Honda Cars bets on hybrid, electric line-up to meet stricter CO2 emission norms

Corporate Average Fuel Efficiency norms, which were first introduced in 2017-18, are aimed at improving the fuel efficiency of vehicles, leading to reduced fossil fuel consumption and carbon dioxide (CO2) emissions. The second stage of CAFE has been in effect since 2022-23, with the third stage set to come into force in 2027. CAFE norms apply to the average fuel consumption of all the vehicles sold by an automaker in a given financial year.

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The company is looking ahead to 2027, counting on hybrid and electric vehicles to meet the stricter CAFE-III standards. It plans to introduce three new electric models by 2026-27 as part of a broader strategy to align its India portfolio to its global electrification goals.

“We are currently navigating CAFE-II norms, and honestly, it’s a little tough at this moment," Takuya Tsumura, president and CEO of Honda Cars India told Mint. “Looking ahead, we are focused on meeting CAFE-III norms with a line-up of electrified vehicles and hybrids."

A hybrid-driven future

Globally, the Japanese carmaker has set a target to achieve 100% electrification by 2040, which includes battery electric vehicles (BEVs) and fuel cell vehicles. By 2030, two-thirds of its sales are expected to be electric vehicles. Tsumura confirmed that Honda's India product roadmap, which currently involves only petrol and mild-hybrid models, will also reflect the same direction, with three electric models set to debut in 2026-27. One of these will be a BEV based on Honda’s Elevate mid-SUV model.

“At least hybrids are the way forward for us to meet CAFE norms and achieve our carbon-neutral goals in India," Tsumura added.

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Honda faces uncertainty regarding penalties for non-compliance with current norms, as government policies, such as carbon credit schemes, remain unclear. Mint had reported in September that Honda Cars India was one of the eight original equipment manufacturers in the country that did not meet their CO2 reduction goals in FY23.

Honda said it is optimistic about the Indian government's goal of 30% vehicle electrification by 2030, though it anticipates the actual figure might settle closer to 15-17%.

To support its electrification goals, Honda, as a group, has also ventured into two-wheeler EV segment and battery-swapping infrastructure in India.

Betting on entry-level sedans

Honda Cars India on Wednesday unveiled the third-generation Amaze, priced between ₹7,99,900 and ₹10,89,900 (ex-showroom, Delhi). The introductory prices are valid for 45 days from launch. With this release, the Amaze becomes India’s most affordable car equipped with advanced driver-assistance systems (ADAS), the company claimed.

Honda is banking on the lower sedan segment to fuel growth, especially as hatchbacks face declining sales.

“The hatchback segment is shrinking, but the lower sedan segment is holding steady with a 2% growth over the last five years," said Kunal Behl, vice-president of marketing and sales at Honda Cars India. “This trend gives us confidence that customers prefer feature-packed, safer sedans to hatchbacks."

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Currently, the entry sedan segment accounts for 7.5-8% of India's car market. Honda predicts it will expand to 11.5% in the coming years, driven by a shift in consumer preferences.

Honda is positioning the new Amaze to appeal to value-conscious buyers seeking safety and advanced features. “With the new Amaze, we are confident of pulling in hatchback customers who are moving up the value chain," Behl added.