Last year, after it separated from Hero, Honda began moving its research and development from Gurgaon to Manesar. While at it, the Japanese two wheeler giant also pumped in a couple of hundred crores into the new R&D facility for product development. It also doubled the headcount in the R&D operation. The R&D center's prime purpose was to engineer new two wheelers from scratch. All these measures will bear fruit in 2014, when Honda showcases the first developed-in-India two wheeler. While the exact details of this two wheeler, on whether it is a scooter or a motorcycle, remains unknown, Honda expects to showcase the new two wheeler "within one year".
The new two wheeler from the brand could be a low cost product that Honda will position for big volumes. We have another Japanese brand, in this case Yamaha, also planning to take to the low cost motorcycle space in a big way. So, a big volume commuter motorcycle or scooter makes a lot of sense for Honda, especially considering its ambition of displacing Hero MotoCorp, currently the world's largest two wheeler maker by volume. The brand has already launched two big volume products this year, the Dream Neo 110cc motorcycle and the Activa-i automatic scooter.
Honda is charting out a very aggressive expansion strategy in India, a market that it wants to lead by 2020. The two wheeler major will launch a new product every quarter for the next few years, bombarding the Indian two wheeler market with a range of offerings, from commuter motorcycles to superbikes. Honda is also expanding production in India, with its Narsapura facilty, off Bangalore, the latest Honda two wheeler factory in India. Honda has also launched a marketing blitzkrieg across urban and rural India, with Bollywood actor Akshay Kumar, as the face of the brand.
The presence of Akshay Kumar in Honda ads peppered into various forms of media is to connect to motorcycle buyers in the rural and semi-urban parts of India, an area where Honda's presence is currently low. By making the brand more visible and by establishing more dealerships and service centers in India's hinterland, Honda will be better equipped to take on market leader Hero MotoCorp. For the record, Hero MotoCorp's 5,000 customer touch points across India is the largest network and this is an important factor contributing to Hero's success in the commuter motorcycle space.