Yoichiro Ueno

President and CEO, Honda Cars India Ltd speaks about taking Honda upmarket once again

ABOUT THE INDIAN MARKET:

It is a very dynamic market, difficult to understand. One year in India is equal to three to four years in other countries. In my present year, the market has shown growth. In the last two years, there was a big shift from diesel to petrol. Diesel is still important and cannot be written off in India. Currently our petrol to diesel mix ratio stands at 70:30.

Excess stock and demonetisation:

Our main challenge was the very high amount of inventory at the beginning of the year. There has been a big shift from petrol to diesel in the last two years. Our dealer inventory had piled up with about 12-13000 cars, so we supported our dealers and reduced our wholesale by a similar amount. We had more of diesel stock so the conversion ratio is very low. At the end of the year, September was very tricky. We had a very positive month of October, then November was really slow in terms of sales (due to demonetisation). By December the market started to show improvement and in January it came back to normal. I think the recovery phase has been faster and the market is almost neutralised. We are expecting a great year, sales are already strong. Some customers stopped buying during demonetisation and postponed, so they are now coming back. It is a positive for the auto industry.

About the new City:

We have just launched the new City, we know that the timing has not been good, but we have received a very positive response. We ran a 10-day campaign and received 5000 contracts although we had expected only 1000-1500. Other than the campaign, we have received overall 7500 bookings, so its surpassed our monthly sales. The City is doing better with petrol. And we have another new car coming (WR-V) on which we will be focusing the most this year. It is based on the Jazz so the styling is completely different and can capture attention. It will drive our sales this year we hope.

About other models:

Mobilio is under expectations but we are selling 500 to 700 cars a month to aggregators (Ola and Uber), so you will see a lot of them on the roads. BR-V is similar, it also has three-row seating, it is between an MPV and an SUV and not really a compact SUV. The compact SUV segment is much larger and the customers are different for each. We were expecting 2000 units a month and we are on track.

We have already sold 5000 units of the Amaze and in December we had a direct order from Ola for 200 cars. 1520 per cent of the Amaze now goes to aggregators while the Mobilio is finding acceptance from fleet operators.

Launch of the new Civic and Acura brand:

Civic is successful all over the world so definitely we will take a look. It takes time to study the localisation. This Civic has a different manufacturing process so it will take time. The Civic Type-R is a very premium product and we are not thinking about it right now.

Acura is available in left-hand drive right now, if in the future we make it in the right-hand drive format, then maybe we will think about it.

On the Brio and Amaze:

We did not expect a decline in A and B segment, in the Indian market. It's a challenge for the Brio and the Amaze. Expectations from the Honda brand were higher. It was not a mistake I would say, but customers expected quite a lot and we thought this is what they want. Maybe in the future our focus will be on upper segment.

If the GDP per capita exceeds $40005000 by 2025, which we expect to happen, maybe new customers will come (back to A and B segments). Maybe we will then focus on the this. Honda's perception has changed in India because of the Brio and Amaze yes, we are now closer to Hyundai. Focus on premiumness and even after sales customer support is very important right now. The Accord is the premium product we are focussing on. Our entire lineup is dependent on the premium segment.

Honda Motorsport in India:

Honda is there in F1, if F1 comes back to India, then yes. In many countries we have races. Racing is not so popular here in India. We would like to study the motorsport scenario first.

In the future our focus will be on premiumness and the upper segment

Investments:

We are planning to open a plant in Gujarat for the future. It is a 380 acres land close to Vittapur, near Honda 2 Wheelers. It is currently in procedural matters. Currently our Noida plant has a 1,20,000 capacity, however it is not full and running one shift less. Tapukara has a capacity 1,20,000 and is running full at the moment.

Strategy for India, if not hybrid:

By 2020, Indian government will implement CAFE regulations, if that happens Honda will bring more cars with hybrid tech. Our challenge is to see whether hybrid gets accepted in the market or not. We are promoting it, but the price point is higher. If the customers are willing to pay, we will get it.

There is no one big solution, so we are thinking of our options. Changing petrol to diesel ratio is a possibility to meet CAFE regulations. If we can bring customers back to the diesels then we can focus on smaller cars. Mixing those kind of opportunities is an option.

On the Accord Hybrid:

We have had an unexpected reaction to the Accord Hybrid but the volume is very small. The first lot sold out when we launched and the second lot coming in March is also sold out. Each lot is 30 cars (and three cars from the first lot went to the PR fleet). The response is amazing and one family from Kota bought four cars. To do a CKD operation for the Accord Hybrid takes quite a big investment for the local manufacturing.