HMSI plots rural roadmap in new sales drive

With four plants scheduled to roll out nearly six million motorcycles and scooters in India by 2016, Honda should have little reason to complain. Yet, Keita Muramatsu believes there is still a lot of work ahead.

“Creating a network in rural India is a challenge and takes time. Customers here want to talk to you and, from our end, delivering top satisfaction is priority,” the President and CEO of Honda Motorcycle & Scooter India (HMSI) told Business Line in a recent interview.

This is an area where market leader and former ally, Hero MotoCorp, is particularly strong. And even while Honda recently announced its intent to set up a new plant in Gujarat, it is only too aware that there is a big customer base out there in rural India that needs be tapped into more aggressively.

The company parted ways with the Hero group over three years ago and has since increased capacity rapidly by commissioning new facilities in Rajasthan and Karnataka. Its first plant in Manesar, Haryana, produces 1.6 million units while Rajasthan chips in with 1.2 million. The following weeks will see Karnataka operating at full capacity with 1.8 million which means HMSI will have manufacturing capacity of 4.6 million bikes and scooters from the new fiscal.

However, to take over the top mantle from Hero would need a far more proactive presence in rural markets which today account for a significant part of two-wheeler sales. And this is particularly relevant for motorcycles where HMSI just needs more numbers to fall in place on the lines of its enormously successful scooter business.

“There is huge demand for motorcycles from rural customers and we need to make better contact with them. HMSI is learning the ropes here and this is a new experience for us,” Muramatsu says.

Eventually, it is just not about setting up more dealerships but increasing regional/zonal offices with trained manpower to reach out to this huge customer base. “People want to meet you and we need to expand our team to be closer and understand the market,” he adds. This will involve market research, skill-building and establishing contact points such as call centres to make sure that requests and complaints are complied with quickly. The company would also need to keep its ears closer to the ground on a host of factors that impact sales, be it weddings, a bumper crop or, conversely, a calamity.

Customers in rural areas would also look for a personal touch from the company unlike their city counterparts, who are quite content with email responses. It is this transition from being largely an urban entity to a mass brand across India which will be the biggest challenge for HMSI going forward.

Hence, even as the Gujarat plant is due for commissioning by 2016, Muramatsu and his team will need to ensure that the company’s roadmap for rural India keeps pace with production numbers. Eventually, the four plants will produce 40 per cent of the country’s two-wheelers but these will have to reach out six million customers too.

Till then, as rivals have realised, taking on Hero MotoCorp’s Splendor and Passion brands is no easy task. Even though they have been around for decades, these two motorcycles still have a tremendous connect with customers.

These are also not the best of times for India’s auto industry even though two-wheelers have done better than cars. It will, therefore, be interesting to see if HMSI will look at markets such as Africa to ship out its bikes. Its Japanese counterpart, Yamaha, is already readying a plan for Africa where India will be a key supply point for low-cost bikes. There is no reason why Honda would not consider something similar especially when companies such as Bajaj Auto are doing very well in Africa. HMSI’s Gujarat plant will largely cater to scooters and its location will ensure easier supplies to the western region which is one of its biggest markets. Along with the south, these two parts of the country represent 60 per cent of the company’s buyer base which puts in perspective the importance of the Karnataka and Gujarat facilities.

As Muramatsu says, the business model is just not about creating new capacities but ensuring even distribution of products. “We have factories in the north producing 2.8 million motorcycles and scooters while the south accounts for 1.8 million units. The fourth plant in the west will meet scooter demand and there will be complete product flexibility among all the facilities,” he adds.

Honda has already made it known that it is eyeing production of 10 million units in India by 2020. It is, therefore, only logical that at least two more plants will be set up in the coming years. The more important task on hand, though, is to get the retail network in place, especially across smaller towns and villages. Till then, the Japanese automaker knows only too well that there is no point putting the cart before the horse.