Team-BHP - Honda Cars might collaborate with its 2-wheeler dealers

Honda is looking to collaborate with its 2-wheeler dealer partners in an attempt to increase its car sales in India. Honda wants to take advantage of the market reach and dealer network of its 2-wheeler arm in order to reach more customers in rural areas.

Honda Cars might collaborate with its 2-wheeler dealers-2017hondawrv14.jpg

At present, Honda Car India is the fifth largest car maker in India behind Maruti Suzuki, Hyundai, Mahindra and Tata Motors. It has 348 showrooms spread across 233 cities in the country. The brand's market share stood at 5.3 percent in the April-June 2017 quarter. The company is aiming to increase its market share to 10 percent over the next five years.

On the other hand, Honda Motorcycle & Scooter India has a total of 5,379 dealerships, branches and sub-branches. Its market share stands at 30 percent. It is the largest manufacturers of scooters and the second largest manufacturer of motorcycles in the country behind Hero MotoCorp.

Honda 2-wheeler dealers who sell with profit can reinvest in Honda's car business. Honda follows a similar strategy in other markets of the world where two-wheelers and cars are managed under one company. In India, the two-wheeler and car businesses were setup as individual entities after both split up from their joint-venture partners.

Source: ET Auto

Link to Team-BHP News

I don't know how Indian customers will take to having cars and scooters sold along side. Cars are an aspirational thing for Indians and I think it's not a great strategy considering the mindset here. Moreover the kind of customers coming to shop for a two wheeler is coming only for 2 wheelers , there is hardly any chance of cross shopping.

If the plan is to start stand alone car showrooms, there isn't going to be enough volumes to justify the same and current sales numbers will get redistributed.To get 10% market, what Honda needs is great small cars, not having few hundred more showrooms!

I for one won't mind buying a great car even if it's from a shack, as long as the service is good. You only deal with sales centre once!

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Originally Posted by TusharK (Post 4247878)

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Originally Posted by The Rationalist (Post 4247896)

If the plan is to start stand alone car showrooms, there isn't going to be enough volumes to justify the same and current sales numbers will get redistributed.To get 10% market, what Honda needs is great small cars, not having few hundred more showrooms!

If I'm not wrong they already have started following this path.
Thrissur Dist in Kerala has a newly opened 2nd Honda Cars dealer John's Honda who is also the Honda motorcycle dealer for many years in the city.

They have a complete 3S standalone showroom away from the motorcycle one. And is leveraging the understanding of the local market to their benefit.
IMHO that's what even Honda is aiming for.

This seems to show Honda's desperation in the market. Honda somehow has forgotten that if they made fantastic products, which is expected out of them, customers will search for their showrooms. Instead of Honda looking for weird sales channels.

How can a two wheeler buyer suddenly bump himself up o a product that will cost 10 times to 30 times of what he intends to buy?

I don't think any one will go to a 2 Wheeler showroom, see a car and say - 'Hey, let me junk that two wheeler that I originally came for. Let me buy a car. Now that I have decided to buy a car, let me not do any research on what's available in the market. Let me just go ahead and spend 6L to 15L, since I am already here in the showroom'.

And if there is an argument that people buying premium motorcycles will be swayed. As far as I know, such people are the hardest to sway. They are buying those bikes purely for the fun/joy of it. They wouldn't shift to a sedan/wannabe SUV.

Plus, what are the costs of going through this? Have one display car in each showroom? Or just have pamphlets/booklets of cars? I mean, where is the plan? How do they plan to tap the market through 2 wheeler dealerships?

It just goes on to show that Honda increasingly seem to be loosing the plot on Indian car market. With brazen cost cutting on cars, which doesn't match the price at which they are sold, Honda seem to have no clue what they are doing and what needs to be done.

From what I understand reading the ET Auto article, the company basically wants the existing Honda 2 wheeler dealers to open separate car dealerships in their small towns. The dealers already have a list of loyal Honda customers in their town. Honda will probably launch 'loyalty' schemes for existing Honda 2 wheeler customers.

Once new dealerships are open, Honda automatically gets visibility (and hence foot falls) in small towns. Big city based dealerships will not be interested in opening new ones in far away small towns.

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Originally Posted by smartcat (Post 4247984)

Yes, lot of people are misreading the article.

Honda doesn't want to sell cars in motorcycle showrooms!!

They want to incentivize 2 wheeler dealers in small towns to open car showrooms. I don't know how it differs from any person just opening a new showroom but I guess the existing 2 wheeler dealers get some sort of incentives and deals to open such dealerships which makes sense. Also, I guess to leverage dealer reputation if exists in the town.

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Originally Posted by TusharK (Post 4247878)

I really don't get what Honda is trying to do. Most 2 wheeler dealers will be currently happy with their turnovers. They surely can't sell a 2W and a 4W in the same showroom. The 2 markets are poles apart- The Activa and City are completely different products with consumers from different backgrounds and different expectations.

Honda should do is give the biggest 2 wheeler dealer in the Tier 2 & 3 cities an incentive to start a car dealership. That's a strategic start to expand into tier 2 and 3 cities.

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The brand's market share stood at 5.3 percent in the April-June 2017 quarter. The company is aiming to increase its market share to 10 percent over the next five years.

lol::uncontrol

Honda might have increased their market share with cheap & affordable products, but they won't retain many of these customers because of their blatant cost cutting.

A few years ago, we were praising Honda for quality and thrashing Maruti for lack of it. Now, it seems like the opposite!

Guys,

As Smartcat pointed out, Honda wants to make car dealership offers to its 2-wheeler dealers. It does NOT want to sell cars & bikes in the same showroom.

This offer is only logical as it's easier to expand with existing dealer partners than recruit new ones. Plus, with the wide 2-wheeler network, they can actually handpick the best-performing ones. In smaller towns, the dealerships can be smaller too, thus ensuring viability.

I also see the reverse of this happening. Going by the success of Honda 2-wheelers, many of its car dealerships would want to open a 2-wheeler showroom!! Indian businessmen are never ones to miss an opportunity.

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Originally Posted by GTO (Post 4249048)

I also see the reverse of this happening. Going by the success of Honda 2-wheelers, many of its car dealerships would want to open a 2-wheeler showroom!! Indian businessmen are never ones to miss an opportunity.

Though Suzuki's aggressive strategy on the same lines of making four wheeler dealers open two wheeler dealership seems to have gained some traction watching their new sales numbers.
Simran Who are known for their Maruti Suzuki showrooms also owns Suzuki two wheeler showroom in Panvel.

Two Wheeler Sales July 2017: Suzuki Motorcycle India Posts Growth Of 62%