Honda is focusing on sedans to regain market share at a time when the competition is focused on churning out SUVs
With the 2019 Honda Civic, Honda has become the only carmaker in India to have four sedans in as many price points and sub-segments
New Delhi: Honda Cars India Ltd has taken a detour from the industry-wide focus on churning out SUVs and is betting big on sedans to try and restore its lost glory in the Indian car market. The company is bringing back the Honda Civic, the premium sedan that is also Honda’s biggest seller worldwide, to complete its portfolio of sedans.
Honda’s attempt to regain market share started with the launch of the new version of its compact sedan, the Honda Amaze, which drew customers despite the overall demand in the domestic market falling significantly after September 2018.
The rationale behind bringing back the Civic is to give more options to existing customers of Honda’s most popular Indian product, the mid-sized sedan Honda City, and bolster the company’s portfolio in the premium segment.
Customers are moving towards SUVs, but the launch of the 10th generation Honda Civic has seen the sedan become Honda’s largest selling car globally, especially in the US, overtaking some of Honda’s SUVs, said Rajesh Goel, senior vice-president and director, sales and marketing, Honda Cars India Ltd.
“With the Civic we have a complete line up of the sedans starting with the Amaze and ending with the Honda Accord, though the volumes are very limited in that segment. The sedan volumes in India are still more than the SUVs. Yes, the growth rates are higher in SUVs but in the future also there will be a market for sedans," said Goel. “If you look at the global markets, there has been a trend towards SUVs but that doesn’t mean sedans have faded away," he said.
Honda has sold 71,059 units of the 2018 Honda Amaze in India in the current fiscal year. Honda City sales declined 27.7% year-on-year to 34,367 units, as a result of the launch of the new generation Maruti Suzuki Ciaz and Hyundai Verna.
Honda’s faith in its sedans for the domestic market is underpinned by the fact that almost a third of the customers of Honda Amaze are first-time buyers.
None of the other vehicle manufacturers, barring the premium ones, have a product portfolio comprising four sedans of different price points and sub-segments. Most of them are investing in developing products such as premium hatchbacks and compact utility vehicles.
Honda’s next generation City is scheduled to hit the Indian markets by 2020 while the full hybrid option is expected to be launched in 2021.
“Our most important product in India has been the City and we had to previously discontinue the Civic because of ‘dieselization’. Also, our Tapukara plant had not been established by then. So we had to focus on the production of the Amaze. So the Civic got discontinued. It was kind of unfair on our part to not offer a natural upgrade to the customers of City who have been our longest-standing and most loyal customers," Goel said.
“The strategy to focus on offering a complete range of sedans makes sense for Honda as the demand for sedans still exists, though the growth rate for utility vehicles is much higher at present. For Honda, the customers of City don’t have any choice if they want to upgrade. So the Civic, if priced properly, will help the company retain some of its most loyal customers," said Puneet Gupta, associate director, vehicle sales forecasting, IHS Markit.