Surprised by the huge response to its 'by India, for India' bike Navi launched this April, Honda Motorcycle and Scooter India (HMSI) is planning to double its production to around 1 lakh units soon.
The Japanese two-wheeler major, which is inching closer to unseating the decades-old market leader Hero MotoCorp, had unveiled the Navi at the Delhi Auto Expo in February at price of under Rs 40,000. It was rolled out commercially in April.
Testing the market for a very stripped-down model with the Navi, which was fully planned, designed, and produced for the local market, Honda had expected to sell only round 2,000 units a month in the first year.
But it has already got huge backlog, and therefore, the plan to double the output.
"We have been really surprised by the humongous response to the Navi. It's really exceeded our expectations. We have, therefore, decided to almost double our capacity to 90,000 to 1 lakh units soon," the company's Senior Vice-President for Sales and Marketing Yadvinder Singh Guleria told PTI.
At the launch, the company had said it would be happy if it could sell 2,000 units a month and had an installed capacity of 50,000 per annum.
But Guleria said even though Navi was developed only for India, which became the largest market for Honda globally in June this year, overtaking Indonesia, they are shipping the bike to Nepal now.
"Last month alone we shipped as many as 500 units to the Himalayan nation," Guleria said, adding, "going forward, the company may look at exporting the bike to other Saarc markets like Bangladesh and Sri Lanka as well."
Asked about investment for the additional capacity for Navi, which is being manufactured at the 1.2 million units per annum Tapukara plant in Rajasthan, he said no additional investment is needed as they have a flexible assembly line.
With the Navi or 'New additional value for India,' Honda has truly disrupted the domestic two-wheeler market as it has created an entirely new segment of fun riding, he said.
Navi is powered by a 110-cc Honda HET engine with automatic transmission and is the first 100 per cent Honda India R&D -- from concept development to commercial production.
On the impact of GST on the two-wheeler industry, Guleria
said if the peak rate is fixed at 18 per cent, it will lead to huge savings for both companies and customers. Currently, the cumulative taxes on two-wheelers is close to 27 per cent.
"If GST comes at 18-20 per cent, then it can offset the cost we had to incur on implementing the BS-IV emission norms," Guleria said.
Asked about the revenue this year on the back of record sales -- HMSI has been averaging at 20-25 per cent this year so far and has become the leader in 13 markets with nearly 45 per cent volume share in them -- he said it hopes to close FY17 with an over Rs 22,000 crore revenue, up from Rs 18,600 crore in FY16.
Parent Honda has invested over Rs 8,800 crore in the country since it parted ways with Hero early this decade. Out of this, in the last two years alone it has invested Rs 2,700 crore.
HMSI operates four plants -- Manesar in Haryana, Tapukara in Rajasthan, Narsapura in Karnataka and Vithalapur in Gujarat -- with an installed capacity of 5.8 million.
On whether HMSI is looking at new capacity addition, having already reached the peak levels at all its plants, including the latest scooters-only plant in Gujarat, Guleria said it will be adding 0.6 million capacity by mid next year at the Karnataka facility.
Once completed, the 1.8 million Narsapura plant near Bengaluru will become the world's largest two-wheeler facility with 2.4 million units capacity. It will also jack up HMSI's total output to 6.4 million.
He said the new 6-lakh assembly line will see an investment of Rs 350 crore and will be commissioned in the second half of next year.
On dealership expansion, Guleria said HMSI will add 500 more this year to take its total network to 5,300 by the end of March.
Out of the 4,800 dealerships now, only 900 are direct dealers, he said, adding last year it added 800 and so far this year 300 dealers have been added. On dealer financing, he said SBI has become the largest lender to HMSI dealers.
On export performance, he said it jumped 34 per cent so far this year, much higher than domestic sales, which as been hovering between 20-25 per cent. Exports contribute 4.8 per cent of total sales for the company.
