Interview with Yadvinder Singh Guleria, Vice President, Sales & Marketing, Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI)

Company Description: Honda Motorcycle and Scooter India, Private Limited (HMSI) is the wholly owned Indian subsidiary of Honda Motor Company, Limited, Japan. Founded in 1999, the entry of Honda into the Indian motorcycle space began with the launch of the Honda Activa.  Current HMSI products include Activa, Dio & Aviator in scooters and Dream Yuga, CBR 250R, CBR 150R,  CB Twister, CB Shine, CBF Stunner, CBF Stunner (PGM-FI), 150cc CB Unicorn & 150cc CB Unicorn Dazzler in Motorcycles.  To expand the culture of ‘fun’ biking, Honda has also introduced 1000cc sports bike CBR1000RR Fireblade, a 1000cc naked sports bike CB1000R and the 1200cc sports-tourer VFR 1200F, VT 1300CX chopper in the Indian market.

After a short stint in Polaris, you returned to Honda Motorcycle and Scooter India (HMSI). Is there any reason for rejoining the company?

My brief stint at Polaris India (100pc subsidiary of US based Polaris Industries Inc.) was as Director Sales & Dealer Development. Off-road vehicle business is very niche and new for Indian market and I enjoyed being part of this challenge as a founding member. Rejoining Honda is equally exciting and challenging as I have joined in the phase when Honda is rapidly expanding its production as well as distribution.  Honda’s 2020 vision is to have the leadership position in the Indian two-wheeler market and I am proud to spearhead the Sales & Marketing operations at Honda to realise this vision.

HMSI, which is building its third two-wheelers manufacturing plant at Karnataka, has revised its investment plan upwards by another 1,400 crore.  It has already been shared that the capacity in the third plant would be 1.2 million units per annum.  But when will the plant go on stream?  Do you have any new products to roll out from this plant? Or will you continue rolling out existing products?

As you have mentioned in the question, our third plant at Karnataka will have a capacity of 1.2 million units per annum. With this, our overall capacity will cross 4 million units. And that includes our other two plants that are located at Manesar in Haryana with a capacity of 1.6 million units and at Tapukara in Rajasthan with 1.2 million units. The current schedule of the third factory is on track and we are confident that the production will start happening in the first quarter of next fiscal. As far as the products are concerned, we have a flexible manufacturing system and it’s too early to share which all models we shall make there.

HMSI has launched its first mass segment bike Dream Yuga. So how has the response been for this product? Has it exceeded your expectations? And are you expanding your foothold in the rural market to facilitate its sales?

The 100-110cc motorcycle market is a very challenging segment and “Dream Yuga” is Honda’s first offering in the mass segment motorcycle market. It’s an important model from Honda’s standpoint & if you ask me in one word, the response has been overwhelming. Since it rolled off the production line in May’12, we have already sold over 77,600 units as of September 12, 2012. We are proud to state with its benchmarked features in the segment, it has created a buzz in the commuter segment of the Indian motorcycle market. We have recently ramped up our daily production of Dream Yuga and are confident of selling 3 lakh units within this fiscal. Since this segment has a lot of demographic spread, we are rapidly increasing our market penetration through our new network and plan to open as many as 500 dealers, sub-dealers and authorised service centres in tier-I and tier-II cities during FY 2012-13 which will take our network’s total strength of 2,000 outlets.

By roping in actor Akshay Kumar, Honda has taken the celebrity association route for the first time. What made you sign him? And any particular reason for opting for him rather than any young actors?

A country where a billion people carry dreams in their hearts, the spirit of Honda’s global brand slogan “The Power of Dreams” was brought alive by its India specific brand identity “Sach Kardenge Sapne”. The slogan recognises India as the center of global two-wheeler business for the coming times and expresses the Japanese giant’s vision and our intentions towards the future: ‘To share our dreams with others and make them a reality’.

Acting on its strategy to connect with the masses, Honda has roped in the successful Bollywood actor Akshay Kumar. In his unique sense, Akshay has both emotionally touched and rationally inspired a generation of young Indians to become achievers. Akshay captures the essence of brand Honda as he truly personifies individual dedication and passion to achieve our deepest and most significant Dreams. The timing of this strategy is also important that Honda was entering an unchartered territory (mass bike segment) through Dream Yuga. Akshay is a versatile & successful actor with many Bollywood hits whether it’s in comedy, family drama or action. You may agree that many of the youngsters in the industry cannot match the energy, vigor and enthusiasm that Akshay carries in his various roles. Moreover he is the one who is equally acceptable across the various age groups. He is relatable to Honda’s success in India and how it has been built over the years driven by “Power of Dreams’.

HMSI had earlier said that it is planning to set up a dedicated R&D centre at Manesar? What kind of activities will be carried out there? Will it be into designing? And will the centre contribute to the company’s global operations too?

First of all, I would like to clarify what we have said earlier is that Honda R&D (India) Pvt. Ltd, a wholly owned subsidiary of Honda R&D Co Ltd, Japan, will be moving in to the newly established Honda Technology Centre within its Manesar factory location. Currently, they are operating out of their Gurgaon premises and will be shifting to Manesar by October’12 end.  As the Indian market is getting hyper-competitive, we want to provide high-quality products at an affordable price. Some of the development stages of our product development will be shifted from Japan and Thailand to Honda’s new centre in India. This will result in faster testing and will also bring down the time required to market new models. This will also help in bringing down the overall cost of the vehicle by heavy indigenisation of parts sourced locally at global quality. Apart from working for the domestic operations for new model development, the team will also be contributing to our global operations.

You have been exporting your bikes in a big way. What are the current and new markets for your product’s shipment?  When and where are you planning to export Dream Yuga?

