Cochin: Honda Motor Co. will introduce cars and multi-utility vehicles (MUVs) fitted with diesel engines in the year to March 2014 to boost sales in the world’s second fastest growing car market, where the company has been hobbled by a lack of models that run on the cheaper fuel.
“The cost competitiveness of the all-new diesel engine will be enhanced through local sourcing and local production to make new diesel models more affordable for customers,” Honda’s global chief executive officer Takanobu Ito said in a statement on Friday in Tokyo.
Diesel car sales have soared in India as the fuel is significantly cheaper than petrol. Even after a Rs.5 per litre increase in diesel prices announced by the government last week, the fuel is still 20% cheaper than petrol. The proportion of diesel cars sold in India has steadily risen from 21.4% of the total cars sold in fiscal 2008 to 40% in the year ended 31 March and 50% in the June quarter, according to the Society of Indian Automobile Manufacturers (Siam).
Honda’s India car sales have declined 8.47% to 54,427 units in the year ended 31 March because it doesn’t have diesel models. The company cut prices of the City by Rs.1,10,000 and the Jazz by Rs.1,65,000 in a bid to revive sales.
“Introducing diesel engines is wonderful news. The absence of diesel variants was hampering their growth. They are getting to understand the Indian markets because they want to bring in entry-level sedans and MUVs,” said Pradeep Saxena, executive director, TNS Automotive, a marketing research firm. “It is time that they get serious about this market.”
The diesel plan comes as Honda seeks to almost double global sales, with emerging markets such as India expected to contribute about half this growth.
“Honda will strive to increase the sales and further growth in Asia by strengthening its mutually complementary structure in the region, especially in Thailand, Indonesia, India and Malaysia,” Ito said.
The company is aiming for worldwide automobile sales of more than 6 million units in FY17, the first time it has made a sales forecast.
“With proactive business expansion in emerging markets, in FY17, Honda will strive to achieve automobile sales of more than 3 million units in emerging markets, doubling the sales of FY12,” Ito said.
The company also plans to change its product development plans in order to suit the needs of emerging markets, it said.
“Honda will add sedan-type and utility-type models utilizing the platform of the Brio, Honda’s strategic model for Asia,” Ito said.
Brio is Honda’s first small car and sells in countries such as India and Thailand.
In the motorcycle segment, the firm said it wants to introduce several 100cc models, indicating intensifying competition with erstwhile joint venture partner Hero Group.
“In India, Honda will strive to further grow its motorcycle business through the introduction of highly-competitive models in the 100cc segment, which is the largest segment in the motorcycle market in India, and through the start of production at the third plant in India which is scheduled to be operational in the first half of 2013,” Ito said.
Honda introduced its first 100cc motorcycle Dream Yuga model in India in April 2012.