Honda to press accelerator on a line-up of new models amid sales slump

Topics Honda

Honda made its mark in the premium sedan segment but couldn’t measure up to the challenge in the mass segment
Japanese automobile maker Honda has taken some recent hard knocks in India but plans to press the accelerator on a line-up of new models to get growth back on track.  

Top executives say they expect to close the financial year with a 'significant' decline in sales but also aim to go back to the earlier pace of growth in 2020-21. 

Honda sold 192,000 vehicles in 2015-16. This slid to 85,751 in the first nine months of the current financial year, April to December.

Industry analysts say it continues to enjoy large brand recall and credibility but hasn’t responded quickly to a changing market. That includes a switch from diesel to petrol, and then again from petrol to diesel, and customer preference for sports utility vehicles (SUVs). 

Pricing is another reason. Honda made its mark in the premium sedan segment but couldn’t measure up to the challenge in the mass segment. For example, it launched the Jazz, a premium hatchback, in the segment dominated by Maruti's Swift. While Jazz attracted eyeballs, the higher price tag deterred buyers. It later came out with the Brio but the market had by then got entrenched placers like Maruti, Hyundai and some others, they say.

Honda Cars India’s senior vice-president for sales and marketing, Rajesh Goel, claims Honda is a highly desirable aspirational brand and known for its durability, quality and reliability. “We have never been a big player in the market.” Also, that product has never been an issue – in the past four to five years, they launched two products every year on average. “Unlike some of the other players, the global cycle of model change was introduced by Honda in India,” says Goel. He cites the Honda City in this regard.

Goel says Honda had its share of downs, due to issues like flooding, oil prices, rupee depreciation, non-banking financial company crisis, regulation changes and election uncertainty, among others. Besides, customer sentiment has not been good due to emission norm changes, fluctuation in fuel prices and electric vehicles. 

Goel says Honda outperformed the seven per cent industry growth the year before last. IN 2018-19, a slowdown year, industry growth was 2.8 per cent, while Honda reported 8 per cent. It had domestic sales of 183,787 units in 2018-19, compared to 170,026 units in 2017-18.

Goel attributes the reversal in performance this year to better risk management. From September 2018, month on month, the industry was in free fall. Considering the supply chain, Honda had no option but to cut on production to bring down the risk of piling up BS-IV stocks, selling at half the price.

Without committing numbers on growth and future launches, he says their current market share of Honda is 4.5 per cent (the best was 8 per cent, in the past). “I would definitely like a number higher than what we are today. Next year, it is likely to be higher.”

For Honda, it took a much longer time than competitors in launching SUVs. And, says one of the future models includes an SUV. Also, an ‘all new’ Honda City, which had its world premiere recently in Thailand.

“We have been a sedan company in India but are committed to fulfilling the customer’s aspirations by bringing in more cars, including SUVs,” says Goel. By 2030, two-thirds of Honda's global production will be from non-conventional powertrains, including electric, hybrids and fuel cells. India would be part of this.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel