Honda Motorcycles and Scooters Inda (HMSI) will launch an entry-level motorcycle in the commuter segment, as this constitutes 37 per cent of the market. Talking to The Telegraph Atsushi Ogata, managing director, president and CEO of HMSI said that the bottom end of the market is shrinking.

“The entry level segment contributed about 49 per cent of the total two-wheeler market five years back, today it stands at 37 per cent. Nevertheless, it is a significant and large segment and we would like to augment our offerings here,” said Yadvinder Guleria, executive director HMSI.

“The 100 cc segment is still the largest segment and we would like to have products here,” said Guleria.

Asked if the customers of the lower end of the market were getting squeezed out of the markets following the increasing fuel price, the upward commodity price making two-wheelers unaffordable to them, Guleria said: “We are totally reforming the constitution of the cost structure. However, we cannot compromise on performance and durability. We have put in place a new vertical for cost innovative structure; we have new vendors focused on the price point. We are going to come up with entry level bikes within a reasonable price point.”

While the entry-level segment is shrinking, it is also observed that there is some traction in the rural market in the beginning of FY 22.

“With the marriage season we saw some good sales happening in the cow belt hinterland. A positive movement in sales is happening with a good harvest leading to a strong buying sentiment.”

However a runaway rise in commodity prices is one of the factors in shrinkage of the market.

“We are trying to keep prices under control but those efforts are clearly not enough to contain prices. Because of the chip shortage other premium segment sales are also getting affected. If there was some improvement in chip supplies, there will be an increased offtake in the premium segment,” said Guleria.

When asked if low sales in the low end segment meant the market was maturing and customers are upgrading from entry—level to more premium bikes, Guleria said: “Upgradation happens in a growing economy. But there is low penetration of two-wheelers in India as compared to other Asian countries.”