Honda Motors Should Benefit From Innovating In the Motorcycle Segment
According to our estimates, the Motorcycles, ATVs and Water Motors segment accounts for more than 15% of Honda Motors’ valuation, with its revenues accounting for around 14% of the company’s total revenues. Honda Motors (NYSE:HMC) is innovating in the motorcycle segment and the company unveiled a self-stabilizing motor cycle at the CES recently. This self-stabilizing technology called “Moto Riding Assist” ensures that the motorcycle can move without being controlled by the rider and would not fall over. This technology can make motorcycle riding safer and reduce accidents in slow moving traffic as the bike will not topple over. According to our estimates Honda’s market share in the global motorcycle market is around 33% and this number is likely to remain stable over our forecast period.
As it dominates nearly one third of the global motorcycle market, innovations in this segment can ensure that Honda retains its competitive edge and attracts consumers. Motorcycles are the preferred mode of transport in South East Asia and Honda Motors is an immensely popular brand in the region. In Vietnam, the word “Honda” is used as a synonym for motorbike. Many potential new drivers in the region still own two-wheelers with motorcycle penetration rates at over 80% in Indonesia, Thailand, Vietnam and Malaysia. To capture this trend, Honda Motors recently partnered with Grab Inc to collaborate in the area of motorcycle sharing services in South East Asia. The Moto Riding Assist technology can support this initiative significantly as the company looks to provide safe motorcycle taxis. While this new motorbike is still in a prototype stage it has the potential to improve riding experience and cut down road deaths due to accidents. This technology also forms the foundation for autonomous motorcycles which the company could use in the long term as part of its motorbike mobility solutions.
The automotive landscape is undergoing a transformation. While several companies are working on autonomous cars, Honda has laid the foundation for autonomous motorbikes. Given their tremendous popularity in South East Asian countries, motorcycles have a huge potential to be used as shared public transport vehicles in this region. Research reveals that there are over 20 million motorcycle taxis in more than 100 countries worldwide. These taxis are becoming popular in major Western cities including Paris (30 moto-taxi companies operate in the country) and the U.S. where the first moto taxi service opened in 2010. As moto-taxis become popular in the developed world, demand for safe riding vehicles in this segment is likely to increase. Honda’s efforts to innovative in this segment and work towards autonomous motorcycles which are safer and less prone to accidents can ensure that the company remains the market leader in this segment.
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