Honda Motorcycle and Scooter India plans to foray into the pre-owned two-wheeler segment to

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sell its own brands to challenge Hero Honda, according to an industry executive directly familiar with the plan.

The fourth largest two-wheeler maker by sales has started a trial study at select dealerships in four major cities including Bangalore, Mumbai and Ahmedabad where abundant Honda products have been sold.

When contacted, operating head (sales and marketing) Honda Motorcycle and Scooter India NK Rattan confirmed the plan though declined to provide further details terming it as ‘premature’.

“The company has started an internal study where in the pre-owned dealerships have been setup separately from its existing dealerships through dealer margins to get closer to existing and prospective customers. The company seeks to take advantage of about six million Honda two-wheelers that already ply on Indian roads,” the person privy to the development added. A total of 50 million two-wheelers run in India, the world’s second biggest two-wheeler market after China.

The plan assumes significance at a time when Honda Motor Co. of Japan is shifting entire focus on its wholly owned subsidiary after having decided to part ways with Indian conglomerate, the Munjals promoted Hero Group, in their 26 year old joint venture Hero Honda Motors, which is the only company that already runs a used two-wheeler business under ‘Hero Honda Sure' in select dealerships of semi-urban areas in the country.

When asked how plans to start selling pre-owned two-wheelers were related to the recent announcement of the joint venture termination between the Hero Group and Honda, Rattan said, “It is just a regular business activity and has got nothing to do related with it (end of partnership between Hero and Honda).”

Other companies may follow Honda in starting pre-owned two-wheeler businesses in India. Industry estimations peg the used two-wheeler market at double of the annual segment size of newly sold two wheelers which stands at more than nine million units.

Honda’s pre-owned business is different from Hero Honda’s ‘Sure’, which was started in 2005 under a business model that a two-wheeler user could trade his old motorcycle for a new Hero Honda motorcycle. Honda Motorcycle and Scooter India on the other hand will focus on direct purchase and sale of used Honda two-wheelers.

When contacted, senior officials of Bajaj Auto and TVS Motor Co. said they have no plans to start selling used two-wheelers business ‘as of now’.

“Pre-owned vehicle business is more of a penetration strategy to build brand goodwill. Two-wheelers act as an important mode of public transport especially in rural markets. The Honda brand is a solid product moving on roads, it automatically builds a premium,” auto practice leader at PwC Abdul Majeed said.