Honda may hold off launches ahead of BSVI
Twowheeler maker warns of fall in bike sales due to increased prices
NEW DELHI: Honda Motorcycles & Scooters India Pvt. Ltd (HMSI), India’s fastest growing twowheeler maker, on Thursday said that it will not introduce any new product over the next two years (April 2018-March 2020) on account of investments that it has to make to upgrade to Bharat Stage VI (BS-VI) emission norms, and indicated that price hikes were a possibility.
The company will launch its new motorcycle X-blade in March this year.
“With the BS-VI norms coming soon, we have already started to work in that direction. So, you can expect the next new model only after BS-VI is launched. There will be slight improvements (upgrades in products) but the big change (in product lineup) will be after BS-VI,” said Minoru Kato, president and chief executive of Honda Motorcycles.
The BS-VI norms are equivalent to the Euro-vi norms, considered to be the most stringent in the world. India has decided to move from BS-IV now to BS-VI by 2020, leapfrogging the intermediate BS-V norms.
In Delhi, the requisite fuel will be made available from 1 April, the petroleum ministry said in November. The decision has forced automakers to reschedule their product plans.
Upgrading to the higher emission norms requires significant investments in engines and research and development (R&D). Honda is the largest scooter maker in India and claims to be the largest selling twowheeler brand in 15 of 29 states in the country.
At the ongoing Auto Expo, the company exhibited just one new product — X-blade — with a 160cc engine. Apart from that, the subsidiary of the Honda Motor Co. showcased a new variant of it popular scooter, Activa.
Kato said that the company plans to set up a fifth factory in the country but is yet to take a final decision because the introduction of the BS-VI norms will increase the prices of two-wheelers leading to a decline in sales.
“Not only Honda, other manufacturers will also have to comply with the norms, so production cost will increase. Hence, we need to increase price as well. So, the total motorcycle industry will decrease in sales in 2020,” he said.
The Japanese company has more than doubled its local market share since 2010 to 29% and now threatens to dethrone its former joint venture partner Hero Motocorp Ltd from the top position. Since Hero and Honda parted ways, Hero’s market share has declined to 37% from 45% in 2010. Honda takes credit for making a dent in Hero’s share of the market by revolutionising the scooter segment.
To be sure, Honda is not the first company to warn about a delay in new product launches due to the new emission norms.
Royal Enfield, owned by Eicher Motors Ltd, decided against introducing new products in the domestic market before the new norms kick in.
In the four-wheeler segment as well, the pipeline for new models has dried up as most manufacturers have already invested heavily in upgrading their existing models, according to Morgan Stanley Research.
According to Pratap Bose, head of design at Tata Motors Ltd, the challenge is not about moving to the new norms but more about bringing stability to policy.
“Adhering to BS-VI is never a challenge but the timelines should not shift and move...” Bose said in an interview.