Storm the Norm

by Anisha Motwani

  Saddling the horse: 2000–2001

  The core team knew only too well that it would have only one chance of proving its worth with the very first Honda product in India. Zeroing in on which segment to focus on was a huge challenge in itself. Till the late 1980s, the scooter was the traditional vehicle of choice for middle class Indians, but with economic liberalization at the turn of the decade, there was a sea change in the demands of the two-wheeler customers. In the 1990s, customer preferences had shifted from the economical and convenient scooters to the more stylish, young, fuel-efficient, four-stroke motorcycles powered by advanced Japanese technology. While motorcycles were becoming extremely popular, scooters were perceived to have an ‘aged’ profile and were on the brink of extinction. Assuming that scooters were losing flavour with the Indian consumer, Bajaj, the No. 1 two-wheeler manufacturer then, focused all its energies on manufacturing motorcycles that were flying off the shelves. But the existing partnership for Hero Honda clearly stipulated that the new Honda Company—HMSI—could not launch any motorcycle in the first three years of its Indian operations. This put well over 80 per cent of the Indian two-wheeler market out of bounds for Honda. The remaining niche market, comprising automatic scooters (ATSCs) like Kinetic DX and Bajaj Saffire, was not a volume driver, being limited to urban households, and contributed less than 10 per cent of the Indian two-wheeler industry.

  Adversity vs opportunity

  In this scenario, HMSI decided to turn the scooter industry’s existential crisis into an opportunity, much to the shock of industry watchers. The core team at HMSI decided that Honda’s first product for India would be an ATSC. Industry experts declared this a ‘strategic suicide’ and started writing obituaries for the brand even before it took its first independent step!

  Far from being fazed by the criticism, the dream team worked with new-found fervour to bring back excitement into the ATSC category and came out with the Honda Activa as its maiden launch. Here was a ‘scooter’ in a new avatar that was trendy, stylish and unisex in appeal. Far from the geared scooters that were cumbersome, heavy and archaic, the Activa came with all the features of a motorcycle. This included superior four-stroke technology, V-matic (gearless) transmission, durable all metal body, convenient lift-up independent cover (CLIC) mechanism and Honda’s patented puncture-resistant tuff-up tube (that minimized sudden punctures by 70 per cent) ensured convenience like never before.

  With Activa, therefore, Honda achieved all that it desired in its maiden launch. On the one hand it completely changed the perception of a scooter in the mind of the consumer and on the other it reopened a ‘dead’ segment, thus throwing the competition out of gear!

  Honda Activa-i

  The product completed to perfection, Honda set about putting the last piece of the strategy in place, that is to register presence and tap customers in the first phase. Taking cognizance of the fact that it was near-impossible to instantly create a pan-India presence, the Honda team shortlisted top potential markets for ATSCs in India. This included obvious key growth drivers of urban consumption, led by cities like Bangalore (India’s largest market for ATSCs).

  Innovative distribution strategy

  The next step was to invite applicants for Honda Exclusive Authorized Dealerships (HEADs). In India, Honda wanted to be the pioneer in providing world-leading standards under one roof which was more than the trio of sales, service and spares.

  Globally recognized for its transparency of approach, the same blueprint and profit and loss (P&L) projection was shared with prospective dealers who would sign up as exclusive dealers of products from the Honda stable. Honda had taken into account every exigency to prepare a three-year survival plan, and provided proof in no uncertain terms of how sustainable and wise a business decision it was to invest in brand Honda.

  Itself a young brand in India, Honda chose young blood over experience when it came to its HEADs. A majority of the sixty-two HEADs chosen in Phase I were entrepreneurs in their thirties. This dedicated and enthusiastic team of founder dealers laid the path for future Honda success in India.

  Results of this momentous first step: 2001

  By the year 2001, everything had started falling in place. In May 2001, mass production of Activa commenced in Honda’s production facility at the industrial model township (IMT) of Manesar, Haryana. With the grand entry of Activa, Honda successfully reactivated the dying Indian ATSC market, and the rest, as they say, is history.

