Akshay Kumar was the perfect choice of brand ambassador for Honda Motorcycles and Scooters. The new 110cc Dream Yuga, is the cheapest bike by Honda, globally. The actor’s passion for action and his rags-to-riches story made him the right guy for the job. “The masses will identify with him,” says HMSI president and CEO Keita Muramatsu. The masses haven’t really been on Honda’s radar until now, so this is a real change. The company’s even gone vernacular in its tagline — sach kar denge sapne — to emphasise the common touch.
Barely a week earlier, Suzuki Motorcycles India, too, unveiled its first mass segment motorcycle (75-125cc). The only difference: riding the Hayate was Salman Khan. And a day before the Dream Yuga’s launch it was Bajaj Auto’s turn to add Discover 125 ST to its range of commuter bikes.
Hero was the only company to post growth in a slowing market
The road to success in the Indian motorcycles market passes through the mass segment territory and companies are waking up to the opportunity. Of the 10 million units sold in FY12, 70% were in the 75-125cc segment. Although operating margins in the mass segment are lower than higher powered bikes, the appeal is higher. Not only are there millions of cyclists who can be motorbike owners, rural penetration is still very low.
Trouble is, with the exception of Hero, the past year hasn’t been too good for commuter bikes, with sales of all brands dropping between 14 and 3% (see: Steady rider). Indeed, sales across the market dropped to 15% in FY12, after two years of high growth (over 20%). With sales in the next few years expected to be in the 9-11% range, new commuter bikes will have a rough ride ahead: not only will they have to break Hero’s stranglehold on the segment, they will have to do so in a slowing market.
Price is not a big differentiator for the new launches: the Dream Yuga compares favourably with the Discover 125 ST (₹45,500), and is slightly higher than market leader Splendor (₹41,200) and Suzuki’s Hayate (₹40,162). So, branding will be critical. “The two-wheeler industry is based on brand building,” says Arun Aggarwal, analyst, Kotak Securities. While Bajaj Auto is targeting sales of 5 million units this year from its new launches, HMSI’s appeal is already well-established with a waiting list of over six months for its Activa scooter. With a brand ambassador for the first time, perhaps reaching out to the hinterlands will be easier.