Honda seeks to enter single-brand auto retail in India

The retail chain format has now caught the fancy of Honda Motorcycle & Scooter India (HMSI), the Indian subsidiary of Japanese automobile major Honda Motor Company, which has sought permission from the Foreign Investment Promotion Board (FIPB) to set up 100 per cent-owned retail outlets to sell its entire products under one roof.

At present, foreign auto companies sell their vehicles and spare parts through franchised outlets.

Once permitted, the two-wheeler maker, which is a 100-per cent subsidiary of Japan's Honda Motor Company, will be the first foreign auto firm to own exclusive retail stores in India.

Honda plans to use these outlets to sell a range of products, including high-end imported motorcycles, all-terrain vehicles (ATVs), specialised side-by-side vehicles, spare parts, accessories as also Honda-branded merchandise.

Honda, which ended a long innings of motorcycle production in collaboration with Hero Motors in India, which the two companies terminated in 2010 (See: Hero, Honda split; seal new licensing deal) says such a strategy will help in the roll-out of products as it would give ''better visibility to our brand Honda in India and ensure access to cutting-edge technology, world-class products and services to the Indian two-wheeler industry, resulting in competitive pricing for products and services''.

Honda has lined up a number of products, including all-terrain vehicles - TRX 250 TE (priced between Rs2 lakh and Rs2.5 lakh) and TRX 420 FA as also side-by-side vehicles - Pioneer 700 and MUV 700 - for sale through single-brand retail stores in India.
Besides Honda has also sought permission to sell over 28 other Honda-branded merchandise such as mugs, pen drives, key chains, t-shirts, wall clocks, wallets, riding boots and body protectors.

Honda also proposes to use these outlets as purchase centers for spare parts and accessories for its entire range of vehicles.

The spare parts and accessories for two-wheelers manufactured in India would be procured from Indian suppliers, while those for imported products would be sourced from overseas facilities.

This is expected to meet the requirement of 30 per cent local sourcing prescribed by the government under the single-brand retail format.

Honda, however, has sought waiver on local sourcing norms for ATVs, high-end bikes and side-by-side vehicles, as it would not be possible to procure high-end technology from Indian suppliers, the company says.