  With the success of Activa giving Honda a solid foundation, the brand soon trailblazed its way to record sales. In 2001 itself, Honda sold over 55,000 units from its limited network. The next fiscal (2002–3) saw Honda striving to meet unanticipated demand as sales climaxed at the peak annual production capacity level of 1.5 lakh units. More than a decade later, the legacy and pace continue unabated. Honda Activa holds the distinction of being the numero uno among automatic scooters in the world. It has over 10 million happy customers in India. So phenomenal has been its success that ‘Activa’ is now the generic name used for all automatic scooters!

  Mastering the stride: 2001–2004

  Honda expanded its ATSC portfolio step by step in order to meet the evolving needs of its Indian customers. Initial customer surveys indicated that Gen Y loved the convenience of a scooter, but dreamt of a ride that also amplified its style quotient. In other words, it wanted something that was not a family scooter, but an individual style statement in motion.

  »To realize this dream of Indian youth, Honda innovated with the 102cc Dio, which created a new sub-segment within ATSCs and was India’s first unisex moto-scooter.

  »This was followed by Eterno—the geared surprise from Honda in mid-2003, targeted at hard working professionals.

  The new product pipeline was fortified by a steady addition of network outlets. Every new city was finalized keeping in mind the future product line. Ensuring dealer viability was paramount. From sixty touch-points in FY 2001-2, the network grew to 252 outlets by FY 2003–4.

  Undisputed Leader

  In just three years, Honda’s ATSC sales skyrocketed by 515 per cent to 3.41 lakh units in FY 2003–4. From a new fringe player that had its hands tied at the time of its entry into India, HMSI was now the undisputed leader with a 52 per cent market share in the ATSC market.

  Trotting ahead: 2004–2011

  As per its agreement with Hero, Honda could not enter the motorcycle segment for the first three years of its independent operations. However, as it entered into its fourth year of operations, HMSI was free to eye the largest share of the two-wheeler pie: motorcycles.

  From a brand standpoint, it made sense that the first model be a premium performance motorcycle as the Honda network’s reach was predominantly in Tier-I cities. Further, the first motorcycle had to personify Honda’s R&D innovations and superior technology. Gradually, as the network would grow to include Tier II and Tier III cities, the product portfolio would grow to address the masses. Thus, the top-down approach was adopted, keeping the demands of the consumer in mind.

  It was with this background that HMSI launched its first motorcycle— the 150cc CB Unicorn. This was India’s first motorcycle with a state-of-the-art mono suspension (Honda’s original technology from the world of international racing) and an enviable list of other novel features. Unicorn was the only motorcycle in India with Honda’s patented puncture-resistant tuff-up tube (that minimized sudden punctures by 70 per cent) and had best in class pick-up (clocked 0–60 in just five seconds) and incredible mileage (60 km to a litre) coupled with an international design guaranteed to bring out the ‘Wing Rider’ in every customer. Globally, Honda’s two-wheeler operations are symbolically representated by wings while the car operations are represented by the letter H. Wing Rider was the tag line for the CB Unicorn.

  With CB Unicorn getting a thumping response from customers, Honda rapidly grew to reach the one million happy customers milestone in January 2005.

  2004: Honda’s first motorcycle

 
; 0–60 in just five seconds

  From 2006 to 2010, Honda’s operations picked up pace, and the motorcycle line-up stretched from 150cc to 125cc. In 2006 came the 125cc CB Shine. In the nine years since, CB Shine sales have jumped from 10,000 units to more than 70,000 every month. Customer satisfaction has ensured that despite severe competition, CB Shine continues to rule as India’s largest selling 125cc motorcycle.

  This was followed by the introduction of a sporty, fun bike in the 125cc CBF Stunner in 2008. With its expanding product portfolio, HMSI’s network had now started penetrating deeper beyond urban India, into the heartland of Bharat.

