Honda Motors CB 350 – Stretching Product Line to Upmarket

It was October 2020, and Honda Motorcycle & Scooters India (HMSI) was all set to
launch H’ness CB 350, its first 350 cc, a new brand of motorcycle in the Indian market—
with the brand name H’ness with its primary target market was expected to be those who
enjoy biking experience (Exhibit 1). HMSI called the new model ‘a modern take on the
classic style’. It would sell the motorcycle from its premium Honda BigWing
dealerships.

The company was with the task of developing the overall marketing strategy for H’ness.
When the company first contemplated introducing a product in the scooter segment, they
only manufactured scooters and lightweight motorcycles of 100-150 cc engine capacity.
Foremost HMSI was looking at the growing segment of Indian young consumers who
were looking for biking experience and would require a vehicle to that looks and feels
different from motorcycles that were meant to commute.

HMSI had to finalize the marketing strategies and specifically the positioning and go-to-
market approach for H’ness. The Indian market already had well established competitors
that manufactured premium motorcycle in the segment of 300-500 cc higher end bikes
(Exhibit 2). For instance, Royal Enfield, the brand of Eicher Motors, dominate this
segment with 95% market share. This motorcycles were being used by consumers of all
age group. The company was already a late entrant in the category, and its challenges
were further intensified given that there were limited possibilities for product
differentiation.

About the company

Founded in 2001, Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI) was a wholly
owned subsidiary of Honda Motor Company Ltd., Japan, and was the only Honda in the
Indian two-wheeler industry. Even though Honda was a relative newcomer to the Indian
two-wheeler market, its focus on delivering high-quality products and services had
helped it garner over 48 million customers and elevate HMSI to the number two spot in
the country.

The Activa, the company's first gearless scooter, ushered in a new era in the scooter
market. For the past two decades, it had held a commanding share of the Indian scooter
market, with a share of roughly 70%. Today, Honda offers a wide range of two-wheelers
with models ranging from 125cc to 180cc to meet the needs of its target market. Honda
offers a wide range of scooters, ranging from sporty, dynamic models to iconic global
models, all powered by Honda engines and designed for everyday use, like the 110cc
motorcycle. Honda's two-wheelers were known for their contemporary design and
cutting-edge technology.
This case has been developed by Professor Atanu Adhikari of Indian Institute of Management, Kozhikode.
The contents are meant only for class discussion and are not intended to express opinion about an
organization’s decisions and processes. The numbers provided in the case are a reflection of the situation
but are not to be considered to be the actual values.
Manesar (Haryana) opened its first production facility in 2001. In 2011, Honda built a
second plant in Tapukara (Dist. Alwar, Rajasthan) with an annual production capacity of
1.2 million vehicles, ten years after the first. With an annual production capacity of 1.8
million units, Narsapura's third plant opened in 2013 in the southern state of Karnataka.
To keep up with demand, Honda opened its 4th manufacturing facility in Vithalapur
(Gujarat) in FY'2015-16 to produce scooters only. In FY 2017–18, HMSI increased its
combined capacity to 6.4 million units per year with a new capacity infusion at its
Karnataka plant1.

Honda, on the other hand, had grown its sales and service network at a rapid pace. More
than 6,200 HMSI customer touch points were available in India. For HMSI’s benchmark
products, technology, and manufacturing excellence over the course of its 20-year
journey, the company had received nearly 200 prestigious awards, including numerous
honours such as Most Trusted Two-Wheeler Brand. As a socially conscious corporation,
Honda places a premium on ensuring the safety of the people on the roads around the
world. A total of 36 million people of all ages, including women and children, had been
taught how to ride safely in India through Honda's 14 traffic training parks and 4 safety
driving education centresi.

While HMSI majorly sells scooters, entry-level bikes in India, the company was making
its entry in the sub 300-350cc cruiser segment, which was largely dominated by Classic
350 and Jawa in the premium bike segment by Eicher Motors owned Royal Enfield. It
would challenge the likes of Royal Enfield. The new model of H’ness would be
available in BigWing outlets in Gurgaon, Mumbai, Bengaluru, Kochi and Bhilai from
end of 2021.

