Will Honda India get back on the road?

“We had a big slipped disc a few years ago and this year is our hospital period,” is how Honda India President and CEO Yoichiro Ueno describes the current condition of the auto major in India.

Faced with slow growth and high inventory, Honda has been struggling in the Indian market for the past few years with increased competition and diminishing marketshare.

“The biggest problem was our inventory. I came in April and the inventory level was extremely high. Also, it was slow moving so it was extremely difficult for us to clear that. Our sales efficiency was down. And people had already shifted to petrol. So we offered discounts on diesel but it was still not easy to move the inventory,” Ueno told BusinessLine .

He said the issue was almost fixed by around October but then again demonetisation struck in November and sales again continued to drop through December-end.

“Currently the inventory levels look healthy. We are making a lot of changes in our marketing activities and we are now developing a lot of retail tools for enhancing dealer operations. These activities will eventually improve the efficiency of the dealers,” he said.

Honda is also trying to regain lost marketshare by bringing in more models to cover different price points. The biggest category for the company — as is for the industry — are the compact and full SUV segments. Honda already has models such as BR-V, WR-V and CR-V in the market and, according to Ueno, the company is also planning to bring its higher end SUV called HR-V soon to Indian shores. The Japanese automaker could also relaunch Civic in India very soon.

“Honda used to sell Civic and Accord in India but now we only have Accord Hybrid here. Our traditional customers want a replacement and those cars are a part of our future line-up candidates,” Ueno said.

However, the Civic segment, according to Ueno, is still a small market. But in the same market, SUVs and MPVs have a bigger demand in India and that’s where HR-V will fit in for the company.

“The Civic segment is only about 15,000. But, if we see the price range, there are some SUVs and MPVs in that segment. Customers in India can switch the segment easily. The volume in that segment is much higher and as the GDP increases, the volume will also increase,” he said.

Ueno further said the new City that was launched last month has seen over 14,000 bookings. However, WR-V doesn’t seem to be enjoying similar excitement among consumers, with only 1,400 cars booked since bookings opened eight days ago.

To create demand, Honda is now trying to position itself as a premium brand in each of the segments it operates in by bringing in more features and cutting down on barebone base models.

“In order to achieve premium-ness in that segment (WR-V) it is important to have the equipment that are best in the segment. So we are trying to modify our specifications. In WR-V, we’ve completely eliminated the base segment and launched only quite fully equipped models,” Ueno said.

However, with stiff competition from its Japanese and Korean peers, it is yet to be seen how the strategy plays for Honda.

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