The Hindu Business Line : ‘Lack of diesel engine options considerably restricts Honda Siel’s reach’

Honda Siel Cars India (HSCI) is priming itself for the launch of its premium small car – Jazz – by mid-2009. But, even as its second car and engine assembly plant is coming up in Rajasthan, there is enough action at the company’s first plant in Greater Noida, near Delhi, where the new City compact sedan rolled out earlier this month.

Business Line caught up with HSCI’s President and CEO, Mr Masahiro Takedagawa, and quizzed him about the company’s marketing strategy, its experience with the Civic Hybrid and its plans for the Jazz. Excerpts from the interview:

What is your plan for the new City launched recently?

We have already started bookings for the new car. Within 10 days all our 83 dealerships will have the new City for the customers to touch and feel. Delivery will commence from early November.

Where does the new car fit in as you have increased the price recently?

The new car having sleek design and utility comes with newly developed 118 hp i-VTEC engine yet the mileage has been maintained as the earlier City ZX. Besides it comes with ABS and airbags as standard equipment. I think the new powertrain and added safety features will justify the 8 per cent increase in price.

In fact we have decreased the price by 5 per cent compared to i-VTEC version of the earlier model and I see this as competitively priced.

You seem to have drawn inspiration from the Civic and the Accord for the new City. . .

I think it is necessary for the manufacturers to have common identity among the models. Every now and then we try to integrate the design philosophy of contemporary models to build a unified impression of Honda.

Why has the Jazz launch been advanced?

We have received tremendous response to the car that was displayed in the last Auto Expo. Moreover, the Government reduced the excise duty for small cars (for less than 4 metres) so we decided to advance the launch to mid 2009. This is also to capitalise on the festive season. Since our Rajasthan plant will be ready only by the end of next year and the ramp up of volumes will take five to six months, we decided to manufacture the Jazz at our Noida plant.

Is your Noida plant capable of manufacturing Jazz given the anticipated volume?

Of course it is a challenge for us as the Jazz will be the fourth model to be made in the single assembly line. At present we make Accord, City and Civic in the plant. Moreover, about 60 per cent of the components are common for City and Jazz and this helps us in the assembly of different models.

Does that mean Jazz will also have i-VTEC engine?

We are developing 1.2 litre i-VTEC engine for Jazz, which will essentially have the same engine block of the 1.5 litre engine. We just reduced the stroke length to reduce capacity.

What’s the capacity of the Noida plant and how will it be shared amongst different models?

The capacity of the plant was increased to 100,000 units last December. However, it took nearly 10 months to train the new employees and stabilise the machines. From next year we will be utilising full capacity, of which Civic will be 20,000 units and Accord 10,000 units. We will be left with capacity of 70,000 units and we have not decided how many units of City and Jazz will be made. It will be decided based on the demand as we have a flexible assembly line.

Tell us about the retail initiative for Jazz?

At present, we have 83 dealers and before March 2009 we will add 20 more.

Hitherto we were focussing on bigger cities and with our plans to launch a compact car, we will concentrate on tier II and III cities.

Is there a plan to make an India-specific small car?

Our goal has always been to make a global car. If we make an India-specific car I do not think our customers will appreciate it.

What are your plans for the Rajasthan facility?

We inaugurated the press shops recently, which make skin panels for City. Hopefully, the construction of the plant will be completed in 12 to 14 months. The plant is primarily designed for small cars. Based on the volumes, Jazz will be manufactured at both our plants.

Do you feel that the lack of diesel options impacts your sales?

Frankly, yes. We do not have any concrete plan for diesel options in our vehicles. However, we feel it is a necessity to take on the competition in the diesel sedans segment. We are seriously studying options now. But, development of diesel engines takes time.

What has been your experience with the Civic Hybrid?

The launch of the Civic Hybrid is primarily to showcase Honda’s technology and its environment-friendly initiative.

With high import duty the car is priced at about Rs 22 lakh. It cannot be commercialised at this price. We are aiming to sell only about 100 units a year. So far we have sold 75 units.

Related Stories:
Honda Siel to begin auto component exports
Honda launches Civic Hybrid; to cost Rs 21.5 lakh