HMSI had an authorized capital of INR 310.00 crore and a paid-up capital of INR 310.00
crore. Honda Motorcycle and Scooter India's operating revenues for the fiscal year ending
March 31, 2021 were expected to exceed INR 500 crore. EBITDA declined by -32.64
percent over previous year. Simultaneously, its book net value increased by 1.93 percent2.

Product features

Engine
All-new BS6-compliant 348.36cc single cylinder air-cooled fuel-injected engine for the
Honda CB350 H'Ness motorcycle. The engine produces 21 hp at 5500 rpm and 30 nm at
3000 rpm when connected to a 5-speed transmission with assist and a slipper clutch. A
counterbalanced system was used to ensure the highest level of refinement possible.
Honda's term for traction control, the HSTC, was standard equipment on the motorcycle.

1
https://www.honda2wheelersindia.com
2
https://www.tofler.in/honda-motorcycle-and-scooter-india-pvt-ltd/company/U35912HR2001PTC034649
Suspension and Brakes
The Honda CB350 Highness uses a half-duplex cradle frame with a telescopic front fork
and twin rear shock absorbers to keep with the bike's retro theme. 310mm and 240mm
discs with dual-channel ABS come standard on the 181kg (kerb) motorcycle to bring it to
a complete halt. Alloy wheels with MRF tubeless tyres of 100-section front and 130-
section rear were mounted on the bike.

Other features
Even though the Honda CB350 looks like a classic motorcycle, the Japanese
manufacturer had packed it with a slew of cutting-edge technology. A semi-digital
instrument cluster was used for the lighting system, which was all LED. Information such
as average mileage, distance to empty, battery voltage, and gear position were all
displayed in the instrument cluster. The cluster also includes a USB port that could be
used to connect a smartphone (restricted to the DLX Pro variant). Voice control of phone
calls, music, and turn-by-turn navigation were all possible when the console was
connected to a smartphone via Bluetooth. Like the KTM 390 Duke, the new bike features
a multifunction switchgear on the left handlebar. On the right handlebar, there's a hazard
light switch and a standard dual-channel ABS.

Price
Price range for the Honda CB350 H'Ness ranges from Rs 1,96,239 to Rs 1,96,239 (for
the base DLX trim). It costs Rs 2,01,239 for the DLX Pro model (both ex-showroom,
Delhi). An instrument cluster that could be used with smartphones was also included in
the DLX Pro model's dual tone colour scheme. Rs 2.03 lakh was the price of the
Anniversary Edition, the most expensive model in the range (ex-showroom).