I will answer the last question first. When you talk of the Dream Yuga, as of now we are focussing only on the domestic market. Since the product is witnessing robust demand, we plan to serve the Indian market first and in future may explore other countries. To answer your first question, we have been shipping out our products to markets like Latin America, Europe & Middle East as well as the neighbouring countries like Nepal & Sri Lanka.

Are you working on a sub-Dream Yuga bike to take on aggressively Hero and other players? If yes, what’s the timeline?

Our new model development is a continuous process. At the appropriate time, you will come to know about the product, segment and other details. Right now, we are just thinking of ways to make Dream Yuga a big success in the mass segment motorcycle market.

What is your sales target for this fiscal? Out of that, how many would be derived from bikes and how many will the scooters account for? And what percentage of the output will be sold in the domestic market? Could you also talk about your current marketshare?

For the present fiscal, Honda Motorcycle & Scooter India Pvt. Ltd (HMSI) has set a target of achieving around 30pc growth at 2.75 million units. Out of the total numbers, we are expecting almost equal contribution from both scooters and motorbikes. Last year, scooters accounted for nearly 59pc of our sales pie and the remaining ones from motorcycles. Out of 2.75 million units, we plan to export 1.4 lakh units in the next fiscal.

Apart from fuel-efficient bikes, Honda is also known for its hybrid scooters and electric bikes? Do they stand a chance here?

These kinds of products can be considered based on the market demand & situation. But there are no such plans to introduce them here in the near term. We shall continue to read the market. Currently Indian market is not ready for such products in terms of infrastructure, cost standpoint etc.

There has been a lot of buzz that Honda is planning to set up its signature showrooms ‘Honda Wing’ outlets beyond Delhi and Mumbai.  Which are the new cities where you are planning to set such outlets?

As you know Honda Wing showrooms showcase the Honda DNA through its superbikes & at the same time are fully equipped with state of-the-art service infrastructure required to handle such technologically advanced products. As no company is allowed to sell superbikes imported as CBU directly to its customers, it is sold through the dealer network with proper registration, invoicing, etc. We aim to deliver more than 100 units during 2012-13. Going forward, we are also studying the possibility of developing such facilities in other big potential cities in the near future.

Are you happy with the way the Twister has done in India?  Are you planning to come out with a fuel -injected version of this bike?

Strategically, the CB Twister has done its job for Honda.  It was the first 110cc bike from our portfolio and is the benchmark for style and performance within the segment. It is a niche product for the young customers who were looking for style and performance at an affordable price. As far as its fuel-injected version is concerned, the biggest hurdle would be the cost equation as this is very price sensitive segment.

How is your used bike business doing? How many outlets do you have right now?

We have 15 such outlets run by our dealers. We have named them ‘Best Deals’. We are expecting around 2,000 units to be sold through these outlets during this year. As it’s a new concept (organised sector for used two wheelers) in two-wheelers, we are quite upbeat about it. We are currently running this as a pilot project and based on its performance and results, we will implement our future strategy.

As interest rates are rising sharply, do you think it is the right time to bring in your finance arm?

We see retail finance as an enabling factor to increase sales volumes. The ratio of financed vehicles is more when it comes to motorcycles than scooters. And around 28pc of our total two-wheelers are financed.  Even though there has been some sort of pressure for retail financing, we are not that worried as the ticket size (EMIs) is very small. Having said that, we are negotiating very hard with our existing finance partners to provide more competitive schemes to our customers. But we are not bringing in our finance arm in the foreseeable future.

What new products can we expect from HMSI in the near term? How many scooters and how many bikes?

Currently, we have 8 bikes and 3 scooters and a handful of superbikes. Though we cannot share the details of our new launches, we can only share that we do have plans to launch new products in both motorcycles and scooters categories.

As petrol prices have hit the roof, can we expect some improvement in mileage of your existing products? And are you also expecting a drop in demand?

You have rightly mentioned that there is a massive surge in petrol prices. Having said that, a two-wheeler is a ‘product of need’ rather than a ‘desire’ for the common man.  There is lot to be done to improve the state of public transport infrastructure & as a basic necessity to commute from point A to point B; the two-wheelers shall continue to remain in demand. Though there are pressures on the industry as far as growth percentage is concerned, it is also a fact that the market is pretty underpenetrated.  In such a scenario, when the sentiments are negative, the consumer may have the propensity for products that are high-on-mileage, more durable and less-on-maintenance. The choice might differ from person to person. For Honda, the sales have been on an overdrive from April-August’12 and we are hopeful of sustaining the momentum. And you can definitely expect enhanced mileage from future Honda products.

Last but not the least; HMSI has gone on record saying that it intends to be the top two-wheeler company by 2020 in India.  So what would be your strategies to fulfill your vision in terms of distribution, product launches, capacity expansion, etc? More importantly, are you confident since your erstwhile partner is growing by leaps and bounds?

We are following the 3Cs in marketing-Communicate, Connect and Create. To summarise my entire conversation, we have started the phase by communicating through our new brand slogan i.e. Sach Kardenge Sapne. With a localised message, (derived from Honda’s global slogan “The Power of Dreams”) our customers can connect better. We are also getting very aggressive by promoting our products on the TV and print media. And to connect with the masses, Akshay Kumar is endorsing us as a celebrity. We have embarked on both rational and an emotional approach to connect with our customers better. At the same time to meet the increased demand for Honda products & serve our customers with new speed, we are also ramping up our distribution network by adding 500 touch points. We are also setting up more than 10 zonal offices. And we will also have the product creation across the various segments in the motorcycle market. We would also like to maintain our leadership in the scooter space with new innovative offerings. These strategies will help us in realising our 2020 vision of being the number one two-wheeler manufacturer in the country. By that time, India will contribute nearly 30pc of Honda’s two-wheeler business globally.