Less than a decade ago, Honda was a formidable player in the indian car market.
It had a lineup of only 4 models (very small as compared to other market eaders like maruti Suzuki and Hyundai motor) but each of these 4 ( city, cvic, cr-v, accord) were leaders in their own segment.
CITY= sedan
CIVIC = top premier sedan
CR-V = premier SUV slot
ACCORD = luxury executive saloon category
Today, there are 10 models and none of them are leading its segment.
Premium hatchback, HONDA JAZZ failed to gather momentum
Small car BRIO was a non-starter.
Compact sedan AMAZE started well but lost steam with sales falling 38% in 2016-17 compared to the previous year.
MVP MOBILO and compact SUV BR-V have been resounding duds.
Its latest offering WR-V, a stylised version of the JAZZ launced in march this year, on which the jury is still out.
Honda was a brand with strong brand equity. It was known for its attention to quality and stylish, techno driven products whih enabled it to command a premium over its competitors.
SYMBOLISIN ASPIRATIONS
Entered india in 1997 in partnership with Siddhrth Sriram of Usha International Ltd.,
when ar market of india was in its infancy
competition was limited
Maruti(market leader) was a public sector entity
It didn’t have any motive of challenging maruti in the small car market, which maruti dominated. It aimed at creating its space in premium segment.
Honda brought products that had succeeded elsewhere and was also attuned to indian conditions( globally popular models might not work in india like companies like GM and Ford have found to their chagrin)
But the 1st generation Honda City, which it introduced in 1998, hadn’t been tested in other contries. It was developed in Thailand, where conditions like tropical climate, are similar to India. In the 1st yr of its launch, despite high prices, CITY sold 8258 units- a runaway success. Till date, 671,000 units have bo=een sold in india, more than any otherfull sized sedan.
Honda innovated with dealership and reaped benefits. 1st auto company to have multi storey dealer outlets, thanks to partnership wth 6 overseas enterpreneurs ( led by r.s.lally (London based merchant company)).
Marutis outlet looked shabby.
Honda provided spare parts and after sales service
MASAHIRO TAKEDAGAWA, the then ceo of honda siel cars india (hsci) said at launch of civic in 2006: “once a customer uses honda, they should never go to other brands”
MASS MARKET GAMBLE:
Honda then entered mass market
Mid 2009, launced premium hatchback JAZZ, pitching it in the same category as maruti’s 4 yr old highly successful SWIFT as there.
But they charged high price( swift= 3.99 lakh and jazz=6.99 lakh)
Such pricing power worked in upscale segments, in the small cars slots the vital factor are:
Price
Fuel economy
Cost of after sale services
On al 3, jazz suffered In comaprision to maruti.
BRIO came next and price was more competitively priced. But it lacked premium quotient that customers associate with honda. Its desgn too failed to express.
AMAZE came next in 2013. Honda ventured into a Diesel variant. By 2012, thanks to petrol prices being deregulated(previously, govt sold petrol at a subsidised price and now they have removed subsidy and prices of petrol change wrt its price international market. Now petrol prices have fallen in international market but govt. isn’t reducing the prices so deregulation is only for name’s sake) far before diesel prices, ( PETROL PRICES INCREASE FROM IN 2010 TO IN 2012) diesel cars ( far more economical in terms of fuel) comprised 52% of the market. It was a success and company’s overall sales rose by 83% in FY2014.
Honda’s diesel engine (only 1) hasn been able to match the refinement of its petrol counterparts. Its iVTEC petrol engine ( for small cars) has drawn global laurels. But it has no diesel equivalent, unlike its Japanese rival TOYOTA. Honda’s diesel engine is noisy.
AMAZE was cheap costing car and so helped honda expand to smaller indian cities.
But success was shortlived. Honda came into diesel cars too late:
Other companies already there
Late 2014, govt. deregulated diesel
Supreme court’s 2015 ruling against large diesel cars further reduced their attraction ( ban sale of diesel cars and SUVs with engine capacity of 2,000cc . toyata, Mahindra & Mahindra, Mercedes bens were adversely affected. Maruti Suzuki, Hyundai, honda nt much affected as they’ll be able to sell their smaller engine diesel cars.) All diesel varients including honda’s suffered market share falling by 26% by 2016.
With amaze’s success, diesel car at one stage accounted for 67% of honda’s sales and now fallen to 25%.
Encouraged by AMAZE’s initial success,Honda launched MOBILO and BR-V,which too had diesel variants and was originally designed for Indonesian market. But it was bad timing as market was starting to shift back to petrol.
This vould have worked in advantage of honda given its legendary petrol engines, but it hadn’t.
BR-V (petrol and diesel variant) sold 20,417 units in 2016-17. Maruti’s BREZZA sold 108,640 units and Hyundai,s CRETA sold 96,899 units.
Insiders claim that honda was late in responding to petrol shift and continued oversupply of diesel cars.
The company blames the market for its sustained 15 month sales decline till march this yr.
THE ROAD AHEAD(-ves)
2012: split with its 15 yrs partner Shriram, leading to parent honda Motor Company taking full control and HSCI changing to HCIL.
At a time, when its competitors were focused on binging new products, honda was preoccupied with these internal differences as well.
There was instability even after separation ( 4 ceos in last 6 yrs)
India’s branch is managed by Honda’s Thailand subsidiary (Honda Automobile Thailand Co.) and has little interaction woth the Japanese parent.
Honda has a fall back in Accord and Civic in recent times.
Accord was relaunched with hybrid versions at a price of 38-40 lakhs.
THE ROAD AHEAD(+ves)
2 plants ( Greater Noida and Tapukara in Rajasthan) and going ahead with building a 3rd plant in Vithalapura in Gujarat.
It is optimistic about its latest launch WR-V (HAS 20,961 BOOKINGS SO FAR)
Company claims that the CITY too is on an upswing , a 22% increase ocer the same period last year.
CIVIC was discontinued in 2012 bt is likely to be back.
New model (mini-MPV freed ) s on the cards a well.
“We are are on a strategic curve. India is the 4th largest market after us, japan and china. We have strong tradition of bestsellers in india and our new generation models will e establish that all over again.” Says Uneo.
Kashvi Gandhi 