By his own admission, Takahiro Ueda had always wanted to work in Asia and his dream finally came true when he was posted as CMD, President & CEO of Honda India Power Products (HIPP), in 2020.
For the Honda veteran, whose previous assignments were largely in Europe and the US, everything was picture perfect except that he landed in February 2020, just a month before the Centre announced its series of lockdowns following the COVID outbreak.
“It was a tough period but I had the support of my associates. My neighbours gave me some food and water because I did not have anything,” recalled Ueda during a recent video interview, a few days prior to his departure from India.
“During my first year, movement was restricted and I could not travel around. However, from the second year, I began venturing outdoors to learn about the business, market and the history of India, which was enjoyable,” he said.
Ueda also considered himself fortunate since he spent the first month of his arrival working and interacting with his colleagues at the Greater Noida facility near New Delhi. Online meetings became the norm when the lockdowns were imposed but “since I already met my people in person, it was much easier to manage than starting online from the beginning”.
HMSI Chief’s Experience
It was around the same time that Atsushi Ogata was appointed President, CEO & MD of Honda Motorcycle & Scooter India except that this was effective from May 2020, when the lockdowns were already in place. The new chief of HMSI had no option but to cool his heels in Bangkok while awaiting his turn to fly out to India at the earliest.
However, he had been following the two-wheeler trends in this market very carefully and used this waiting period to work on a strategy that would finally culminate with the launch of the Shine 100. It was during the Mumbai event that Ogata told this writer how he had spent time in Thailand to study “the point of difficulty” for Honda’s two-wheeler business in India.
After parting ways with the Hero group over a decade earlier, HMSI had focused on premium brands such as its top-selling Activa scooter even though it was crystal clear that it was the “low-end motorcycle segment” which was the major market in India. To Ogata, it was imperative to work on filling this gap and ensuring that customers in rural India got access to a Honda offering.
Contributing To India
“Our responsibility was to offer a dream bike for rural markets and contribute to the Indian economy,” he said. Long discussions followed with counterparts in Japan and it was clearly a no-brainer that the success of this motorcycle would play a big role in the leadership game where its former ally, Hero MotoCorp, was the monarch of the market.
“We realised that we were missing attractive products in the 100 cc segment and I discussed with senior management in Japan the need to serve rural customers in India with Honda quality. The challenge was the cost structure and there was a lot of work involved with suppliers,” narrated Ogata.
It took a long time because “quality was essential and could not be compromised”. From his point of view, the Shine 100 represents “an amazing product” and is significant because it is perhaps for the first time in Honda’s 75-year-old history to go in for such a paradigm shift from its global focus in order to meet the requirements of a specific user base in rural India.
Reprieve For Power Products
While Ogata was plotting a roadmap for HMSI with COVID on the rampage, HIPP was luckier because the Centre had lent a supporting hand during the pandemic to agriculture products which “helped our business continuity”.
Many industries and services saw operations severely restricted during the lockdown but with production of agriculture products “allowed as a special case”, it was a welcome tailwind compared to cars and bikes, whose production came to a standstill.
“Actually, I continued to stay in India through the three COVID waves and I recently returned to Japan after two-and-a-half years when cases started coming down,” said Ueda. He was also awestruck by India’s diversity in language and culture. “Yet, people are unified and the power of the country impressed me,” he added.
On the other end of the spectrum, Ogata was beginning to realise that there was a need to relook at the overall cost structure at HMSI given the reality of high commodity and fuel prices in a highly volatile world. This also put in context why the 100 cc motorcycle project was so important since rural India was a price-sensitive market.
Reworking Cost Structures
“If we could find some countermeasures to reconstruct our overall cost structure — including our suppliers — we can stabilise our experience across all our product line-ups and portfolios in the future. We can survive after 15-20 years in India and this move therefore goes beyond 100 cc in terms of the cost structure issue,” Ogata had said in an earlier interview, prior to the launch of Shine 100.
While one of the high points of his tenure was the launch of Shine 100, Ueda of HIPP was similarly pleased with his company’s foray into marine engines. The Indian market is about 10,000 units annually but is growing at 20-25% “which is impressive” compared to the global rate of 5%.
“I see big potential in India, especially for the leisure and coastguard segments where both the mid and large marine outboard business is expanding,” he said. What was equally welcome was the transition to 4-stroke technology, which reflects Honda’s strength right from the time it started this business nearly six decades ago.
Ueda admitted that the company was a late entrant compared to established brands like Suzuki and Yamaha but was still targeting to be the top player ahead of its Japanese counterparts as well as Mercury of the US.