Competitors – The Royal Enfield and others

The Royal Enfield Classic 350 and the Honda Meteor 350 would be direct competitors
for the Honda CB350 H'Ness in 2021 (Exhibit 3). Jawa and Benelli Imperiale 400 also
compete in the 400cc category. Royal Enfield Himalayan and Bajaj Dominar 400 were
also rivals for the Honda CB350. Albeit these half a dozen companies, Royal Enfield had
monopoly in the 250 – 500 cc segment with 96% market share. Using sales data from
April to November 2020, one could clearly see the dominance of Royal Enfield. During
the eight-month period, the company sold 3,11,388 units in the 251cc to 500cc segment.
One motorcycle – the Classic 350 – accounts for roughly 70% of all sales3.
As far as industry insiders were concerned, Royal Enfield was here to stay. The fact that
Royal Enfield was so difficult to beat could be attributed to a number of factors. Another
was the fact that riding a Royal Enfield motorcycle was a symbol of accomplishment, a
symbol of strength and a symbol of renown. They had a cult-like following as a fashion
statement and a way to express the rider's individuality. Motorcycles made by Royal
Enfield had a reputation for their aggressive appearance, large size, and distinctive
3
https://www.rushlane.com/motorcycle-sales-251cc-to-500cc-apr-to-nov-2020-12387203.html
exhaust note on the road. Royal Enfield also had a wide selection of products to meet the
needs and preferences of all customers. Furthermore, each product had a wide range of
colour and accessory options.
The company recently launched the 'Make it Yours' platform in order to make things
even easier and more beneficial for customers. This allows users to tailor their
motorcycles to their exact specifications. When it had a 95% market share, Royal Enfield
isn't prone to taking things lightly. The firm was actively working to not only maintain
but also increase its lead. In order to meet this demand, Royal Enfield intends to
introduce a number of new products in the coming years. The Meteor 350, the company's
first next-generation product, was already a top seller in its market. The Interceptor 650
in 350cc form was currently under development. Some of Royal Enfield's most popular
models, such as the Classic 350, the Electra, and the Bullet, would be getting updated
versions in the futureii.
Premium Motorcycle Industry in India
Motorcycles with a displacement of 350-500cc had been the fastest growing category of
the two-wheeler market. Over the last three to four years, this segment of the market had
expanded rapidly in terms of size, complexity, and variety. Both established players and
newcomers had seen a significant increase in sales as a result of increased demand from
purchasers in urban and semi-urban areas. Many of these purchasers were first-time two-
wheeler owners who were attracted to the potential of new adventures on open roads and
the lifestyle improvements that a bike in this category may bring. Naturally, there were
several consumers who were simply want to upgrade their regular commute.
The 300-400cc motorcycle segment was one of the busiest in the country right now.
Every major motorcycle manufacturer had either already or was preparing to get into the
300cc segment. It's because the new generation of tourers and mature bikers were
moving up from the 150-250 CC range to the 300 CC and above range for their riding
requirements. For most riders, a 300cc motorcycle was their primary touring or second-
to-second fun machine. The following were the top-rated 300cc motorcycles on the
Indian market (Exhibit 4).
The 300cc motorcycle segment includes a wide range of motorcycles with engine
displacements ranging from 300 to 400 cc. You'll find everything from classic cruisers to
classic tourers to power toursers to off-roaders to adventure tours to streetfighters and
everything in between. Customers may be disappointed to learn that this category does
not include a cruiser. In contrast, customers won't miss anything other than money thanks
to these options. You'll also find bare-bones classic motorcycles with retro design and
retro features that would move your soul along with your body in this segment of the
motorcycle market. Many of the bikes in this category were designed to convey the
personality of the bike rather than the bike's performance and features (Exhibit 5).
The 300cc motorcycles in India start at Rs 1.27 lakh for the Royal Enfield Bullet 350 and
go up to Rs 3.04 lakh for the tech-savvy KTM 390 Adventure. This was where customers
were going to get lost because there were so many different models in this category, each
serving a different purpose(Exhibit 6). It's possible that your needs would change as new
bikes enter the market. For the best selection and least amount of confusion, you must
first select your budget and then check which bikes were available within that price
range. Your needs would be tailored to fit your budget, allowing you to choose the
perfect bike for your riding style and preferences. Take a look at the best 300cc
motorcycles in India, starting with the cheapest and working up to the most expensive
model in the category.
Road ahead
Honda claimed that the H'ness-CB 350 boasts a number of segment-first features,
including Honda's selective torque control (HSTC), which detects variances in front and
rear wheel speeds, calculates slip ratio, and maintains rear wheel traction via fuel
injection adjustment. HSTC could be turned on or off through a handlebar-mounted
remote. Additionally, the DLX Pro model featured the world's first Honda Smartphone
Voice Control system (HSVCS), which was developed in-house. Riders could use the
HSVCS app to connect their smartphones to the motorcycle through Bluetooth. Once
linked, the system may be operated via the controls on the left side of the handlebar to
access services including phone calls, navigation, music playback, and incoming
messages4.
The two wheeler maker had said last year that it was planning to nearly double its
offering in the premium big bike segment to 13, including five brand new models in
FY21 as it rides into BS-VI emission norms. And all the existing seven premium big
bike models ranging from 300cc CB300R to 1,800cc Goldwing were supposed to get
brand new global updates.

To ensure complete concentration on the ride, information would be transmitted via the
helmet headset speaker (when a compatible unit was connected). Though it was not the
first motorcycle in India to include a slipper clutch, Honda claims a segment first with
the assist and slipper clutch on the H'ness-CB 350. This was intended to aid reduce clutch
lever operation in stop-and-go traffic and smooth out gear shifts. Another highlight was
the digital-analog speedometer and information display. Now Honda would need to
chalkout a effective go-to-market strategy so that the H'ness-CB 350 break into a Royal
Enfield stronghold. What should they do?

