Minoru Kato admits that it is difficult to predict the road ahead for Honda Motorcycle & Scooter India (HMSI). This may seem strange considering that the company has been on a roll lately especially with April numbers at an all-time high of 5.79 lakh units.
Yet, the President & CEO of HMSI believes there is a bigger challenge on hand in the form of Bharat Stage VI emission norms, which will come into effect nationwide from April 2020. “It is difficult to say what will happen especially with BS VI coming soon and the impact it can have in terms of cost increases and prices of two-wheelers,” he says.
And even while HMSI has literally been growing from strength to strength, Kato knows too well that growth needs to be balanced with the reality of gearing up for BS VI. After all, India is going to skip BS V in the process and catapult to this new emission regime in barely 1,000 days from now.
“This is why we need to consider when is the right time for Honda to invest again and expand production capacity, says Kato. “After 2020, thanks to BS VI, we want to become an export hub from India globally. This has to be factored in while planning our future,” says Kato.
To that extent, the BS VI era could end up being a huge opportunity for HMSI even while there is no denying the fact that it could be a tough haul ahead. According to its CEO, there is enough confidence within the team to achieve the target but “how to maximise production efficiencies to reduce cost increases” remains the real challenge.
Japan to chip in“We have a big team in R&D Japan to support BS VI in India as well as our parts suppliers especially when it comes to fuel injection,” says Kato. “This is a critical item and we have started talks on how much to localise and produce fuel injection in India and which parts to import from Thailand and Indonesia,” says Kato. The idea is to develop new generation FI systems and collaborate with suppliers for low-cost options.
The fact that HMSI has four plants in India with a combined capacity of over six million units means that the transition exercise to BS VI will require careful planning. There are also huge logistics challenges to be reckoned with given that these facilities are located in diverse regions such as Haryana, Gujarat, Karnataka and Rajasthan.
Talks have already begun with R&D in Japan on the models that have to be part of this makeover to BS VI. “We have a lot of associates in this company especially in Japan to support us in this shift,” says Kato. “I have also told our people to improve the quality of our daily operations in order to maximise customer satisfaction.”
The next step is to increase the base of loyal customers and become the top player in India. While he is reluctant to give a time frame to reach the Numero Uno status, the top priority is to expand the local buyer base and grow the Honda brand even further.
Thanks to its ambitious BS VI roadmap, India will become an important reference point for the Japanese automaker for two-wheeler emissions. “In India we have a responsibility to lead Global Honda,” says Kato.
As a manufacturing hub, these two-wheelers could be shipped out to ASEAN as well as Europe and Japan. In addition, India is already on its way to becoming the biggest two-wheeler market for Honda worldwide ahead of Indonesia.
Electric mobilityElectric mobility is another big focus area in India though Honda has not quite made huge strides in this space, especially in motorcycles. Kato is candid enough to admit that there is some way to go in this area.
Honda R&D Japan has been working for 20 years to develop electric motorcycles but “still struggling” because of cost-related issues “We don’t have any special idea or technology within Honda, which explains why it is difficult to introduce a specific product,” he says.
It will be interesting to see if the company will look at collaborating with Yamaha in this department. The two recently announced their intent to work together on 50cc scooters in Japan, which account for a minuscule share of the market. This by itself was a big leap forward given the history of the H-Y war of the 1980s.
While there is no indication of further collaboration happening between Honda and Yamaha, there is no telling what the future could hold especially when it comes to areas like e-mobility. After all, synergies at the back end make sense especially when this translates into lower costs that are critical for emerging markets.
“The average travel distance in India is longer than Vietnam or Thailand’s big cities,” says Kato. “It will then be difficult to convince two-wheeler customers here of e-mobility and the challenge is to balance ride, systems and performance.” One way out is to launch e-mobility options in small travel zones of less than 10 kilometres.
The HMSI chief also reiterates that it is critical to be successful in both scooters and motorcycles even while the Activa has been making all the news. Even while “a scooter is a scooter”, he believes that a big motorcycle is a completely different possibility.
“We have many bike lineups in Europe and Japan. India has the potential to grow in the big motorcycle segment,” says Kato. With rising income levels coupled with better road conditions, he insists that the motorcycle market will continue to be relevant especially as it has a completely different user profile.
“Female customers are increasing thanks to scooters, which deliver easy riding but male buyers prefer the clutch even in daily commuting and want to enjoy riding. In the future, these customers will prefer to step up to big motorcycles,” declares Kato.