Japanese two-wheeler major Honda said on Friday it will exit the geared scooter market in India and phase out its 150 cc model -- Eterno -- as the company plans to focus on the gearless segment.
Honda Motorcycle & Scooter India, fully owned Indian subsidiary of the Japanese firm, launched on Friday a new version of its gearless scooter Activa, priced at Rs 39,800 (ex-showroom, Delhi).
"We will stop producing Eterno. We will not stay in this segment (geared scooter). Eterno will be phased out," HMSI president and CEO Shinji Aoyama told reporters.
The company would focus on gearless scooters in the future and with the launch of the new Activa, HMSI is looking at a total of 18 per cent growth in its two wheeler sales in the next fiscal, 2009-10.
Eterno was selling only about 40,000 units a year, which was very small, Aoyama said.
Asked if the company would bring in a new model to fill the vacuum after withdrawal of Eterno from the market, Aoyama said: "We will surely compensate with a substitute, but at the moment the new Activa is enough to take the challenge as it will give 15 per cent increased mileage."
Besides, HMSI is expecting to record 17 per cent growth in the current financial year with a total sales of 10,60,000 units.
"The Indian two-wheeler market witnessed a growth of five per cent in the current fiscal, whereas HMSI grew by about 17 per cent in the same period and we expect to keep this momentum," Aoyama said.
"For the next fiscal, 2009-10, we have set a sales target of 12,50,000 units in the Indian market, of which 7,40,000 will be scooters and 5.1 lakh will be motorcycles," Aoyama said.
Talking about the new 110cc Activa, Aoyama said the company had developed the model keeping in mind the changing needs of Indian customers.
"We are aiming at further expansion of scooter market with new Activa and have set challenging plan to sell 5,50,000 new Activa in 2009-10," HMSI head (sales and marketing) N K Rattan said.
Rattan said the company will increase add new 100 outlets in the next fiscal to take the total to 750.
Earlier HMSI had said it would invest Rs 300 crore (Rs 3 billion) in the next three years for expanding its production capacities, besides launching new models.
The company, which has a production facility at Manesar, has so far invested Rs 900 crore (Rs 9 billion) in the country.
HMSI has also planned to introduce a 100cc bike targeting the mass market within next one year, which would be targeted at young customers, Aoyama said.