4
https://www.thehindubusinessline.com/specials/auto-focus/hondas-new-hness-cb-350-would-
challenge-res-stronghold/article32806329.ece
Exhibit 1: HMSI’s H’ness 350 cc bike

Exhibit 2 : OEM wise market share of top 10 two-wheeler manufacturers

Source: https://www.financialexpress.com/auto/bike-news/top-10-two-wheeler-manufacturers-and-their-
market-shares-hero-motocorp-down-4-7-tvs-up/2398814/

Exhibit 3: Motorcycle sales in 250 – 500 cc category

Motorcycle Sales
No 251-500 cc Apr-Nov 20 Market Share
1 Royal Enfield 3,11,388 94.65
2 Bajaj KTM 9,870 3.00
3 Honda 5,357 1.63
4 BMW TVS 2,189 0.67
5 Mahindra 179 0.05
6 Kawasaki 0 0.00
7 Yamaha 0 0.00
Total 3,28,983 100.00
Source: https://www.rushlane.com/motorcycle-sales-251cc-to-500cc-apr-to-nov-2020-12387203.html

Exhibit 4: Comparison of primary specifications of competing products

TOP
ENGINE POWER TORQUE WEIGH MILEAGE SPEED PRICE
MODEL (cc) (bhp,rpm) (Nm,rpm) T (kg) (kmpl) (kmph) (₹)
Royal Enfield Bullet
350 346 (19.1)(5,250) (28) (4,000) 186 40 110 1,27,093

Jawa Forty-Two 293 27 28 170 34 130 1,60,300

 Royal Enfield
Classic 350 346 (19.1)(5,250) (28) (4,000) 195 40 110 1,61,688

Jawa 300 293 27 28 170 34 130 1,73,164

Roya Enfield
Meteor 350 349 (20.2)(6,100) (27)(4,000) 191 40 120 1,75,825
Honda H'ness (20.78)
CB350 348.36 (5,500) (30) (3,000) 181 35 115 1,85,000

Jawa Perak 334 30 32.74 179 33 135 1,94,500

Royal Enfield
Himalayan 411 (24.3)(6,500) (32) (4,500) 199 30 133 1,91,401
(39.42)
Bajaj Dominar 400 373.2 (8,800) (35) (6,500) 185 25 160 1,97,758
Benelli Imperiale
400 374 (20.7)(6,000) (29) (3,500) 205 30 130 1,99,000

BMW G310R 313 (33.5)(9,250) (28) (7,500) 158.5 30 143 2,45,000

TVS Apache RR310 312.2 (33)(9,700) (27.3) (7,700) 174 30 160 2,48,000

KTM RC390 373.2 (42.3)(9,000) (35) (7,000) 165.3 25 165 2,53,184

KTM Duke 390 373.2 (42.9)(9,000) (37)(7,000) 167 25 165 2,57,906

BMW G310 GS 313 (33.5)(9,250) (28) (7,500) 169.5 30 143 2,85,000

KTM 390
Adventure 373.2 (42.9)(9,000) (37)(7,000) 172 28 160 3,04,110
Source – Prepared by author from the secondary sources

Exhibit 5: Comparison of secondary specifications of competing products

FRONT REAR FRONT

GEAR
SUSPENSI SUSPENSI FRONT REAR BRAKE
MODEL COOLING BOX
ON ON TYRE TYRE (mm)
(Speed)
(FORKS) (Shock) (Dia)

Royal Enfield 3.25 X 3.25 X

Air 5 Telescopic Twin 280
Bullet 350 19" - 54P 19" - 60P

Jawa Forty-
Liquid 6 Telescopic Twin 90/90 18 120/80 17 280
Two

Royal Enfield 90/90 - 110/90 -

Air 5 Telescopic Twin 280
Classic 350 19" - 52P 18" - 61P

Jawa 300 Liquid 6 Telescopic Twin 90/90 18 120/80 17 280

Roya Enfield 100/90 - 140/70 -

Oil 5 Telescopic Twin 300
Meteor 350 19 - 57P 17 - 66P

100/90- 130/70-
Honda H'ness
Air 5 Telescopic Twin 19M/C 18M/C 310
CB350
57H 63H

Jawa Perak Liquid 6 Telescopic Mono 100/90-18 140/70-17 280

 Royal Enfield 90/90 - 120/90 -
Air 5 Telescopic Mono 300
Himalayan 21" 17"

