Honda to cash in on brand equity in mass segment

Honda Siel Cars India (HSCI), which makes cars and SUVs for the Indian market, will leverage the brand equity of its two other associate companies in India.

The company, which is now moving from being a premium brand to a mass market player through two launches in the small car segment in the next four years, hopes to cash in on Brand Honda’s strong presence in the rural and semi-urban markets in India.

Experts call it a gradual scaling up of the brand in the minds of the Indian consumers – a strategy followed by the Japanese major in all parts of the globe.

Masahiro Takedagawa, president and CEO, HSCI, says this strategy explains the fundamentals of the Honda brand. “Our two-wheeler company (HMSI) enjoyed the set-up of Hero Honda and similarly we (HSCI) enjoyed the set-up of HMSI. We will continue to operate in this manner to expand into different markets.”

Hero Honda, the joint venture with the Hero group, established the brand in the relatively lower-income segment in the urban and rural areas, making the Honda brand popular in the mass segment. Hero Honda, now the world’s largest two-wheeler manufacturing company, has made inroads in rural and semi-rural markets to increase sales. The company has doubled its dealership network to 3,000 outlets in the last two years alone. It would be further expanded to 3,500 outlets this year.

Next came Honda Motorcycle and Scooter India (HMSI), which catered to the premium bike segment and helped the brand enter the mind space of the more affluent consumers. HMSI, which sells gearless scooters and executive to premium bikes, has capitalised on the market expertise of Hero Honda. The company has opened showrooms in many of the markets, dominated by Hero Honda.

Its products are priced a notch above its competitors but despite this it recorded an increase of 26 per cent in sales in the last financial year while the other two-wheeler makers including Bajaj and TVS recorded a double-digit fall in sales.

Honda Siel, which was the last Honda company to enter India, gained hugely from the spadework done by the other two.