Reference Auto

Honda Motor Co, after parting ways with Hero, is for the first time going solo with launch of the Yuga, and unlike its cars, Honda plans to make a dent in the mass motorcycle market and grow at a substantial pace in India within a decade.

Honda’s 110 cc Dream Yuga motorcycle, the first in India’s basic 75-125 cc category, will carry a price tag from Rs 44,642 and target to dent the market of mainly the Hero Splendor brand, which is India’s biggest.

The new Dream Yuga is an India-specific mass market bike. To be available in three variants, the bike offers 8.5 BHP power and a fuel economy of 72 km to a litre.

Honda had severed ties with its 25-year-old partner, India’s Hero Motors, about a year ago by striking a deal of $851 million.

Honda is serious about its lone foray into the bike market and wants to give sleepless nights to its erstwhile partner by planning to pump in Rs 2,000 crore into its India ops.

Honda has a strong brand and can deliver better quality bikes than Hero. But Honda’s problem is its distribution, which it will have to ramp up quickly.

The Japanese auto major has been far-sighted in its pricing of cars. However, it seems Honda is having a change of heart with its bikes, and to take on rivals (read Hero), it is pricing its Dream Yuga for the aam aadmi, at least initially, to enter small towns and villages.

Honda’s investment plan comes in the wake of its expectation to make India account for 30 per cent of its global motorcycle revenues by 2020. Its market currently is at 13 per cent. This was revealed by Keita Muramatsu, president of Honda Motorcycle and Scooter India during unveiling of the motorcycle.

“Our long-term plan is to be the top player in India by 2020,” Yadvinder Singh Guleria, marketing head at Honda India, said.

He has set an ambitious sales target for the Yuga at three lakh Dream Yugas this financial year, which is to end on March 2013.

Entry-level bikes have seen around 70 per cent sales of the total domestic market, logging around 10 million bikes in the previous financial year in India, which is the second highest market after China.

Other bike majors are also shoring up capacity in a big way. Yamaha Motor Co had recently announced a new $280 million factory in the country and will triple its capacity to 2.8 million motorcycles in six years.

Suzuki Motor Corp, which plans to launch a basic segment bike this month, is also constructing a new factory to take its capacity up in the country to nearly one million motorcycles by 2014. So, bike makers are very aggressive and Honda needs to keep up this tempo to find a place in this highly-competitive market.

Honda sold 220,487 two-wheelers in India in March, 50 per cent more than what it sold in the same month last year, and marginally more than Bajaj.

And with an economic offering like the Dream Yuga, sales could grow manifold (even in the flourishing rural market) in the medium term but it may take quite a while for it to gather steam to dent the Hero brand name.