Retail Strengths
“Our strength is that we are the only OEM which has a subsidiary in India while other rivals are distributors. We have the edge in doing business ourselves and not relying on someone,” he explained. The emphasis on after-sales service was another plus given that “before we entered, we learnt that there was big frustration among buyers on after-sales and availability of parts”.
On the contrary, HIPP has a stronger retail base though it has a lot of catching up to do with its rivals, who corner a lion’s share of the marine engines business. The company is targeting 25% market share by 2030 in the mid and large marine segment. It is also hoping that the 4-stroke will also become more popular than 2-stroke engines, which have a two-thirds share of the pie.
The two-wheeler segment clearly has a more glamorous profile and Ogata said that it was important for Honda, as a global market leader, to do well in India. “It is just not about market leadership. We have additional responsibilities on our shoulders to lead the way in safety riding and mobility systems. We want to take the initiative for society’s well-being, which is more important than market share,” he reiterated.
Larger Global Role
In an earlier interaction, soon after he had taken charge in 2020, Ogata told this writer that HMSI had the strongest resources of quality, cost and delivery among all Honda associates in the motorcycle industry. Headquarters in Japan was also looking at expanding the global role of India beyond developing markets in Africa and South America to include Europe, Japan, Korea, Taiwan, Australia and so on.
He conceded that in the past, HMSI was solely eyeing more market share and volumes but there was really no need for that any longer “From now, after we build the company strongly, we will try to gain market share without (offering) huge incentives,” he elaborated.
Customers needed to “believe and trust” the Honda philosophy and its core DNA. Even while the company’s products were a “bit more expensive”, buyers across Europe and ASEAN had no issues because they “find it easy to understand what Honda is all about”.
Even while HIPP has a more sober profile compared to flashy cars and bikes, the company has been around longer for 38 years. Its generators, auto pumps, tillers and engines are locally made and exported to 60 countries.
On The Fast Track
India is a key global hub for Honda Power Products of Japan and Ueda said that once the marine engine business also grew in the coming years, local production would be considered instead of imports as is being done now. His tenure also saw the company achieve accumulated production of five million sales both in domestic and exports along with the launch of a new water pump and tiller.
Honda’s R&D is common to its automobiles, motorcycles and power products with many mid and large outboards fitted with the same engine used in cars. Interestingly, Honda had merged the motorcycle and power products operations in Japan and other regions to promote greater synergies. However, this is not likely to happen in India since HIPP is a listed entity.
“The size of the engine is similar for bikes and power products and looking at the future of electrification, motors and batteries can be unified for the future. We are now looking at these things (for India),” said Ueda.
This is where the Bengaluru-based Honda Power Pack Energy India, which is into the battery sharing business for two- and three-wheelers, will have a role to play in power products too. “We are looking at some power products that can use the same battery which the company is supplying,” he explained.
Electrification Plans
Honda plans to kick off a feasibility study for electric power products in India and will take a call once their potential is assured. It will initially test handheld products like brush cutters, blowers, chain saws, etc and launch these in India depending on market response.
HMSI is also drawing up an aggressive roadmap for its electric business and recently announced that its Karnataka facility would be a key hub going forward. Ogata said collaboration with other partners would be an imperative in this new arena as well as working closely with Honda Power Pack Energy India.
“The auto industry is about collaborations and this is the new normal,” he added. Speculation is rife that Yamaha could also team up with HMSI given that the two former foes recently decided to join hands and develop small scooters together in Japan. Moreover, they are part of a battery consortium both in Japan and Europe and there is no reason why this bonding should not extend to India too.
Rebooting HMSI Facilities
Ogata’s tenure also saw HMSI converting its oldest plant in Manesar, Haryana, into a global export hub while the other three facilities spread across Rajasthan, Karnataka and Gujarat will cater to the domestic market.
More specifically, Manesar will be a CKD (completely knocked down) assembly model where the current capacity is six lakh units annually and has the potential to go up to a million units. The CKD operations will be confined to high premium brands like the H’Ness CB 350, while the mass volume brands will be produced at the three other plants.
“The sales model and product portfolio is changing a lot,” Ogata had told this writer in an earlier interview. The future would see greater production of premium commuter motorcycles and fewer scooters. While the Rajasthan and Karnataka facilities will handle both segments on a flexible line, Gujarat will remain a scooter plant.
In Conclusion
Ogata and Ueda landed up in India in 2020 when COVID dominated the news. They wrapped up their tenures on March 31 this year and have headed out to China for their new assignments. It has been a remarkable story of coincidences with some memorable anecdotes to share.
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