Honda Launches Dream Yuga in India - Analyst Blog


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Honda Motor Co. ( HMC ) has launched the 110cc Dream Yuga in India, its cheapest motorbike ever. The move is trigged by the company's goal to double the revenues generated from motorcycles in India and to compete with the Hero MotoCorp. Limited.

The company will focus on the Indian market for the next 10 years with an expected increase in export to 150,000 motorbikes by 2013 from 111,000 bikes last year. The company expects 30% of revenues from motorcycles to be generated from India by 2020 compared with the current level of 13%.

The new bike has been priced at INR 44,642 (US$819) in the New Delhi showrooms. The company expects to sell 300,000 units of Dream Yuga in 2012.

Motor bikes are most preferred in India due to its fuel efficiency and low cost. Two-wheeler sales shot up 14% to 13.44 million units in the last fiscal year in India.

Other motorcycle makers are also expanding into the lucrative emerging markets including India. Yamaha Motor Co., for example, will start the construction of new motorcycle factory in Tamil Nadu. With this new factory, which will be operational in 2014, Yamaha will have a production capacity of 2.8 million units by 2018 in India.

Suzuki Motorcycle has also recorded an improvement in sales to 30,635 units in April 2012 compared to 29,362 units in April 2011. The company has further plans for setting up new factories which will increase the capacity of bikes in India to 1 million by 2014.

Honda Motor Company is a leading manufacturer of automobiles and the largest manufacturer of motorcycles in the world. Honda is recognized internationally for its expertise and leadership in developing and manufacturing a wide variety of products that incorporate its efficient internal combustion engine technologies ranging from small general-purpose engines to specialty sports cars. It is the second largest automaker in Japan, following Toyota Motor Corp. ( TM ).

Honda Motor currently retains a Zacks #2 Rank, which translates into a short-term (1 to 3 months) "Buy" rating. The automaker expects a revival in sales and profits in fiscal 2013, based on higher revenues, favorable model mix and effective cost reduction measures. However, it continues to face difficulties in obtaining parts from suppliers due to disaster in Japan as well as flood in Thailand. Taking these factors into account, we currently have a long-term (more than 6 months) Neutral recommendation on the stock.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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