Honda IB Final Project

8/10/2019 Honda IB Final Project

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HONDA - OVERVIEW

Honda Motor Co., Ltd.is aJapanese public multinational

corporation primarily known as a

manufacturer of automobiles,motorcycles and power

equipment.

Honda was founded in in

Hamamatsu, Japan in 1948.

Honda has been the wlargest motorcycle manuf

since 1959, as well as the

largest manufacturer of icombustion engines me

by volume.

Honda became the second-largest Japanese automobile

manufacturer in 2001 behind

Toyota

Honda became the eighth largestautomobile manufacturer in the

world in 2011.

The company has asseplants around the globe

countries including In

In 2013, Honda became the firstJapanese automaker to be a net

exporter from the United States,exporting 108,705 Honda and

Acura models while importing

only 88,357


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HONDAINDIA-AUTOMOBILES

Honda Cars India

Ltd.(HCIL) is a

100 % subsidiaryof the Honda of

Japan for the

production,marketing and

export ofpassenger cars in

India.

It beganoperations in

December 1995as a joint venture

between Honda

Motor Companyand Usha

International ofSiddharth Shriram

Group.

In August, 2012,

Honda bought

out UshaInternational's

entire 3.16%stake for 1.8

billion in the jointventure.

HCILs first

manufacturing

unitwas set up atGreater Noida,

U.P in 1997 while

HCIL's second

plant was setup

in Bhiwadi whilein Tapukara the

third plant is thefirst car

manufacturingplant in

Rajasthan.

Companys

Product Range

Includes HondaMobilio ,Honda

Brio, HondaAmaze, Honda

City And Honda

CR-V Which Are

Produced At TheGreater Noida

Facility.


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HCIL GROWTH STRATEGY

Honda entered India with launch of Honda cityin 1998 which positioned itself as a premium sedan in the Indian

It launched Honda Accordin 2001 while Honda Civicwas launched in 2005.

The Jazz compact car, launched in 2009 in India, was priced a little over Rs.7 lakh, but lower than the

unlike in other markets , it was considered expensive for a car its size.

The company enjoyed the segment leader position with the Honda City and Civic for years.

HCIL begun tweaking their global product development, pricing and marketing strategiesto suit theincrease their share in the country

HCIL began research and development initiatives in India in 2009 as it geared to introduce its Honda Briocountry, which shared parts with the Jazz .

HCIL known for its petrol engine technology, deviated from its global strategy to develop a diesel engine for the launched a diesel sedan, Honda Amaze, in the country based on the Brio platform, that has 90% of its parts ma


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HONDA-INDIA-TWO WHEELERS

Honda has become the largest two wheeler manufacturer as well as the second largest two-wheelers company in Ind

All the products launched by HMSI were runaway hits in the market

It was followed by Honda ShineIN 2006.

First bike launched by HMSI was Honda Unicorn IN 2005.

Subsequently HMSI launched ETERNO ,AVIATOR AND DIO range of scooters

HMSI entered India in 2000 with ACTIVA a gearless scooter which captured the whole scooter market and has since remained mark

HONDA arrived in India as Honda Motorcycle and Scooter India Pvt. Ltd. (HMSI ) a 100% subsidiary of Honda Motor Company


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Challenges Faced

License system was followed to control concentration of economic power

Control over investment

People were more inclined towards scooter because Motorcycle was considered as aflamboyant thing and it doesnt suit working class

Low interest in motorcycle

Not familiar with local people, Hero was more visible partner of JV

Started operation of scooters again and launched Activa, which became instant hit

Dependent on Hero without self-image

Hero & Honda products share the same engine & transmission system but Hero products arecheaper hence more preferred

Trying to position themselves as mass company but still very tough to shed image of MNC

Competition with Hero

Wanted to implement non union model but failed

Union was formed with the help of governing political party, this affected production andalso tarnished their image

Cross cultural issues


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Factors favourable to Honda with respect to Indian Market

Growing Population and Transportation Needs

India : Population of more than 1.21 billion people

Population density of 382 persons per square kilometre

which is double as compared to that of China

Annual per capita travel in India is estimated to be close

to 900-1000 km compared to 500-600 km in China.

India is worlds second largest market for two-wheel vehicles.

The output of scooters, motorcycles and two-wheelers in India ranked first in the world,

exceeding the output of Japan.

G

The permission for 100% FDI in the automobile sector

to a turnover of 12 billion USD in the Indian auto indu

It has also lead to a turnover of 3 billion USD in the anc

The government p

potential benefits

Generation of emp

technical and nont

achieved not only

through the growi

industries

India as Export hub

Honda can cater to the growing demand of two

wheelers in African market with India as its export

hub

The foreign firms such as Honda have not only a higher level but also higher export

intensity as well (on an average two times as that of domestic players)

MNCs can actually use India as a base for their

exports

A significant progress has already been made by different MNCs like Yamaha, Honda,and Suzuki etc.

The spurring 19% growth in the nations scooter sales

personal transport in Indias villages and small towns,

Honda aims to incre

40-42% from the cu

HMSI in 2013-14, so

and hopes to sell 4.5

2014-15.

It had 2,800 dealer o


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Promising Niche Market growth in future

Factors favourable to Honda with respect to Indian Market

By Niche market we mean market for Top-end bikes, which include the likes of Suzukis

Hayabusa, Hondas CBR1000RR and Yamahas R1, that are typically bikes with a large

displacement of around 1,000cc that allows them to accelerate quickly and maintain speeds

up to 300km per hour if road conditions permit

Cost 9.5-12.5 lakh, theyre only bough

The major market for these type of bikes would

Mumbai, Delhi, Kolkata, C

Slowing economy has not hit sales of this segme

constant space


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Factors unfavourable to Honda with respect to Indian Market

Economic slowdown

In India, an economic recession, high borrowing costs and swelling fuel prices have dec

According to the report of Society of Indian Automobile Manufacturers (SIAM) the comIndia remained flat at 57,51,267 units in the five months from April to August for 2013,

units in the same period a year ago

After expanding at such an abrupt pace for several years, sales rose by a mere 3% in fis

Absence of dedicated

finance arm

In India, Honda does not have a dedicated finance arm to provide loan facility to vehicl

Hero & Bajaj have their dedicated finance arm named as Hero Fincorp and Bajaj Auto f

Honda is by far handling the deficiency by having partnerships with banks and finance

High Pricing of Honda

vehicles

About 65-70% of Indian population lives in rural areas of India. In order to attract this hHero (Splendor) and Bajaj have kept the prices of their bestselling models at par with ttarget customers

Hondas high pricing as compared to its competitor proves gives it an edge in urban mapullback factor in rural scenario


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Recommendations

Follow Multi Domestic Approach: Increase local sourcing of com Explore New Markets: Explore into hybrid and fuel-efficient vehi

strengthen its current position and step into new markets such aaircrafts

Strategic Alliance with competitors: To achieve economies of scagain technological knowledge in new segments

Partnership with Institutes & Institutes: Avoids problems of lack and maintain quality standards

Strengthen Supply Chain: Export Honda vehicles to other compaefficient supply chain

Honda IB Final Project

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