Honda banks on economy model to recapture lead in Indian motorcycle market

NEW DELHI--Honda Motor Co. has released a new low-end motorcycle in India as part of its strategy to regain its status as market leader in the country.

Honda’s Dream Yuga has a 110cc engine and is priced at 44,642 rupees (about 67,000 yen, or $838). It was introduced May 15.

The model can accommodate up to four people, a feature geared for the local market where many families use a single motorcycle to get around.

“(The Dream Yuga) is intended exactly for the mass market,” said Keita Muramatsu, president of Honda Motorcycle and Scooter India (HMSI), Honda’s Indian motorcycle subsidiary.

Honda, the world’s largest manufacturer of motorcycles, is eager to regain the top spot in India after it fell to fourth place at one point. The Indian market is expected to continue to grow rapidly in coming years.

The Indian market ranked No. 2 globally in annual sales volume, after China, with 13.44 million units sold in fiscal 2011. The figure is 2.5 times the number from eight years before.

The most popular type of motorcycle in the Indian market are small models with 100cc to 110cc engines and high fuel economy within a price range of 40,000 rupees.

Honda’s sales suffered after it dissolved a joint venture with the Hero Group, a midlevel conglomerate in India, in March last year over disagreements on management policies.

The joint venture, Hero Honda Motors Ltd., was established in 1984 to roll out motorcycles.

The Splendor, a 100cc model developed by Honda, became India's top-selling motorbike on the back of the Hero Group’s expansive sales network.

Honda is now vying with a local maker for second place in terms of market share, lagging far behind Hero MotoCorp Ltd., the market leader and whose name was changed from Hero Honda Motors.

Honda is set to bolster its annual production capacity to 4 million units, 1.4 times the current level, by 2013, in an attempt to return to being the market leader by adding a plant and through other means.

Honda also plans to add 200 dealerships, bringing the total of dealerships in India to 1,000.