Automobiles Honda: A formidable competition – Incumbents beware !! April 25, 2013 Honda is making a huge inroad in the Indian Automobile sector. On one hand, Honda Motorcycle and Scooters India (HMSI) has overtaken Bajaj Auto (BJA) as the second Surjit Arora highest two-wheeler manufacturer on account of new launches and capacity
[email protected] expansion (scooters + motorcycles), while on the other, Honda Cars India has +91-22-66322235 forayed into the Diesel segment with its first offering ‘Amaze’ which is attractively priced to take the competition head-on. In this report, we analyse Honda’s market Update share in both the segments and what it means for the incumbents. In motorcycles, we believe HMSI would further increase its market share by 210-220bps, whereas in the Passenger car segment, we estimate 190-200bps gain in FY14E for Honda. Stock Performance Sector (%) 1M 6M 12M ! Motorcycle segment to grow by 9%, mainly driven by 30% growth likely by Sensex 2.4 2.5 11.5 HMSI: Led by new launches from HMSI, mainly 110cc ‘Dream Yuga’ and the Auto 3.5 3.1 (1.1) recently launched 110cc ‘Dream Neo’, HMSI is likely to grow its motorcycle volumes by ~30% in FY14E. The company has already increased its capacity of Bajaj Auto 0.1 2.6 9.1 two‐wheelers from 2.8m to 4.0m units. As a result, we foresee its market share Hero Motocorp (2.7) (14.1) (29.9) further improving by 220‐230bps to 14.0% (from 7.7% in FY12). Given the strong Maruti Suzuki 19.5 12.2 11.2 growth expected from HMSI, we expect the incumbents to lose 40bps -120bps in market share in FY14E.