of the Japanese firm posted increased numbers. Hero’s domestic motorcycle sales declined by 12.5 per cent to 4,32,657 units as against 4,94,473 units in the same month last year. Similarly, Bajaj also posted 0.19 per cent dip at 1,99,838 units compared 2,00,228 units in April 2012.Contrary to this, in a declining market HMSI saw its bike sales in India grow by 48.76 per cent to 1,15,536 units as against 77,665 units in April last year. The trend is not restricted to just the April month. In the last fiscal, HMSI’s motorcycle sales grew by 53.77 per cent to 11,86,726 units as compared to 7,71,715 units in the previous fiscal. On the other hand, market leader Hero saw its bike sales decline by 4.72 per cent in FY13 to 53,62,730 units from 56,28,513 units in 2011-12.Likewise, Bajaj’s domestic motorcycle sales dipped by 4 per cent to 24,63,863 units in FY13 as against 25,66,757 units in 2011-12.

After breaking up with the Hero group in 2010, Honda has stated that it was aiming to be the number one two-wheeler manufacturer in India within a decade with plans to produce 10 million units by 2019-20 that may entail the company having up to eight plants in India.

A closer look reveals that HMSI has gained in different segments where either Hero or Bajaj are leading. For instance, in the 75cc to less than 110cc segment, which is the bread and butter segment for Hero, HMSI’s sales soared by over four-fold in April this year to 32,982 units as compared to just 7,290 units in the same month last year.In contrast, Hero saw its sales in the segment decline by 15.2 per cent to 3,55,460 units as against 4,19,199 units in the same month last year. Bajaj posted a growth of 32.65 per cent to 1,18,809 units from 89,563 units in April last year.Similar was the case last fiscal in the 75cc to less than 110cc segment. HMSI increased its sales in the segment to by over two-fold to 3,19,197 units from 1,42,075 units FY12.On the other hand, Hero’s sales in the segment declined by 6.51 per cent to 44,86,617 units in FY13 from 47,99,151 units in the previous fiscal. Bajaj, however, increased its sales by 10.33 per cent to 12,44,938 units in FY13 from 11,28,410 units in FY12.

In May 2012, Honda Motor Scooter India Pvt Ltd (HMSI), the Indian subsidiary of Honda Motor Company Ltd. (HMCL), launched the Dream Yuga motorcycle in the Indian two wheeler market to attract mass and rural customers. It believed that by entering the economy segment, it would improve its sales. Until the launch of the Dream Yuga, HMSI had sold its products only in the executive and premium segments and had set up stores only in Tier I cities of India. In 2012, it decided to focus on the mass and rural markets with the aim of gaining a leadership position in the Indian two wheeler market. It’s sought to sell 300,000 Dream Yuga units by the end of 2012-13. HMSI wanted to displace Bajaj Auto and Hero MotoCorp to lead the Indian two wheeler market by 2020…The Dream Yuga is a low-cost 109 cc single-cylinder motorcycle manufactured by Honda’s Indian subsidiary HMSI since 2012. It was announced by Honda in January 2012 at the Delhi Auto Expo, and was available to consumers in India in May 2012. At 44,642 Indian Rupees, the motorcycle is billed as the least expensive Honda currently produced, and the least expensive Honda ever made, adjusting for inflation.

Questions:

1. Why did HMSI launch the Dream Yuga though it had the CB Twister in that segment?

2. Do you think launching an economy segment product will attract more customers to HMSI? Justify.

3. Do you think the Dream Yuga will be able to sustain itself in the economy segment given the act that other players are offering more economical products? Justify.