The Hindu Business Line : Honda firms up plans for small car

"We are seriously looking at the `B' segment. We have already commissioned a study in this respect," the Honda Siel Cars President and Chief Executive Officer, Mr H. Yamada, told Business Line.

Mr Yamada said the B segment was a tough market to break. "There are so many competitors in the market. We need to be extremely careful," he said.

But sources in the company said both Life and Jazz, the latter being the largest-selling small car both in Japan and Europe, could fit the bill.

Mr Yamada, however, did not specify how soon the small car would be rolled out in India.

Honda plans to significantly increase production of its small cars' range in Asian and South American plants.

This is part of the global small-car platform project through which Honda plans to sell at least 5 lakh more cars globally in 2004. As per a recent statement from Honda, the automaker wants to make the small-car series its pillar of global model strategies following the success of Accord, Civic and CR-V. Launched in 2001, Jazz (called Fit in Japan) is sold in 60 countries worldwide and resembles a smaller version of Toyota's Matrix with five doors. Jazz, which can seat five people, is powered by a 1.3-litre twin-spark four-cylinder engine and comes in both manual as well as automatic transmission variants.

It has the same suspension as that of CR-V and currently has three versions ranging from 1.3-litre to 1.5-litre engines.

Life is a four-door hatchback with a 660-cc engine.

Its engine capacity could, however, be a restricting factor for Honda to look at it seriously.

Hopes to wipe out losses next year

HONDA Siel expects to wipe out its accumulated losses during next year itself, instead of 2006 as indicated earlier.

Mr Yamada, said the company has been able to cut its losses by half to around Rs 60 crore within two years, as Accord and City have been able to capture a good share in the luxury segment of the market. Honda now plans to sell 20,000 cars during 2003 compared with 13,300 in 2002. Out of the 20,000 cars it plans to sell in 2003, around 18,000 will be City, 1,500 Accord and 900 units of its sports utility vehicle CR-V. By 2006, it expects to sell around 50,000 cars.

Honda hopes to start making net profit within three years. Last year, the company announced that it plans to invest around Rs 200 crore over a period of three years. It has so far invested around Rs 450 crore. Honda plans to increase its market share in the luxury segment in India to around 20 per cent from 16 per cent last year. Over the next three years, it plans to lead the luxury segment with a market share of 35 per cent.

Mr Yamada said though CR-V is a sports utility vehicle, it will be positioned in the D segment. "There could be some amount of canabalisation because the prices of Accord and CR-V are more or less the same. But it will only be a short-term phenomenon," Mr Yamada said.

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