  However, the global economic meltdown, lay just around the corner and by October 2008, the Indian two-wheeler industry was in the throes of a contraction. The sole exception to this was Honda, the only two-wheeler company to witness no drop in sales even for a single month.

  In contrast to the overall decline of 7.92 per cent in the two-wheeler industry in FY 2007–8, HMSI sales had jumped up 27 per cent. While the motorcycle industry, which contributed over 70 per cent to total two-wheeler sales, witnessed a colossal de-growth of 11.9 per cent, Honda’s motorcycle sales grew at a phenomenal 65 per cent. In just two years, by FY 2009 end, HMSI had gained a substantial 5 per cent market share by making the most of the opportunity that lay in adversity.

  CB Stunner

  Engaging with society at large

  As the fastest-growing two-wheeler company in India, Honda left no stone unturned to catch the pulse of the nation and convey the message that the well-being of its customers was at the core of its philosophy. Working towards this goal, Honda introduced a separate ‘safety riding’ vertical to its organization. Honda’s skilled safety instructors started engaging with all age groups, starting from children as young as five years old to adults. Riding trainers were introduced at HEADs across India to aid new riders to experience over hundred possible risks on the road in a virtual safe mode. From regular safety trainings at schools, colleges, corporate offices and public sector units to mega camps in Tier II cities, the importance of responsible riding and safety of self and others on the road was driven home.

  Observing the increasing trend of female riders, Honda also became the first in the two-wheeler segment to extend its two-wheeler riding programme to women, enabling them to experience the freedom of riding. The unique Dream Riding initiative is the next step wherein women can learn to ride in just four hours. All they have to do is to drop an e-mail and Honda’s safety instructors will get back to them. Already, this empowering initiative is seeing an overwhelming response from eighteen-year-old college students to forty-eight-year-old professionals and housewives.

  A new era begins

  From 2000 to 2010, India had become the world’s second-largest motorcycle market after China. Sensing the opportunity that lay in the increasing diversity of the Indian motorcycle market and its potential to grow business both inside and outside India, both JV partners (Honda Motor Company, Japan, and Hero) expressed a desire to mutually end their twenty-six-year-old partnership in December 2010.

  With this new development, HMSI was all set to unleash its mega plans of expanding Honda’s footprint in the Indian two-wheeler market on its own, this time without any restrictions.

  Picking up pace: 2012–2014

  HMSI’s new innings as the only Indian Honda two-wheeler company had now begun.

  This translated into ‘simplicity, concentration, speed and communication’ on all fronts—product, production capacity, R&D, penetration, manpower, investment and expansion of supplier base.

  The challenge now, as the core team saw it, was ‘to provide good products to our customers with speed, affordability and low CO2 emissions’. The plan was to develop India as the centre of Honda’s global two-wheeler operations, build it as an export hub, and increase its contribution to Honda’s overall two-wheeler sales from 13 per cent in 2010 to 30 per cent eventually. Honda’s then global chief, Mr Takanobu Ito, president and chief executive officer (CEO) Honda Motor Company, Japan, reaffirmed that Honda would go all out to leverage its vast resources and expertise for emerging as the leader in India. Towards this end, Honda launched its new India-specific, three-pronged corporate direction in May 2012.

  Following a three Cs strategy, Honda would communicate, connect and create for India. Simple as this sounds, behind it lay years of experience in building trust and continuous innovation.

  There was vast opportunity in taking the spirit of the Honda global brand slogan ‘The Power of Dreams’ and communicating it to a country of a billion in a way that showed that Honda was here not just to share a dream, but to power it into reality. That is how the Indian brand slogan ‘Sach kar denge sapne’ was conceived.

  At the heart of it was a simple but powerful insight that revealed what drives today’s India. As a nation, Indians are in a rush to turn their dreams into glorious reality. Across geography and demographics, they are impatient to participate in the march to progress, and all they need is a two-wheeler to get them there faster. This dovetailed perfectly with Honda’s own mission, across the world, and here in India.

