"We have started work on the scooter which will compete with the kind of products which are popular now. Honda R&D Co Ltd, Japan will develop a prototype based on our requirements, which will be further worked upon by our engineers here," a senior company official told FE.
Hero Honda is expected to foray into the gearless self-start scooter market, which has been dominated by Honda subsidiary, Honda Motorcycle and Scooter Indias (HMSI) Activa. The details of the investment and facility are still to be worked out. "We have to decide which plant will be engaged in the manufacture of scooters. It may be the third plant which we are planning to set up, though the plant will also have a line-up for motorcycles," he said.
Honda R&D Co, Japan develops all vehicle projects of Hondas subsidiaries and joint ventures all over the world, and has centres in Americas, Asia and Europe, besides Japan. Interestingly, it is also involved in the development of two-wheelers for HMSI.
The gearless automatic scooters segment is expected to grow over 25 per cent, much more than the total two-wheeler growth pegged around 10-15 per cent, and is at present about 50,000 units per month. The largest selling in the segment is the Honda Activa, sales averaging 25,000 units per month and cornering 50 per cent market share.
Honda believes that the domestic two wheeler market will grow at a fast pace with double-digit growth levels per annum. It expects that products of both its ventures in India -- Hero Honda and HMSI will complement each other, and not be in competition.
Hero Hondas foray into scooter market assumes significance in the wake of HMSI entering the motorcycle market this year. At the time of establishing its 100 per cent subsidiary, Honda and Hero Honda Motors reached an agreement that Hero Honda will not make scooters till 2004, while HMSI will not enter the motorcycle market. HMSI has announced plans of launching a motorcycle in September this year, to take on Bajaj Pulsar.