‘We Want to Maintain Honda’s Premium Image’
As Indian economy grows, people are shifting towards premium vehicles. Honda Cars India plans a stronger line-up in the segment to consolidate its niche image
Honda Cars has seen its sales slow down in the past year with the diesel ban, the imposition of the infra cess, and eventually the demonetisation drive. The company’s flagship model City ceded the number one spot to rival Maruti Suzuki’s Ciaz. In an interview with Sharmistha Mukherjee, chief executive officer of the company’s India operations, Yoichiro Ueno, said with demand picking up, the company will focus on bringing more premium products to consolidate its position and brand image at the premium end of the market, starting with the 2017 City Honda Cars. Edited excerpts:
The Indian market has seen a lot of uncertainties over the past year. While the market revived, Honda’s wholesale numbers remain impacted. What do you make of the situation? In December 2015, there was a diesel ban, and the price differential between petrol and diesel had shrunk. There was a very rapid shift from diesel to petrol. We took to correcting our inventory from April/May 2016 and stocks were normal by the festive season. But then demonetisation came as a big surprise and hit business. We had to make changes again. By January, the situation, especially at the retail level, had been more or less normal.
Honda has been known for its sedans in the Indian market. But in recent times, City has seen strong competition and ceded the number one spot to Maruti Suzuki’s Ciaz. We had reduced production of the City over the last few months to adjust petrol/diesel inventory at our dealerships and subsequently to make way for the 2017 version that we launched today (Tuesday). In fact, we have not produced a single unit of the diesel City in the last three months. I am confident that with the new City, we will regain our leadership position in the segment. We opened bookings for this car on February 3 and have received sbout 5,000 bookings. While you continue to enjoy good demand in the sedans, your presence is limited in the small car segment. Because of economic growth, people are gradually shifting to more premium vehicles. Honda is known as a premium brand, and we want to maintain our premium image. We have been receiving some feedback from customers that Honda should have a stronger line-up in the premium segment. So, we are always studying that and looking for opportunities to expand not only in the small car segment, but in the premium space as well.
How evolved is the R&D work you are doing in India currently? The biggest role of the R&D centre here is localisation of parts. In order to do that, you need to study the material which is available here, you need to modify the design to suit the equipment that suppliers in India have. So, that is one of the main areas. At this moment, they are not developing a full car. However, together with the R&D centres in Thailand, Japan, the team here is making feedback, collaborations on what kind of vehicles, what kind of specifications are suitable for the Indian market. That’s also an important role. Concerns over rising levels of air pollution in India have been dominating debates. But as far as the automobile industry is concerned, is the domestic market evolved enough for hybrid and electric vehicles? Honda has several environment-friendly vehicles, including hybrids, which can address air pollution and reduce CO2 emissions. We believe that hybrid technology is suitable for both bettering air quality and improving fuel efficiency.
The Indian market is moving towards environment-friendly vehicles. The government is implementing BS VI emission norms and new CAFÉ regulations. We believe that hybrid technology is right to meet these government directions.
One challenge is that hybrid is a new technology, so it may take some time to become popular. But if the government can support the cost of the new technology initially, it will help.
The government is offering incentives for another technology (mild hybrids). But in our case, we have full hybrids. May be for mild hybrids the subsidy is quite good. But for full hybrids, because the cost is far higher, we will appreciate if they can extend/increase the incentive.