‘Amaze is doing the job well for first-time buyers’

Murali Gopalan | Updated on: Mar 14, 2019

MD of Honda Cars explains why the Brio had to go

It was in February when Honda made known that it was discontinuing production of the Brio compact model in India.

At one level, this decision was inevitable given its falling sales here. Yet, to those associated with its journey, there could have been a sense of regret about a brand that promised plenty but could not quite deliver eventually.

Gaku Nakanishi, President and CEO of Honda Cars India, admits that it was “an emotional moment” to slam the brakes on the Brio in India. Yet, as he puts it, from a logical/rational point of view, this had to happen especially in the context of limited resources.

Had this not been the case, the sky would have been the limit and the company could have done anything it wished to. “With limited resources, the strategy should be which area to focus on and based on this reality, Brio production was stopped,” says Nakanishi.

New Amaze

The spotlight has now turned to the second generation Amaze, which was launched last year and has been “well appreciated” by the market. The car has started to give Honda the momentum in getting first-time buyers, which the Brio was intended to do in the first place. “Amaze is doing the job well given that 30 per cent of its base comprises first-time buyers,” says Nakanishi. This is also in keeping in line with market trends where customers are moving away from entry-level options to SUVs and premium hatchbacks.

Brio continues to be sold in many ASEAN regions like Indonesia, the Philippines, Vietnam and Thailand, as well as South Africa. Nakanishi also reiterates that the decision to stop its production in India had nothing to do with the imminent Bharat Stage VI emission norms that come into effect from April 2020. “As for BS VI, we are perhaps the only company which will change our entire line-up including petrol and diesel powertrain within the deadline. We would have changed Brio as well (had it so required),” reiterates Rajesh Goel, Senior Vice-President and Director, Sales and Marketing. Nakanishi chips in to add that the company is not worried about BS VI and is gearing up to meet the new deadline. The plan is to continue the present BS IV models till end-December this year.

“We will discontinue BS IV models from January onwards of 2020. This literally means that between January and March, model by model will see the transition to BS VI from time to time. The exercise will be completed by end-March,” explains Nakanishi.

During this transition, every auto-maker has its work cut out in balancing the phasing out of old inventory while getting ready with the new BS VI stocks. The Honda Cars India chief admits that stock management will be “very sensitive” though the company is completely ready from the technological point of view. “How many BS IV vehicles we will produce and sell while switching to BS VI efficiently is the challenge. Priority will be decided not only form the viewpoint of sales (of individual models) but our development schedule on BS VI application,” says Nakanishi. Clearly, it is going to be a challenging task but much harder for Honda’s two-wheeler arm, which produces over six million scooters and motorcycles annually from four plants located across different parts of the country.

For now, Nakanishi is doubtless keen on getting the mojo back in Honda Cars. Sure, the Amaze is doing well as also the City, which is perhaps India’s longest surviving car brand but a lot more needs to be done.

Sedan line-up

“Looking at the history of the Indian market, the hatchbacks led the way but preferences are not the same now. We need to satisfy changing demand,” he says. Right now, Honda has pretty much completed its sedan line-up right from Amaze and City to the new Civic and Accord.

The idea is to keep sedan customers within the Honda family where they will move from the Amaze to City. Prior to the Civic, the only other option was to move to the more expensive CR-V and Accord “which are huge gaps” in pricing. “Civic should have the responsibility to draw from City,” says the MD, even while it is part of a segment that is barely averaging 600 cars each month. Honda is hopeful that going by the initial response to Civic, the momentum should return in this product category. Nakanishi is only too aware of the growing demand for SUVs and even while his company has models like the WR-V, BR-V and CR-V to offer, a lot more needs to be done. “We have to work harder on the SUV space,” he says.

Published on March 14, 2019
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