Honda plans to give Hero nightmares with its 'Dream Neo'

Japanese auto giant Honda has decided to take the battle right to its former partner and now its rival Hero MotoCorp ’s doorstep with the launch of its entry level bike the ‘Dream Neo’.
The Dream Neo is priced a tad cheaper than the market leader Splendor. So, in FY14 we will see a tripartite fight in the commuter segment between the incumbent leader Hero MotoCorp, new solo entrant Honda and Bajaj Auto.

For the first time in a decade, the dominance of the world's largest two-wheeler maker is under threat. Former partner Honda has made an entry into its bread and butter segment with its Dream Neo perhaps to create a differentiation between the market leader ‘Splendor’. Dream Neo is a 110 cc bike,

YS Guleria, VP - Sales & Marketing, HMSI said, “Expansion of our product portfolio at a very rapid pace and the new technical centre has to give a lot of contribution towards that.”

Honda Motorcycle and Scooter India (HMSI) sources say the direction from Honda Japan is clear, it wants the number one spot and has set itself a sales target of nearly 4-million units this fiscal and is hopeful of closing the gap further with Hero by end of the year.  Hero’s other competitor; Bajaj Auto  the leader in the premium motorcycle market is also making a serious play in the commuter segment.

Rajiv Bajaj, MD, Bajaj auto said, “This year our main focus will be on the Discover brand and Discover segment. We have planned the launch of several new Discovers. In fact, we have six Discovers that are being ready for launch.”

However, faced with stiff competition and a difficult market, the cracks are begging to show, Hero MotoCorp lost over 2 percentage points in market share to 53% last fiscal. With no new launches in its core segment so far, the lack of in-house technology is hurting. But Hero Moto's management says the company will spice up the markets come the festive season and showcase its first fully developed bike in 2014.

Pawan Munjal, MD & CEO, Hero Motocorp said, we have been working on new products, on new designs and a lot of stuff is happening at our R&D, at the design centres of our alliance partners.

Moreover, as the three two-wheeler markets slug it out in the market; technology, pricing and more importantly brand power will decide who stays ahead.

Hero MotoCorp's total two-wheeler sales last fiscal stood at 5.9 million as compared to 2.6 million for HMSI and 2.4 million for Bajaj Auto. Although Bajaj Auto’s sales numbers do not include scooters, which is the case for both Hero as well as Honda.

So, although HSMI may be an aggressive competitor, it may be premature to vote in favour of it just yet because the Splendor still continues to outsell Honda’s ‘Dream Yuga’.

VIKAS KUMAR GUPTA
PGDM 2ND SEM