Honda closes in Hero as volume gap narrows to 56,617 units


Two-wheeler major Honda, which is at a striking distance to overtake Hero as the No 1 player, having narrowed the gap between them to just 56,617 units in August, says it is confident of meeting the 20 per cent volume growth in the year and continue to lead the industry growth.

Honda Motorcycle & Scooter India has grown 22 per cent in the first half of the fiscal, while the industry managed just 11 per cent, which means that Honda has consistently been adding 50 per cent of the incremental volume year-to-date to August, according to Siam data.

Honda has also retained its No 2 tag in terms of bike volume since April, overtaking Bajaj Auto with a wide margin and increasing its market share to 17 per cent-adding a full 300 bps to its market share pie YTD.

However, it is not vocal enough to overtake its estranged partner to become the No 1 two-wheeler maker sooner than the 2020 deadline its Tokyo headquarters has given to it saying it is constrained by low capacity.

“With our present capacity of 24,000 units a day, we cannot sustain the present volume growth. But we have appointed an internal panel to study the need to add more capacity at the earliest, which again is not possible in 2018,” senior VP-sales & marketing YS Guleria told PTI today.

In August, Honda reported its best-ever sales numbers clipping at 26.4 per cent to 6,22,180 units, while Hero MotorCorp sold 10.1 per cent more units at 6,78,797 in the month, its best-ever as well.

When asked whether they will advance the 2020 target to become the No 1 two-wheeler maker, he said, “We are constrained by capacity. If at all we want to add more capacity, we can’t do so even in 2018 as it takes at least 14 months to add an assembly line. So that headquarters’ target remains.”

He said even the 0.6 million capacity added last month at its Bangalore plant is consumed already and will touch the full capacity of 2,200 units a day by the month end.

On sales target, he said, “With the first half getting me 22 per cent, I am pretty sure of meeting my 20 per cent volume target this year. But I am not revising it upwards again due to our capacity constraints.”

The company has an installed capacity of 6.4 million units at its 11 assembly lines spanning four plants.

Guleria said even adding a third shift is not feasible as we have to have a shift for maintenance and other machine tooling and other activities.

Guleria attributed the break-neck growth to all-round showing by the company, especially the bikes, which has been consistently going up and retaining the no 2 tag since April growing at 43 per cent YTD. Similarly, in scooters we have grown at 19 per cent against industry’s 18 per cent helping us retain our market at 59 per cent.

“We’re firing from all the six cylinders- five regions plus exports, which grew 40 per cent since April to 1,50,438 units, making us lead the industry in this segment too. There is not a single region, where we have not grown less than 30 per cent in festival sales. While our sales grew 85 per cent during the Ganesh festival in the Western region over last year, for Onam we grew 41 per cent this year,” Guleria said.

Honda had clocked Rs 20,000 crore revenues last fiscal and hopes to touch Rs 25,000 crore this year he said, adding that their cumulative investment stands Rs 9,482 crore in the country and employs 22,000, of which 40 per cent on the rolls at its four plants.

In August, Honda’s domestic sales rose 25.1 per cent to 5,86,173 units of which motorcycles sales were at 1,91,944 units up 47.73 per cent and scooters at 3,94,229 units, up 17.2 per cent and exports for the first time crossed 36,000 mark.

“On the domestic front, both scooters and bikes touched their highest sales mark. We are seeing increased footfalls at dealerships and are fully equipped to cater to the high demand during the festive period,” Guleria said.

As against this, Bajaj Auto sales inched up a pale 3 per cent in August to 3,35,031 units of which domestic bikes sales were only 1,71,664 units down 1.75 per cent and exports at 1,34,372, up 7.47 per cent.

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