Taking the “Small Start” Strategy to Gain Ground
as a Late Entrant to the Kenyan Market
Kenya has developed as the economic center of the Eastern African region. Not only in the capital city of Nairobi, but also in various other cities, small motorcycles are seen traveling on the roads, especially in urban areas. Most of them are Pota-Botas (also called Boda-Bodas), or motorcycle taxis, which began to increase rapidly in the late 2000s and, by 2010, accounted for about 90 percent of the motorcycle market. However, that was a market dominated almost exclusively by China and India.
In Kenya, Honda had been selling and servicing motorcycles through local distributors since 1979, but was far behind in entering the motorcycle taxi market.
In December 2011, Honda opened a local office in Nairobi to build a business foundation in the East Africa region, and began gathering market information. With low brand recognition and without its own motorcycle sales and service network, Honda had to start local production and quickly introduce its motorcycle taxis to Kenya, as the market was still small but expected to expand further. The challenge for Honda to regain a foothold in the Kenyan motorcycle market had begun.
Bicycles, and two- and three-wheeled taxis are the main means of transportation in Kenya’s regional cities
The basic approach Honda had been taking to start local production in any regions with growth potential was to “starting small and growing big.” The strategy is to start with small-lot production and expand the scale of production as demand grows. This idea was further advanced into a new strategy called “KDP” – Kan-tan (simple), Doko-demo (anywhere), Pack (package) – which allows production to start with minimal time and cost in regions with small markets such as emerging countries. This small start strategy was to be put into practice in Kenya.
In March 2013, Honda Motorcycle Kenya (HMK), a local Honda subsidiary to focus on the production and wholesale of motorcycles, was established in a rented warehouse in an industrial park in Nairobi City, after months of local market research by Yasuhiro Imazato, who became the company’s first president. He spoke directly with motorcycle taxi riders and found that Indian-made motorcycles were becoming increasingly popular due to their high fuel efficiency and durability. Prices of those Indian brand models were 10,000 to 20,000 Japanese yen higher than Chinese brand models, but he realized that more and more people were looking for quality motorcycles. Honda models were expected to be priced slightly above Indian models, but Imazato was convinced that Honda quality, including service, could appeal to customers who were not satisfied with the quality of other models.
HMK established in Nairobi City
In July of that year, factory start-up experts arrived in Kenya from the Kumamoto Factory, the Honda worldwide motorcycle production hub. First, materials were brought in using forklifts to turn a rented warehouse into a small factory, and a simple production line was completed in just a few days. This was the essence of KDP.
The training of local associates followed. HMK hired seven new associates, and none of them had previous experience in motorcycle assembly. Since a KDP-based factory was not equipped with any automated equipment, every production process was almost entirely manual. Moreover, the two associates who would lead production had to acquire the skills to assemble an entire bike in order to become familiar with the entire process. This was because those leader associates had to be able to continue instructing all other production associates even after the Japanese instructors had returned to Japan.
The main instructor was Hiromitsu Tsuruta, who at the time was the assistant chief engineer of the Kumamoto Factory. Tsuruta had a 25-year experience as a technical advisor and had provided guidance to startup Honda factories in about 20 countries outside Japan. However, this was his first time to startup a factory with the KDP strategy, which was different from his past experience. Moreover, Tsuruta was given only about one month to startup production, thus his days there were tumultuous.
One of the most difficult tasks in the motorcycle assembly process is assembling the front section, including the front fork and front wheel. The delicate alignment directly affects handling and ride quality, an important component to test Honda quality. This process also requires craftsmanship, which made Tsuruta’s task of instructing the associates even more difficult. Before returning to Japan, Tsuruta prepared a manual illustrating the work procedures and handed it to the local production leaders. The key points were illustrated and clearly marked with millimeter precision. The manual was designed so that the local associates could learn the techniques on their own even after the Japanese instructors had returned home, and was filled with Tsuruta’s strong belief that self-reliance is the key to strengthening the foundation of local production.
Full-scale production began in October of the same year. HMK hired additional local associates, and the two production leaders supervised them.
A new Honda motorcycle produced in a small factory in Kenya, by Kenyan associates, to be use as motorcycle taxi in Kenya, was unveiled in November 2013, only four months after the factory became operational.
