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Honda to launch 4-stroke scooters in May

With the Munjals of Hero Group still reluctant to enter the scooter segment, their joint venture partner Honda Motor Company of Japan has set up a 100 per cent subsidiary in India and will roll out the first model of a 4-stroke scooter by May-end.

Honda Motorcycle and Scooters India Limited is setting up a mass production facility at Gurgaon in Haryana which will be operational by May-end or June, said Kazumi Yanagida who is director at Hero Honda Motors Limited.

''Initially, we plan to produce 100,000 scooters annually. The plant capacity will eventually be expanded to make 350,000 units annually,'' he told reporters on the sidelines of HHML's marketing convention.

Yanagida said the scooter market in India is shrinking and hence entering it is a risky venture. Industry experts attribute two main reasons for this.

One, motorcycles are more fuel-efficient than scooters and hence the operating costs are low. Two, motorcycles are preferred by middle-class youngsters who are very conscious of the changing lifestyles.

''That is why we have floated a separate company. But the new company will establish its own marketing channel and use the manufacturing facility for export purposes as well,'' Yanagida said.

The HMSIL will be a wholly owned subsidiary of the $50 billion Honda Motors of Japan. The HHML is a joint venture with the Hero Group and Honda each holding 26 per cent equity stake. The remaining 48 per cent is with public.

Meanwhile, HHML chief operating officer and director Pawan Munjal firming ruled out any immediate plans to enter the scooter segment.

''There is no need. In future, if scooter sales show good growth, we may consider making them.''

Nearly 2 million motorcycles are sold across the country every year compared to 1.6 million scooters. Hero Honda's five models claim 46 per cent market share.

While CD100, CD100 SS, Splendor and Street Smart are 100-cc mobikes, the CBZ model is in the 156-cc category.

The company recently rolled out Passion, another 100-cc mobike, from its stable. One more new model is expected by April.

Munjal said that HHML motorcycle sales are showing 25 to 30 per cent annual growth. He said the company will invest Rs 1 billion in the next financial year to augment its existing manufacturing facilities at Gurgaon and Dharuhera in Haryana.

''There is little niche segment for above 100-cc motorcycles and hence the volumes are low,'' Munjal said. ''But the CBZ engine is versatile. It can be tuned to operate below or above 100-cc capacities.''

He said the HHML will introduce high capacity models (above 150-cc) next year.

Munjal ruled out any change in the joint venture's equity structure in the near future, but indicated the possibility of picking up some equity stake in the HMSIL if it performs well.

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