Bajaj 110/70- 150/60-

Liquid 6 USD Mono 320
Dominar 400 R17 R17

Benelli 100/90 - 130/80 -

Air 5 Telescopic Twin 300
Imperiale 400 19 18

110/70 R 150/60 R
BMW G310R Liquid 6 USD Mono 300
17 17

110/70- 150/60-
TVS Apache
Liquid 6 USD Mono ZR17 ZR17 300
RR310
M/C 54W M/C 66W

110/70 150/60
KTM RC390 Liquid 6 USD Mono 320
R17 R17

KTM Duke 110/70 x 150/60 x

Liquid 6 USD Mono 320
390 17 17

BMW G310 110/80 R 150/70 R

Liquid 6 USD Mono 300
GS 19 17

KTM 390 100/90 x 130/80 x

Liquid 6 USD Mono 320
Adventure 19 17

Source – Prepared by author from the secondary sources

Exhibit 6: Comparison of tertiary specifications of competing products

MODEL Additional features

Royal Enfield Bullet 350 Free flow exhaust and long stroke engine, Metal body, EFI, Speedo meter &Odometer

Jawa Forty-Two Blacked out engine & exhaust, Blacked out handle bars,2 stroke engine

Royal Enfield Classic 350 Metal Body

Jawa 300 2 stroke engines

Roya Enfield Meteor 350 Twin Pod design of the cluster, Tacho meter
Lower kerb weight, semi-digital instrument cluster with analogue speedo meter and digital
screen, LCD Screen-odometer trip meter, fuel guage gear position, Indicator, Honda Smartphone
Honda H'ness CB350 Voice Control system (HSVCS)
console was semi-digital in design on a single-pod unit. A reverse sweep speedometer, fuel
Jawa Perak gauge and an odometer were all you get to rely upon.

best in class hardware and cycle parts, pair of telescopic forks at the front with a travel of 200
mm and the preload-adjustable rear monoshock had 180 mm travel, large windscreen visor,
halogen bulb instead of an LED unit that was speculated in the BS6 model,BS6 version gets
switchable ABS, instrument cluster, analogue speedometer, tachometer and fuel gauge while
easy to read orange back-lit LCD displays the odometer, two trip meters, ambient temperature,
digital clock and a digital compass was placed on the rightmost side, large 21 inches front rim
Royal Enfield Himalayan with spokes and was fitted with a 90/90 cross-section tyre
 fully digital instrument cluster with an LCD screen, speedometer, tachometer, odometer, trip
meters and gear position indicator real-time fuel economy, average fuel economy and distance to
empty. The secondary screen on the fuel tank hosts odometer, trip meters and gear position
indicator making for a perfect view while riding, negative LCD fully digital display, trip
computer data on the main display such as apart from regular speedometer, tachometer and fuel
Bajaj Dominar 400 gauge.
a semi-digital instrument panel which offers far more information than the Classic 350. There
was a twin-pod dashboard comes with analogue speedometer and tachometer with an LCD
screen displaying the odometer, trip meters, gear position indicator etc thereby providing all the
basic information about your motorcycle, kerb weight offers rock-solid stability on the
Benelli Imperiale 400 highways,
full LED lighting and slipper clutch for added convenience and safety, colourful TFT unit with
BMW G310R Bluetooth connectivity to lure in more customers and added usage,
dual LED projector lamps with study fairings and muscular fuel tank, The bike now comes with
a 5-inch Full-colour TFT screen with Bluetooth connectivity. The meter offers a speedometer,
tachometer, odometer, trip meters, fuel gauge, engine temperature gauge, real-time fuel
efficiency, average fuel efficiency, distance to empty, lap timer, 0-60 counter, top-speed
recorder, Bluetooth connectivity with smartphone notifications and turn by turn navigation, a
TVS Apache RR310 new Glide Through Technology,

KTM RC390 fully-digital multi-information display

KTM Duke 390 There was a smartphone app through which you could do the navigation part

BMW G310 GS Full LED lighting and slipper clutch for added convenience and safety, Bluetooth connectivity.

KTM 390 Adventure A 5-inch colourful TFT display, A 3-axis IMU

Source – Prepared by author from the secondary sources
i
https://www.honda2wheelersindia.com
ii
https://www.rushlane.com/motorcycle-sales-251cc-to-500cc-apr-to-nov-2020-12387203.html