Honda takes its battle with Hero to villages

Company building new vertical within itself that will focus exclusively on rural areas

Honda Motorcycle and Scooter India (HMSI) is building a new vertical that will focus exclusively on rural areas, a market dominated by two-wheeler major Hero MotoCorp.

Honda, the third-largest maker of two-wheelers in the country, will deploy a number of ‘foot soldiers’ to assimilate market intelligence in rural areas from where Hero generates nearly half its sales.

Honda has made some changes in its reporting pattern that will result in the creation of a new parallel structure. Instead of having one zonal head responsible for both urban and rural areas, the rural vertical will have its own zonal and regional heads. At present Honda has five zonal heads who have regional heads reporting in to them.

Further, Honda is focusing on entry-level motorcycles for rural markets where scooters have a negligible presence. The nationwide ratio of motorcycle to scooters is 3:1 but in the rural market it is 9.5:1. Sources said one more entry-level motorcycle would be launched alongside the Dream Yuga and Dream Neo.

An Indian technical centre is assisting Honda in tweaking the product for consumers in rural areas. For instance, the dual-tone paint on the limited edition Dream Yuga bike was a result of market inputs from rural areas. The technical team is geared to make speedy changes to respond to market needs.

Y S Guleria, vice-president (sales and marketing), Honda Motorcycle and Scooter India, said, “The new rural dedicated organisation takes care of not only the rural network and strategy but also communication. Their responsibility is to expedite the expansion of the rural network and strategise the communication direction.”

People with strong rural connect would be preferred for Honda’s new vertical as language played a key role in enhancing customer relations, Guleria said. As much as 70 per cent of Honda’s sales in India are in urban and semi-urban markets.

The company intends to take the rural share to 40-45 per cent in the next few years. This will be achieved through an expanded retail presence. About 60-70 per cent of the 1000 new outlets planned by the company will come up in rural markets. Honda added 850 outlets last year. About 48 per cent of Hero’s sales come from the rural segment.

Honda’s sales grew 37 per cent last year to 3.55 million from 2.60 million in 2012-13. Hero's sales grew by three per cent to 6.11 million last year from 5.91 million in 2012-13. The industry’s sales grew by seven per cent last year to 14.8 million.
RURAL STRATEGY

• Honda plans to assimilate market intelligence in rural areas from where Hero generates nearly half its sales
• Honda will now focus on entry-level motorcycles for rural markets
• As much as 70 per cent of Honda’s sales in India are in urban and semi-urban markets