As Honda Active scooter closes gap on Hero splendor motorcycle, what is Bajaj Auto thinking?

This is a great story of three companies – Bajaj Auto, Hero Motors and Honda Motorcycles:

  • Bajaj Auto was the undisputed leader in the 2wheeler category for years in India. Its scooters were poor on engineering but worked in a shortage driven licence era.
  • This changed with Hero and Honda combining into a joint venture. It launched Hero Honda motorcycles which took the steam out of Bajaj Auto. In particular its 100 cc bike Splendor became a sensation of sorts just like the Maruti 800 (which too was a Joint Venture and shook the Ambassador monopoly)
  • Then Bajaj Auto which was mainly a scooter company comes out with all guns blazing launching bikes above 100 cc. It shook the ground from HH by coming out with more powerful bikes for the new aggressive generation which wanted more power.
  • Hero and Honda soon split with Splendor remaining in Hero stable.
  • This time Honda competed with both Hero and Bajaj launching scooters! These scooters were redesigned and appealed to Indian consumer in a big way. After all scooters allow one to carry more stuff back home which lacked big time in motorcycles. Honda brand was Activa which became as much a rage like other two wheeler brands. It changed the 2-wheeler market yet again bringing scooters in the mainstream.
  • Bajaj which shifted its game from bikes to scooters in a big way, is now looking at competition from a segment it owned supremely at one point. The younger generation of Bajaj Auto went against the old generation and discarded their venerable scooter brand.

So much so, Honda Activa is now almost selling same numbers as Hero Splendor:

Hero Splendor’s long streak of market dominance looks likely to be challenged by Honda’s biggest seller Activa, as it steps on the pedal to get the top spot in the two-wheeler space.

Splendor is one of India’s oldest and largest selling motorcycles; Activa is the country’s largest selling scooter. Honda shrunk the gap with the Hero bestseller after Splendor sales declined last year, while that of Activa grew in double digits. From a gap of nearly 339,000 units in the financial year 2014-15, or FY15, Splendor’s lead over Activa was down to under 20,000 units in 2015-16 or FY16, according to Society of Indian Automobile Manufacturers’ data.

Last year (FY16), Hero sold 2.48 million Splendors; in FY15, it had sold 2.51 million units. It was a drop of 1.2 per cent. Activa’s sale grew 13.2 per cent in FY16 to 2.46 million units as compared to 2.17 million units sold in FY15. In seven of the 12 months last year, Activa was racing ahead of Splendor; it held on to its leading position in the January-March quarter.

Since first racing ahead of Splendor in September 2013, the Japanese scooter model has often sold more units than the Indian motorcycle.Hero has managed to hold on to a slim lead but what could upset the ranking is Honda’s new manufacturing capacity. It recently inaugurated the largest scooter-only plant in the world, in Gujarat in February. Now, it can make 1.2 million scooters every year.

Activa’s growth has eaten into the economy bikes (1,000-cc engine) market. In urban area, scooters are preferred over bikes because it is easier to ride them through congested roads.

Superb stuff.

How wheels of the 2 wheeler industry go round and round and keep coming back. Next change could again be from a different kind of motorcycle..

 

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