BackHonda plans slew of new models for India
Honda is looking to make deeper inroads into India's competitive car market and thwart competition from newer rivals
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Mumbai: Honda Cars India Ltd plans to introduce several new models in India over the next two years as it seeks to make deeper inroads into the country’s competitive car market and thwart competition from newer rivals, said three people familiar with the company’s plans. They declined to be identified as plans are confidential.
Besides the new BR-V, a compact SUV that goes on sale on 5 May, Honda plans to launch a cross-over (code-named 2FM) based on the Jazz platform in 2017.
The India unit is also working on developing a new generation Brio compact car, Amaze sedan (code-named 2UA and 2UB) and the new generation Accord and CR-V.
All these models are expected to be launched in India in fiscal 2018-19.
A spokesperson from Honda declined to comment. “We don’t comment on speculation," she said.
The plans come amid heightened competition in the Indian car market and Honda’s flagging sales.
The local arm of the Japanese car maker, which had come back strongly in the passenger car market with the new generation City, Jazz and Amaze, saw its fortunes slip in fiscal 2015-16 as new model launches from Maruti Suzuki India Ltd and Hyundai Motor India Ltd, found greater acceptance among car buyers in India.
Honda sold 192,059 units in 2015-16, advancing by a mere 2% over the last year, according to the Society of Indian Automobile Manufacturers.
Its share in the passenger vehicle market dropped to 6.8% from 7.2% in the year-ago period.
The sales were dragged down by the poor performance of models including the Mobilio multi-purpose vehicle.
This was in a year when the broader car market expanded the fastest in three years.
Sales of the Mobilio and Brio saw a steep decline of 74% and 30%, respectively, over a year ago period.
The Jazz and Amaze which were seeing strong sales growth till last year saw volumes taper off due to intense competition from rival models.
For example, sales of the new generation Jazz launched in July 2015, which was critical to Honda’s plans of garnering volumes, cooled off after peaking at 6,676 units in August and continued to fizzle out under pressure from Maruti Baleno.
Sales halved to 3,683 units in March over a year ago.
“Honda needs to be faster. They are slow to react to customer’s demands," said a former dealer, declining to be identified. An average car buyer expects a host of bells and whistles in their cars and that’s one of the reasons why a Baleno scores over a Jazz, he pointed out.
Puneet Gupta, associate director, IHS Automotive said its critical that in order to boost sales, Honda follows a staggered approach and introduces new models at a gap of every 10 to 12 months.
IHS estimates Honda’s annual sales in India to touch 300,000 units by 2021.
The forecast is based on the strength of the new models the company plans to launch over the next years.
“Honda has tasted success with most of the recent launches. The introduction of next generation models should help them take a big leap forward," said Gupta.
Meanwhile, Honda is also expected to step up sourcing of parts from India.
The new generation models of the Accord and CR-V, unlike the previous generation ones, will have 60-65% local content which is higher than before, said one of the three people cited above. “The direction on localisation remains the same; we will do more of what we have been doing," said the Honda spokesperson cited above, declining to comment on specific model plans.
“Quite a few of their models have seen a free fall in volumes in the recent past, impacting the overall sales adversely. Therefore, the idea is to launch models with a high degree of locally sourced parts so that it can be launched at a competitive price which can in turn get them the much-needed volumes," said one of the three people cited above.
This person also pointed out that with India being one of the largest markets near the Asean region, the market will be critical for the company.
The company will also commence exports of the new Brio back to Japan, said one of the three persons cited above. Honda will be the second Japanese car maker to export a car back to its home market.
Last month, Maruti Suzuki India Ltd, commenced the export of the Baleno—the compact car it launched in October—to Japan.
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