New Competitor for Hero Honda


Honda Motor Co., the world's biggest maker of motorcycles and scooters, plans to start selling a new motorcycle and a new scooter in India next year as demand grows in the world's second-largest two-wheeler market.

Honda plans to spend $76 million (2.4 billion Baht) in the next three years on four to five new models and increasing annual manufacturing capacity from 1 million vehicles to 1.2 million by 2010, said Shinji Aoyama, president and chief executive officer of local unit Honda Motorcycle & Scooter India Pvt.

Honda's plans to sell new models increases competition for its affiliate Hero Honda Motors Ltd., India's biggest motorcycle maker, at a time sales of motorcycles is slowing. Motorcycle sales have fallen in India this year as five-year-high interest rates deter buyers in a market where three-fifths of all motorcycles and scooters are bought on credit. The move could see Hero Honda Motors Ltd., India receive new technology from its Japanese parent to manufacture powerful bikes targeted at urban youth, while Hero Honda would stick to the high-volume, but low-margin, bikes in the 100-125cc segment.

The Gurgaon-based Indian unit will display the new scooter at the New Delhi auto show in January while the new motorcycle will go on sale in the first half of the next fiscal year starting April 1, Aoyama said in New Delhi today. He declined to reveal any details about the vehicles.
Sales of motorcycles have declined 12.3 percent in the eight months ended Nov. 30, according to the Society of Indian Automobile Manufacturers. Scooter sales in the same period rose 16.8 percent, the association said. Honda says the convenience of its automatic scooters is helping drive sales, Aoyama said.
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