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Honda 2Wheelers India to push scooter sales in rural market.

Saj 007

29 Jan 2015
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Honda 2Wheelers India to push scooter sales in rural market...

CHENNAI: Scooters may be more preferred by urban customers but market leader Honda Motorcycle & Scooter India (HMSI) is kicking in a new strategy to push rural sales ahead of the festival season. The company is increasing production to better capture the rural markets, where demand is expected to rise, thanks to a good monsoon.

"Currently 28 per cent of our total volume comes from rural markets. Earlier, the ratio was 1 scooter to 9 motorcycles in rural markets but now, of late, with better availability of scooters the ratio has improved to 3:9 ," said YS Guleria, senior VP-sales and marketing, HMSI.

Honda is able to kick off this rural focus in scooters thanks to a recent capacity addition that has allowed it to allocate more scooters for the festival season. "We started with our scooter-only factory in Sanand to breach the demand-supply gap in scooters and we have brought forward the second line in that plant to hit peak capacity by end August," said Guleria. As a result, the piling up of back orders have come down.

"Scooters back orders are down to 18,000 starting September compared to 35,000 last year. For the first time in 10 years, Honda scooters will be available off the shelf this festival season," he added. Typically, given the demand pile up, scooters were not available at the last mile in rural networks. With the new capacity addition, Honda hopes to fix that skew.

Also with a network increase of an additional 2,000 outlets in the last 3 years, HMSI is looking at a more balanced urban-rural mix. Honda commands 59 per cent marketshare in scooters.

The capacity ramp would mean a higher share of scooters in Honda's overall sales mix. In the April-August period, 66 per cent of the company's total sales came from scooters. With the ramp up in capacity, it will be in a position to supply enough to take that to 70 per cent scooters.

Overall, Honda expects a more than 20 per cent demand growth in the festival season as well as the first 10 months of the calendar. "We have been growing at a 22 per cent trot in the April-August period as against the industry growth of 12 per cent," said Guleria.

"We should be able to maintain 20 per cent plus growth in the festival season and through the first 10 months. Overall we are seeing positive momentum already. The 7th Pay Commission, OROP and good monsoon should contribute to good growth," he said.

Honda 2Wheelers India to push scooter sales in rural market - The Economic Times
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