Honda announces partnership with L &T Finance to achieve better targets

This week Honda Motorcycle and Scooter India which solely concentrates on manufacturing and selling motorcycles, scooters and scooteretts across its three production centers has tied up with Family Credit Ltd which will provide instant loans to its two wheeler buyers. Since the Family Credit Ltd has been bought over by L &T Finance Holdings in 2010 from Societe Generale Consumer for sole purpose of venturing into two wheeler financing it directly forged a partnership with Honda Motorcycles. This partnership will help them reach out to a larger buyer database as both can pool in their data and make Honda’s products available to a larger number of prospective customers around India. The firm will provide loans to customers across India through its wide network of branches to purchase both motorcycles and scooters of Honda.

Honda is targeting sales of 3.7 million units for financial year of 2014 therefore is adopting a long term strategy to meet this target by partnering with firms which can grow and prosper along with the firm’s business. During official announcement of this tie-up to media persons, L&T Finance Group’s CEO stated that since takeover of Family Credit’s financing business the firm has grown rapidly from 53 branches to nearly 200 branches across India. While some branches are company owned a few are franchised outlets which are spread across both rural and semi rural towns and cities. Since Honda is planning to increase its existing capacity of two wheeler production by nearly 60 percent it needs to increase sales outlets also to avoid chances of inventory glut.

Speaking on this occasion Deputy Director of Honda Motorcycles and Scooter India (HMSI)  stated that the firm has managed to sell nearly 2.5 million units between April to December 2013 which beats its performance of 2012 by nearly 30 percent. The firm is upbeat on success of its Indian business venture and aims to reach position of number one two wheeler manufacturer and seller within a year or two. To achieve this future target Honda has also recently bought land in Gujarat to set up a new production unit. The partnership with L&T Finance will help Honda reach out to India’s remotest rural areas which are potential markets for both low end and expensive two wheelers as most of these areas lack public transport and connectivity.

The record breaking performance of 2014 has been largely assisted by financing through banks and financial institutions which contributed nearly 30 percent to overall sales of its products. Honda has a huge following in both rural and semi-urban Tier II and Tier III towns for both its motorcycles and scooters and last year’s sales contribution from these regions was at 35 percent. Honda is keen on expanding its sales beyond traditional urban and city markets to bring their products within reach of people who will treasure them over a longer period of time. Therefore after study of sales structure of past years Honda decided to tie up with a reliable financing partner who has a ready network of potential clients and the expertise to provide professional support to its sales network and assist HMSI to achieve its goal of 3.7 million units by 2014.