‘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

The Economic Times - - Brands: Creating Desire -

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.

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