The Hindu Business Line : Honda Siel seeks policy clarity before hybrid car launch

According to Mr Masahiro Takedagawa, President and CEO, Honda Siel Cars India Ltd, the company is discussing the issue with the Government through the Society of Indian Automobile Manufacturers, the automobile industry’s trade body.

At the current level of import duties – over 100 per cent – hybrid cars will be prohibitively expensive.

The company has a hybrid version of its popular Civic sedan, which it hopes to introduce in India once the policy framework is clear.

(Hybrid engines run on either petrol and electric power or diesel and electric power; they are more fuel efficient and less polluting.)

Honda’s Civic hybrid runs on a mix of petrol and electric power.

Due to technological barriers and because of the low volume of these cars, Honda makes its hybrid cars only in Japan and even exports them to the US.

The high import duty would mean that a hybrid Civic would cost twice as much as a petrol engine Civic does.

Honda Siel would also like regulatory issues regarding hybrid cars to be made clear before it considers bringing the car here.

It believes that hybrids are a better option for customers as they are clean and also may not be as expensive as a diesel engine vehicle, even though they will be costlier than a petrol engine car.

Among the manufacturers in India, only Toyota and Honda have hybrid engine cars, Mr Takedagawa said.

Therefore, the Government needs to take a fair and balanced view on the kind of incentives it could offer for such cars.

The US and Japan offer subsidy of almost $2,000 a car for hybrid engine vehicles.

To a question, Mr Takedagawa, who was here to formally inaugurate Honda Siel Cars’ second dealership – Capital Honda on the GST Road near the airport – said that the company did not think diesel was an option that regular customers of its City sedan would prefer.

It had conducted a study which showed that a typical City customer preferred a petrol engine to a diesel engine.

Almost 30 per cent of the City segment – which includes cars like the Ford Fiesta and Hyundai Verna, and the recently-launched SX4 from Maruti Suzuki – is made up of diesel cars.

However, Mr Takedagawa said that fitting a diesel engine in a car like the City would push up its price and it would not offer the kind of value for money that a typical City buyer looked for.

A diesel engine offers value to the buyer only when the car covered an average of 23,000 km a year, while a petrol engine is cost-effective at less than 18,000 km a year.

He said that it makes more sense to have diesel engines in larger cars, like the luxury sedan Honda Accord, and not in smaller ones.

For a car like the Civic, a hybrid engine would be a better option than a diesel one, he added.

On sales of the City, vis-À-vis Maruti’s SX4, Mr Takedagawa was not unduly worried.

Honda Siel has 62 dealers, while Maruti has more than 450 major dealerships.

Honda’s dealers on an average sell 50 City cars each every month.

In August, Honda sold only 40 Citys fewer than the SX4.

And, with the launch of the 10th anniversary City – with added features at a marginally higher price – the company is confident of increasing sales.

Mr Takedagawa said the expansion at the Greater Noida plant was on schedule, adding that company would have a capacity of one lakh cars a year from January 2008.

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