Honda launches its cheapest two-wheeler

At Rs 43,150, Dream Neo hopes to create deep inroads into the Indian commuter segment.

Honda Motorcycle and Scooter India (HMSI) today launched its cheapest motorcycle in the mass commuter segment, the 110cc Dream Neo, to take on former partner Hero MotoCorp's flagship model, Splendor.

The Dream Neo is priced at an aggressive Rs 43,150 (ex-showroom, Delhi).

The Hero Splendor family has three models with an engine capacity of 97.2cc, the Splendor+, Splendor NXG and Splendor Pro. These are priced between Rs 42,250 and Rs 47,150.

The Super Splendor, tagged upwards of Rs 50,650, has a 125cc engine. On an annual basis, Hero sells an average of a little over two million units of the four products in the Splendor family.

Keita Muramatsu, president and chief executive officer, HMSI, said: "Dream Neo is Honda's next big leap towards creating deep inroads into the Indian commuter segment." Developed specifically for Indian customers, it has a 110cc engine and the company claims it will give 74 km for a litre of petrol.

The mass commuter segment accounts for around 65 per cent of overall motorcycle sales in India. HMSI wants to overtake Hero MotoCorp to become the number one two-wheeler maker by the end of the decade.

Currently, HMSI, with two products, the CB Twister and Dream Yuga, has 4.9 per cent in the mass commuter category.

The Dream Yuga is priced between Rs 45,101 and Rs 48,619. Hero's market share in the segment is 69 per cent.

To boost volumes, Muramatsu hinted HMSI was looking at developing additional motorcycles at lower price points, at its technical centre in Manesar. "Our R&D (research) team is continuously considering how to reduce costs and improve mileage without compromising on power and adding value to products. In future, we will look at more entry-level products," he said.

With the Neo in its portfolio, HMSI aims to increase volumes by around 150 per cent, to sell 800,000 units of the Dream series in FY14. "Overall, we are confident of customer demand for Honda two-wheelers and eye 43 per cent growth with 3.93 million unit sales in FY14," Muramatsu said.

The growth in sales would be aided by a concurrent expansion of its dealer network, specially in tier-II and tier-III cities. HMSI has plans to put in place about 2,500 sales outlets by the end of this financial year, from 1,950 in FY13.

The company will commission its third facility in Karnataka by the end of next month. It will have total installed capacity of 400,000 units once the unit becomes operational. HMSI is scouting for locations to set up a fourth facility.

Y S Guleria, vice-president (sales & marketing), HMSI, said: "We have hiked the prices of all our models by Rs 200-800 from April 1. It was done mainly to offset the impact of diesel price increases in recent times." After the rise, HMSI's three scooters -- Dio, Activa and Aviator -- are priced between Rs 44,718 and Rs 53,547. The current range of eight locally manufactured motorcycles are now priced between Rs 45,101 and Rs 1.77 lakh.