Honda Activa faces BIG production cut as sales slowdown

Honda Motorcycles and Scooters India (HMSI) has seen a big sales slowdown in the past few months, prompting it to go slow on production. Honda has effected a 15-20 % production cut for the June 2019 quarter in order to make sure that inventory at the factory and dealer stockyards does not pile up.

Slowing down sales is said to be the main reason for the production cut. Honda does not expect demand growth in the next three months, and has blamed it on elections, higher two wheeler prices thanks to the mandatory safety features, high insurance premium and overall slowdown in demand.

Responding to LiveMint’s email queries, Honda’s official response to the production cut is as follows,

Increased insurance premium in September 2018 dampened the festival sentiments, and pre-festival stock buildup was converted into high inventories for the two-wheeler industry. Recognizing this situation early, we realigned our  supply with the domestic demand to correct inventories and support our business partners. Green shoots of demand pickup are not visible. A tough quarter ahead.

The Activa is Honda’s best selling offering, and the automatic scooter is sold with multiple engine options, at  multiple price points. The Activa also forms the basis for many other automatic scooters in Honda’s range, including  the Cliq, Aviator, Grazia and Dio. Why, Honda even has a mini-bike called the NAVi based on the Activa platform.

The big selling scooters in the Activa range include the 110cc Activa 5G and Activa-i. The Activa 125, Grazia and  Aviator sell much lesser than the Activa 5G and i variants. The Activa competes with a wide range of automatic  scooters in India. Main rivals include the Hero Pleasure, Hero Maestro, TVS Jupiter, Suzuki Access and the Yamaha  Cygnus Ray.

Honda also sells a wide range of commuter motorcycles in the 110cc, 125cc and 150cc segments. The CB Dream 110, CB Shine 125 and Unicorn 150 are strong brands. These motorcycles rival offerings from Hero MotoCorp, including the Splendor and Passion, TVS Star City, the Bajaj Platina and CT100, and many other similar motorcycles.

The Japanese two wheeler giant also sells premium motorcycles in India. It recently launched the Honda CB 300R, a  naked sportbike that’s priced at nearly Rs. 2.5 lakhs. The brand also sells a range of superbikes – from the CBR 600R  to the Africa Twin and Goldwing.

To sell premium motorcycles, Honda has established My Wings dealerships across 23 cities in India. These dealerships have exclusive rights to sell high-end superbikes, and also have adequate service back-up to maintain high performance motorcycles.