Honda Cars seeks synergy with two-wheeler business for rural growth

HMSI is a strong player in the domestic two-wheeler market and had a 27% market share in FY17

Japanese car maker Honda, which gets most of its India sales from urban markets, is trying to use the wide presence and market experience of the group’s two-wheeler business here to expand volumes in semi urban and rural areas.

“The motorcycle business has lot of dealers, especially in rural areas. Our business has been focussed on big cities. Now, the market outside cities is expanding and we are appointing dealerships in tier III cities. We are trying to get feedback and experiences of regional markets from the motorcycle business. There can be some synergies,” Yoichiro Ueno, President and CEO at Honda Cars India told Business Standard.

Honda Motorcycle & Scooter India (HMSI), part of the same parent company, is a strong number two in the domestic two-wheeler market. In FY17, it had a 27 per cent market share. The company has a large presence with 5,100 touch points spread across the country. About 28 per cent of the 4.7 million units sold last year came from rural markets. By comparison, Honda Cars is estimated to get 12-15 per cent sales from semi-urban and rural markets. There is scope to expand it further.

Ueno said the company is trying to learn regional activities from HMSI to take advantage of demand increases during auspicious occasions. “We need to plan our marketing activity and supply to meet seasonality in the rural markets. Motorcycle business has lot of experience and knowhow. We need to learn. Our people are in touch with HMSI to get feedback,” he said.

HMSI did not share any details on what are the areas where it co-ordinates with Honda Cars. "As part of Honda group companies, we do have exchange of information. However, we cannot share more details,” said a spokesperson at HMSI.

Ueno said there can be certain brand synergies between the two businesses. “A lot of customers are upgrading from motorcycles to cars. People who have had a good experience with a Honda two wheeler might choose a Honda car,” he added.

Honda’s products such as the Amaze and Brio could do well in rural and semi-urban markets. “Honda has the ingredients to be successful in rural markets. A significant reach in tier 2 and tier 3 cities coupled with proven vehicles like Amaze will help them expanding in rural markets, helped by the learning and expertise from HMSI,” said Amit Kaushik, managing director for Detroit-based automobile consultancy Urban Science in India.

Biz synergy

• Honda Motorcycle and Scooter India (HMSI), part of the same parent company, is a strong number two in the domestic two-wheeler market. In FY17, it had a 27 per cent market share
• About 28 per cent of HMSI’s 4.7 mn units sold last year came from rural markets. Honda Cars is estimated to get 12-15 per cent sales from semi-urban and rural markets
• Honda Cars is trying to learn regional activities from HMSI to take advantage of demand increases during festive occasions