India to overtake Indonesia for Honda two wheelers

India is all set to overtake Indonesia as the top two wheeler market for Japanese auto major Honda Motor Company globally. According to a senior Honda official, Honda Motorcycle & Scooter India (HMSI) is already a "very strong" number two globally thanks to its top gear run in India. With both Indonesia and India planning capacity expansion, HMSI is expected to overtake Honda Indonesia is the next "couple of years". 

Said Keita Muramatsu, President & CEO, HMSI: "HMSI's volume contribution is now very close to Honda Indonesia which makes us a strong number two. Indonesia clocks around 4.8 million units in annual sales and our plan for HMSI this fiscal is 4.5 million units. Both of us (HMSI and Honda Indonesia) are planning additional capacity so in the next couple of years we will cross Indonesia," he added. 

HMSI has always been a top volume growth earner for Honda globally. "This fiscal Honda added 7.5 lakh units in additional sales globally," said Muramatsu. "HMSI's tally in additional sales was 8 lakh units. So it is clear that there is a large contribution of HMSI to Honda's global two wheeler operations." HMSI's total sales volumes comprise 25% of Honda's global two wheeler sales of 18 million units.

In revenue terms too, HMSI is no minnow in the Honda stable. "HMSI currently clocks 25% of Honda's revenue globally and next financial year we plan to increase that contribution to 27%," said Muramatsu. Indonesia, however, has a much bigger contribution on account of higher priced models in its range. China is not such a big volume player for Honda globally. 

"We clocked 23% growth in India at a time when the Indian two wheeler industry has grown 10%," said Muramatsu. "India's motorcycle market has grown just 4% but HMSI has grown 11%. So we have been growing consistently in a market that is beginning to look flat." 

One of the reasons why HMSI has managed to outperform the market has to do with a change in dynamics in the Indian two wheeler business as growth shifts from motorcycles to scooters. "We activated this automatic scooter trend and today it is 28% of the total two wheeler market," said Yadvinder S Guleria, VP-sales & marketing, HMSI. "In the next 5-10 years, we expect the scooter versus motorcycle ratio to change with a 35-40% contribution from automatic scooters in the overall two-wheeler market." 

HMSI is building its fourth two wheeler plant in India adding 1.2 million units in capacity. "Currently our focus is on building our new plant in Gujarat which will be an all-scooter factory taking our total capacity up to 5.8 million units by Q3 of FY16," said Guleria. "We follow a step wise approach -- once we complete the Gujarat plant, there will of course be a next step."