Honda motorcycles being produced at a small factory in Kenya, almost entirely by hand by local associates
HMK Continues Steady, Incremental Growth by
Expanding Sales Network and Providing High Quality Service
The Ace 125 motorcycle taxi was introduced to the Kenyan market. It was a localized version of the Ace CB125, which was launched in Nigeria in 2011, and underwent a minor model change in 2013 and was further tailored for the Kenyan market.
Like the Nigerian version, it was durable and fuel-efficient, had a long seat to accommodate the rider and two rear passengers, and was equipped with tires resistant to mud clogging, tailored to the often unpaved roads. In addition, the Kenyan version has additional footrests for the rear passengers, and the wheels were changed from spoke to cast wheels, changes that were made based on information obtained through interviews with Kenyan motorcycle taxi operators.
The day after the announcement of the Ace 125, HMK held a test ride event for motorcycle taxi riders in the city center of Kitale, one of the regional cities in Kenya, where motorcycle taxis gathered. As the event venue, HMK selected the first dealership location built within the sales network HKM established from scratch.
When the Ace 125 arrived, the riders gathered around. Imazato, the president of HMK, played a key role in promoting the new model. The riders had positive feedback: “This bike is quite nice.” “The handlebars seem easy to use.” “The speed is good.” and “The ride is comfortable, so I think our customers will be pleased.” Imazato, while feeling a sense of emotion welling up in his eyes, said that he would hope to sell one bike at a time and to increase the number of Hondas on the streets of Kenya.
HMK believed that by expanding its sales network and at the same time enhancing its services, Honda models would be able to offer a different level of reliability and quality than what Chinese and Indian models offered. The number of dealership locations in Kenya was increased to 26 by the end of 2014 and 55 by early 2017, and has steadily increased since. In terms of service, HMK offered Service Clinics, a free inspection campaign in which mechanics traveled to various dealership locations, sometimes to remote areas near the border, to perform maintenance and inspections together with the local mechanics. HMK also launched some sales promotion campaigns to further expand sales, such as giving away jackets with the Honda logo to customers who came in for inspections. In 2018, along with the service clinics, HMK also held riding safety seminars in three areas, attended by more than 1,000 customers.
Ace125 motorcycle taxi riders assembled in front of HMK
In the same year, the CG110, a new, lower-priced small motorcycle was added to the lineup. The basic performance and equipment were the same as the Nigerian motorcycle taxis, but Kenya-specific features were added such as a larger rear carrier. After 2019, the Ace125 continued to capture persistent demand, and the Ace110 gradually increased its sales volume. Later, the Ace125 Tuff was added to the lineup, making it more complete.
In 2013, a small factory began operations with a production capacity of 25,000 units per year. By 2023, with addition of some equipment, the factory increased capacity to 35,000 units per year. The HMK sales network, which started with only five shops, expanded to 111 shops in 2022, and the company continues to grow steadily in the Kenyan market, which holds great promise for the future.
Honda Continues its Challenges in the African Market,
the High-Potential Last Frontier of Global Economic Growth
The African market is home to diverse countries and cultures. Looking at its economy, there are many emerging African countries whose economies are the same size as those of Asian countries about 10 years ago, and Honda sees this as a promising market where rapid population and income growth is expected in the future. This is why, despite the challenges faced by many of these countries, Africa is considered the last frontier of global economic growth.
In March 2023, Takayuki Yamashita, director of the Africa and Middle East office, commented on the future of the African business: “Honda has been doing business in Africa since the 1980s and has grown along with the region. However, the region also faces societal and economic instability due to weak infrastructure and other challenges. When faced with such difficult conditions, Honda has always come up with ideas to overcome them, and that was the exact case of the challenges Honda took on to cultivate the African market. I am sure that we will continue to face the same challenging environment in the future as we have in the past, but we will strive to achieve further growth in the spirit of ‘never giving up and keep challenging’ more than ever in such situations.”
Promoting Traffic Safety Education Tailored
to the Characteristics of Local Users
Offering Safe Rider Training Programs at HMN
In 1989, HMN started offering a safe riding school program targeting corporate users, who were the main customers of HMN at the time. The school program included practical training by instructors who were trained in the Suzuka Circuit Traffic Education Center Japan.
Since then, HMN has been expanding the targets for this program and offering training tailored to the characteristics of each user group. For example, for motorcycle police officers, HMN offers training with the large CBX750 model, and for motorcycle taxi operators, various training is offered to teach safe riding while carrying passengers. Through these activities, HMN is promoting safe riding and development for a healthy motorcycle market in Nigeria.
