Honda Cars set to throw down the gauntlet

The difference couldn’t be starker. At global level, Honda achieved a landmark output of 100 million vehicles last December since the time it began production in 1963. Yet, it is a different story in this part of the world where Honda Cars India has not had a good run lately (even while its two-wheeler business is growing by leaps and bounds).

After four consecutive years of growth, the company is experiencing a slowdown in cars this fiscal. Between April 2016 and February 2017, domestic sales totaled 1.39 lakh units, down 21 per cent from the previous year. With just four weeks to go before this fiscal draws to a close, it would need a miracle for Honda to surpass the tally of 1.92 lakh units recorded in 2015-16.

While demonetisation was only one of the reasons for the not-so-great growth story, the Japanese automaker’s woes are a result of other factors ranging from a shift in fuel preferences to the infra cess on diesel. Despite these headwinds, the company is upbeat about its prospects here and grow its presence in the world’s most competitive car market.

One part of the rebooting plan will involve better inventory management and new launches for the short-term. The bigger drive will come from a renewed focus on improving buying experience and service quality.

“We took strong correction measures to ensure reasonable and healthy stocks at dealerships,” says Jnaneswar Sen, Senior Vice-President, Marketing & Sales. “As a result, they were able to focus on healthy retails through the year. With the launch of two new models, we expect sales to pick up in the coming months.”

An encouraging start is already underway with the recently launched new City, which has received more than 10,000 bookings since February 1. In the process, the car has catapulted Honda back to the top slot in the mid-size sedan segment with 6,318 units sold last month against Maruti’s Ciaz with 5,886 units. The challenge now is to keep the momentum going while gearing up for completion in the form of the new Hyundai Verna, which is scheduled to debut soon. Honda is also betting big on the WR-V, a subcompact SUV slated for launch on March 16. It will take on the Maruti’s Vitara Brezza and Ford EcoSport.

Sen reiterates that Honda will not steer away from its premium focus in India. “We believe the premium image comes from the entire experience with a brand. This includes excellent products, great dealership experience and cutting edge customer services across all segments we operate in,” he says. The company has grown its network to 332 outlets and the effort seems to be paying off with them ranking top in JD Power’s Customer Service Index.

Honda has also started tapping its Indian R&D base far more aggressively in new vehicle development. The team played a significant role in designing the new WR-V along with their global counterparts. “It is the first model developed by Honda India R&D and this is the first country to manufacture and launch the WR-V,” says Sen.

The success of this product will be critical to the company going forward. For far too long, it has banked on the City to steer its fortunes in India. The Amaze has fulfilled its role in the entry-level sedan place but dynamics are changing rapidly with customer preference growingly by the day for SUVs.

Honda has not made a strong connect with its Mobilio or BR-V and this is where the WR-V becomes even more important. Its corporate brand is its biggest calling card but there are also hardcore realities to contend with in terms of competition especially from Maruti and Hyundai. How Honda handles this new terrain will be seen in the coming months.

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