  To establish an emotional connect with the Indian masses, Honda roped in Bollywood superstar Akshay Kumar as its brand ambassador. Kumar, as the marquee ad for HMSI conveyed, had seen this journey from dreams to reality up close, succeeding as he did in Bollywood without a godfather, coming in from the unknown. He embodied that journey, knew its ups and downs, but also knew that once it got a little boost, nothing could come in its way. Aspiration and perspiration for turning dreams into reality were matched perfectly in Kumar, making him a credible spokesperson for Honda.

  Bollywood superstar Akshay Kumar as brand ambassador

  Most importantly, Honda was proceeding full throttle to create new benchmarks of success in the two-wheeler industry. This entailed challenging and ambitious network expansion, product innovation, aggressive investment for production expansion and more.

  On the product side, Honda was finally free to enter the 100–110cc motorcycle segment which commands a nearly 42 per cent share in India’s two-wheeler market. In this highly competitive mass motorcycle segment, Honda introduced Dream Yuga, its first 110cc mass motorcycle, in May 2012. The Dream series has originated at the hands of Honda Motor Company’s founder Soichiro Honda, and is a perfect embodiment of the Power of Dreams, created as it was with the dream of providing mobility for all. With its accessible style and value offerings, Dream Yuga sales crossed 1 lakh units in just four months of its launch.

  Creating capacity

  By the end of 2011, Honda’s first factory at Manesar was already running at its full annual production capacity of 1.6 million units. To serve its waiting customers better, the HMSI announced its second plant at Tapukara industrial area of Rajasthan, and it started operations in July 2011 with an initial annual production capacity of 0.6 million units. Still, with waiting time going up to a year on some products, demand for Honda’s products far exceeded supply.

  Taking a dynamic leap to accommodate present and the future demand, Honda announced plans to double the capacity of its Tapukara plant, and build a third two-wheeler plant in Narsapura area of Karnataka even while construction of Phase-I at Tapukara was being completed. The second plant started production in FY 2011 and expanded to its full capacity of 12 lakh units annually by FY 2012. Following this, the third plant started operations in May 2013 and expanded to its full capacity of 18 lakh units annually by FY 2014 end. It is noteworthy that in just three years, Honda has blazed new trails by almost trebling its annual production capacity from 16 lakh units in FY 2010–11 to 46 lakh units in FY 2013–14.

  In 2013, HMSI launched its second Dream series mass motorcycle, Dream Neo. Differentiating Dream Neo from the existing crop of mass motorcycles was the key to driving sales.

  In a category first, Honda brought advanced technology to the traditional 100–110cc ‘bread-and-butter’ motorcycle segment. Dream Neo was the first Honda motorcyc
le with revolutionary Honda Eco Technology or HET.

  The HET advantage

  With HET, Honda’s engineers had achieved what until then had been deemed impossible for the segment—to increase power while boosting fuel efficiency. By working on the trio in engine technology—reducing friction, improving combustion and optimizing transmission—Honda had given Indian customers what they truly wanted, a super mileage. Customers visiting dealerships were overwhelmed by the fact that despite a new technology, which made Dream Neo the most fuel-efficient offering from Honda, it was also Honda’s most affordable two-wheeler.

  At the designing stage itself, Honda’s engineers ensured that Dream Neo had a longer and wider seat, higher ground clearance and other features which made the model most suited for rural conditions.

  On the positioning front too, Dream Neo was pitched as an expression of individual identity for those who strongly believed in themselves and wanted a motorcycle that stood out from the crowd. New India’s new dreams were larger than life, much like Bollywood films. And each Indian was the hero of his own life, effortlessly overcoming obstacles in pursuit of his dreams. The tagline ‘Apni film ka superstar’ (The superstar of one’s own film) essentially reinforced the idea that every Dream Neo customer was the real superstar of his life. With Dream Neo, Honda rewrote the equation for commuter mass motorcycles in India.

  With the Dream series (Dream Neo and Dream Yuga), Honda posted stellar growth of 196 per cent and almost quadrupled its market share in the mass motorcycle segment to 11 per cent (between 2011 and 2014).