Honda Motorcycle and Scooter India, a subsidiary of the Japanese automaker with a sizable presence in the two-wheeler space, launched its smallest-scooter yet, at nearly Rs 10,000 less than its next cheapest offering.
The launch of the Honda Cliq is HMSI's second attempt at luring first-time buyers in rural India, said international brokerage house Goldman Sachs, an area which for the last few years has been the domain of motorcycles.
Scooters are still not cheaper than entry-level motorcycles, with older peers like Bajaj Auto Ltd. and Hero MotoCorp Ltd. still dominating the space. The dominance is more pronounced in rural areas where two-wheeler buyers are more price sensitive.
Hero MotoCorp also has a higher market share in the scooter business, according to the Goldman Sachs research note.
Our FY19 scooterisation target of 36 percent is based on a slow ramp-up in rural India.Goldman Sachs Report
Honda Motorcycle and Scooter launched its new model Honda Cliq recently taking on rivals like TVS Motor Ltd., Hero Motocorp Ltd. and Bajaj Auto Ltd.
The company unveiled the model at an introductory price of Rs 42,499 to target the rural market. It will compete with TVS' Scooty, Hero's HF Deluxe and Bajaj's CT100B.
The brokerage house expects HMSI, the country's second largest two-wheeler manufacturer, to now ramp up its presence in the relatively cheaper but mass market scooter segment.
HMSI saw sales grow by more than 20 percent in May while TVS Motor reported a sales growth of 16 percent. Bajaj Auto was the only motorcycle maker which saw sales drop in May.
In its base case, the brokerage recommends a ‘sell' on Bajaj Auto and Hero MotoCorp, citing more competition from the likes of HMSI and TVS Motor.
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