Honda Motor Co (7267.T) launched its first mass-market motorcycle for India and its cheapest motorbike worldwide on Tuesday, as it aims to tap low-cost emerging markets including more than doubling India’s share of its motorcycle revenue by 2020.
Honda, which ended a 26-year joint venture with Hero MotoCorp (HROM.NS) in March of last year in an $851 million deal, has announced fresh investment worth 20 billion rupees since then as it looks to chase down its former partner, the current market leader.
Honda’s 110cc Dream Yuga motorcycle, its first in India’s 75-125cc commuter segment, will start at 44,642 rupees and will compete with Hero’s Splendor brand, India’s biggest-selling bike.
Honda expects India to account for 30 percent of its global motorcycle revenues by 2020, up from 13 percent currently, said Keita Muramatsu, president of Honda Motorycle & Scooter India at the bike’s launch in New Delhi.
“Our long-term target is to be the number one in India by 2020,” said Yadvinder Singh Guleria, marketing head for Honda India. He said the company targets sales of 300,000 Dream Yugas in the current financial year that ends in March 2013.
Entry-level commuter bikes account for around 70 percent of the domestic market in a country that sold over 10 million bikes in the last financial year, second only to China.
Under the joint venture agreement, Honda was banned from directly competing with Hero Honda vehicles.
Honda’s foray into the mass-market arena is part of a larger assault by Japanese motorcycle makers ramping up capacity and targeting volumes in a market that grew 14 percent in the 12 months to March 2012.
Yamaha Motor Co this week announced a new $280 million factory in India to almost triple capacity to 2.8 million motorcycles by 2018, while Suzuki Motor Corp (7269.T), which will likely launch a mass-market offering this month, is building a new factory to take its India capacity to close to 1 million motorcycles by 2014.
Local rivals are taking note. Bajaj Auto (BAJA.NS), India’s Number 2 but beaten into third place in March by Honda, launched a souped-up version of its flagship commuter bike, the Discover, on Monday.
Honda sold 220,487 two-wheelers in India in March, 50 percent more than in the same month last year, and marginally more than Bajaj.
The Japanese company, which also sells passenger cars in India, is currently constructing its third two-wheeler factory in the country. The new plant is expected to begin production early next year and take total capacity to 4 million two-wheelers.