Riding Two-Wheelers in India

June 7th, 2008 - 3:23 am ICT by Amrit Rashmisrisethi  

Most of the world’s global auto giants are rushing to supply low-cost cars to the masses in India. The Japanese company, along with its local partner, produced more than half the eight million motorcycles and scooters sold in India last year, and it probably has the most to lose if its competitors’ strategy works. Rather than betting that Indian consumers will buy their first cars if they are cheap enough, Honda is promoting its motorcycles and scooters for entry-level drivers and reserving its cars for India’s burgeoning middle class, whose status-minded members often aspire to own a Civic or an Accord.

“It’s hard to imagine that Indian customers would buy cars just because they’re cheap — and accepts the fact that quality is sacrificed,” says Takeo Fukui, Honda’s chief executive officer.

Honda’s counting on drivers like Mumbai’s Mustafa Badshah. The 40-year-old business owner, who shared one scooter with his wife and two children, recently considered buying a car. But he decided instead to get a second scooter, a Honda Aviator, because it could more easily navigate the city’s traffic congestion. “It’s always better to own two bikes than a car in this city,” Mr. Badshah says.
To keep sales healthy, Honda is aggressively promoting its motorcycles and scooters, adding models like the newly launched Aviator, a stylish scooter selling for about $900, and the sporty Unicorn, which sells for $1,400 and features swift acceleration and “macho” styling to appeal to urban males.

Honda’s main targets are young students and professionals. For car companies, getting this market right is crucial. As growth slows in developed countries, auto companies are increasingly relying on fast-growing emerging markets like China and India to pick up the slack. While sales growth in the U.S. and Japan are declining, CSM Worldwide Inc., a market research firm, expects auto sales in India to nearly triple to 4.6 million by 2014 from 1.6 million units last year, fueled largely by the growth of small and low-cost cars. Honda’s cautious approach to the Indian market dates back to 1984, when it first teamed up with the Hero Group to produce motorcycles. Its early entry allowed Honda to quickly become the dominant motorcycle maker in India. Honda expects to sell many more motorcycles than cars because of customers like Pritesh Gohel.

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