Toyota and Honda face their toughest test yet in India over the next few months as they grapple with reduced output while keeping rival carmakers at bay.

The catastrophe in Japan has severely affected the schedules of parts suppliers and sources say it will take another six months before production is back to full swing in the India operations. Toyota has indicated that it will work at 30 per cent capacity in its Bangalore facility till early June while Honda will halve output at its Noida plant beginning May.

“It will be a slow crawl and full production is likely to resume only by November-December. All their plants across the world are facing a similar predicament and India will also have to wait till then,” an auto sector executive told Business Line .

Both companies were betting big on their compact car launches this year. Honda has already put out the Brio in the Thailand market and India was to follow in August-September. In the case of Toyota, the Liva hatchback was scheduled to hit the roads in June. The two cars will be part of the growing B plus segment and priced under Rs 5-lakh.

Prolonged Waiting

A slight delay in the launch of the Liva and Brio is not likely to hurt either company. The bigger area of concern is to ensure that existing models do not lose out to competition in the event customers get tired of waiting beyond a point. The likes of Maruti, Hyundai, Ford and Volkswagen are just not going to sit back and do nothing.

Honda's City is a strong brand in the mid-size segment but VW's Vento is emerging a strong rival to contend with. Likewise, the SX4 from Maruti continues to draw buyers and the recent diesel option will only increase the momentum. “Honda will have its task cut out in the next few months to ensure that its loyal base of City customers do not shift camp,” sources said.

In the case of Toyota, the bigger area of concern relates to the Innova which has been growing from strength to strength with monthly numbers averaging 5,000 units. Since output will be slashed by 70 per cent till early June, the waiting list for the vehicle is going to be extra long through this calendar. It now remains to be seen if this translates into greater demand for models like the Mahindra Scorpio and Xylo.

Likewise, the recently launched Etios sedan garnered over 20,000 bookings but it is unlikely that customers will wait for months now to get their deliveries. Cancellations are inevitable, sources say, though it is hard to predict the quantum. In the process, models like the Hyundai i20, Swift DZire and the rechristened Mahindra Verito (the erstwhile Logan) could benefit.

Both Toyota and Honda know that this is only a momentary hiccup except it is happening at a time when they were gearing up for the second phase of growth. “The next few months will indicate to what extent their brands continue to command customer loyalty. If everything goes off smoothly, the stage will be set for the Liva and Brio to take off strongly,” an auto sector official said.

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