India loses crown to Indonesia as Honda’s biggest two-wheeler market

HMSI’s FY20 domestic sales are back to the same level as FY17 when the company had sold 4.72 million units in the domestic market

India is no more Honda’s biggest two-wheeler market. Indonesia has emerged as the leader.

Challenging market conditions made two-wheeler operations of Honda India lose the top position in the world to its fellow Asian for the first time in four years.

Honda Motorcycle & Scooter India (HMSI), the country’s second-largest two-wheeler maker, clocked sales of 4.7 million units in FY20 as against sales of 4.85 million units clocked by P.T Astra Honda Motor, Indonesia’s largest two-wheeler manufacturer.

HMSI’s FY20 domestic sales are back to the same level as FY17 when the company sold 4.72 million units in the domestic market. Honda Indonesia sales also contracted during FY20, when compared to FY19 but at a lower rate than HMSI.

The demand for two-wheelers in India has remained weak for two consecutive years due to a variety of factors including rise in insurance costs, price hikes, natural calamities and regulation-led changes to products.

Honda has retained the top position in India’s scooter market with a share of 57 percent despite multiple launches by rival brands over the years. Scooters have a lion’s share in HMSI’s volumes making up 67 percent of its domestic sales as of the end of FY20.

Honda makes India's best-selling scooter Activa that even became the single best-selling two-wheeler in India in the past few years - dethroning Hero Splendor.

However, the overall share of scooters itself in India came down to under 32 percent last year from more 34 percent recorded three years ago, according to data provided by the Society of Indian Automobile Manufacturers.

During the same time budget, a small capacity motorcycles powered by 100 and 110cc engines made a comeback in states like Uttar Pradesh, Bihar, Rajasthan, which have been the stranglehold markets of Hero Motocorp, India’s biggest two-wheeler manufacturer.

While India’s two-wheeler market is dominated by motorcycles with a share of 64 percent in Indonesia scooters and mopeds make up more than 85 percent of the total two-wheeler sales. India’s heavyweights Bajaj Auto and TVS Motor Company are also present in the Indonesian market.

The undeveloped or under-developed road infrastructure in the hinterlands of the country powered the acceleration of share of motorcycles in the total two-wheeler pie of India as scooters have largely remained an urban phenomenon.

Having remained under suspension for more than two months, production recommenced at HMSI on May 25 at one of the factories while three more factories will restart production in the first week of June. Production at each of the manufacturing facilities of automakers was halted following lockdown orders from the Centre to control the spread of COVID-19.

No company, including Honda, has so far given any guidance on demand for FY21 as even sales activities were halted during the past 6-8 weeks. HMSI restarted sales operations in the first week of May through a limited number of opening of dealerships.

Honda, however, cautioned that consumer spending had been sluggish due to economic stagnation and rise in the unemployment rate.

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