Till Diwali, sales will be lower than last year: Honda Cars India CEO

S Ronendra Singh New Delhi | Updated on July 16, 2020 Published on July 16, 2020

Honda Cars India Ltd (HCIL), on Wednesday, launched the all-new City, a model which has been the bread and butter for the company since its inception in India. And, with this latest launch, the company is also expecting a spike in its sales in the coming months. However, due to the Covid-19 pandemic, the company is not expecting a growth or same level of sales as of last year. The company had registered annual domestic sales of 1,02,016 units during fiscal year 2019-20, a decline of 44 per cent from the 1,83,808 units sold during 2018-19. The company’s sales had tumbled to only 1,398 units in June, compared to 10,314 units in June 2019. In an interview with BusinessLine, Gaku Nakanishi, President and Chief Executive Officer of HCIL, shares more — the industry and company plans. Excerpts:

The City launch has been one of the most awaited launches of this year. But, in the current scenario, what are your expectations?

As you may know, this is the time when we have shifted from BS4 to BS6. Our BS4 to rundown and the BS6 product to start was planned for the end of March. But, due to the lockdown we had to stop all the operations for BS6 production. Then we had stopped from the end of March...April, May production zero, wholesale, retail sales all zero. However, from June we moved to the unlock phase and we started production from June 15 at Tapukara plant and Greater Noida plant. At the same time, we took the BS6 classification of the new City, W-RV, and the Civic. So, in July we are expecting better sales than in June. Having said that, the plant has not started 100 per cent work, as there are restrictions and only one shift at this point in time at the Greater Noida plant. So, we have just touched 60 per cent production; we hope to touch 100 per cent by September.

The City has been the bread and butter for Honda Cars India. What campaigns are you doing for other brands/ models to boost sales?

Yes, Honda City is the bread and butter, and Amaze is another key business for India. From the segment-wise decrease in the market, our sales model by model have decreased. However, in case of Amaze, from the market share point of view, we are now maintaining market share. For other models, we have just started domestic production of W-RV and Civic. The actual situation currently is that a lot of people like SUV shapes. But, we believe that there are diversified customers who like sedans and crossovers; so for these customers we try to cater our product strongly.

In terms of the market, how are the responses coming from across the country since there is still lockdown in many parts and you have limited dealerships also. How are you maintaining the supply chain on that?

More than 90 per cent of dealerships are already working. But, in States like Maharashtra (Mumbai area) and Tamil Nadu (Chennai area), we are still struggling to open dealerships because of the restrictions of lockdown by the government. And, the supply chain, especially from China and domestic procurement, we are carefully monitoring the imports from China. However, we could not find any big problem or concern to stop the supply chain.

The market dynamic has changed a lot during the pandemic, including the diesel prices going up. Honda is young in the diesel segment but with prices increasing day after day, are there any demands for diesel cars?

I was very surprised by the spike in prices of diesel. But, we expect that after some time, diesel prices will come down to normal rates. Also, this is a very abnormal situation, as before Corona we (had) decided to continue diesel models because we found that a good number of customers want diesel vehicles. For instance, in case of (Amaze 15 per cent), W-RV (50 per cent) and Honda City (15 per cent) customers still ask for diesel variants.

What are the overall expectations in the car market for this year?

We might suffer from lesser sales numbers by the end of this year in comparison to the previous year. But, from January 2021 onwards, we hope sales will be back to the numbers as in the previous year. Till Diwali, sales will be lower than last year, but we hope to reach the same numbers as last year after Diwali. We have suffered a lot in April, May and June this year, and now we are trying to recover as much as possible. However, it is very difficult to reach the same sales number as last year.

What are the long-term plans, especially in electric vehicles? Other Japanese counterparts are tying up with each other, they have set up their battery factories also. Is there any concrete decision by Honda on this?

At this moment, I am not sure. If you remember, about two years ago, we talked about our electrification strategies. About two years ago, we gave a statement that we will start electrification within three years. But now, our start will be with Hybrid because we think Hybrid is the most realistic option to reach EV. Regarding the timings, it is also not changed. We will start launching Hybrid models from next year.

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Published on July 16, 2020
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