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2024 : Honda Elevate Report Card | Rise and fall of Honda car brand in India



Honda’s latest offering, ther Elevate, has completed a year in the Indian market, and this article looks into the below-mentioned aspects under three sections.

1. Honda Elevate Report Card
2. Honda Elevate vs. Segment Leader: Hyundai Creta (Gen-2 Facelift)
3. Rise and fall of the Honda car brand in India

Image courtesy: Team-BHP

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Honda Elevate Report card

The segment – ‘Mid-size (~4.3m) monocoque Crossover’



This particular segment has been quite lucrative in India, as it is not only the second largest segment in 2024 but still growing further by 15%. Several car manufacturers have tried their luck in this segment, but Hyundai Creta and, to a certain extent, Kia Seltos are the ones that have achieved sustained success in this segment over a longer period of time. Honda has had two attempts in this segment. The first one was with B-RV in 2016, and now with Elevate, which was launched in mid-2023.

2016 Honda’s 1st Attempt: Honda B-RV



BRV was loosely based on the Honda Mobilio MUV, which in turn was based on the extended Honda Brio hatchback platform, designed and developed for the ASEAN region.

For the BRV's design, it seems as if ASEAN product strategists briefed designers that SUVs from definition per se should have rugged looks.

This transpired into functional roof rails, black cladding, raised ground clearance and the addition of a fake skid plate. And thus the BRV was born out of Mobilio carrying Honda Jazz inspired front fascia and dashboard. Everyone at Honda must have been happy then.

And here in India, Honda was offering the longest car in the segment with the BRV, along with a third row of seats, which competitors didn’t have in India, another functional value for the family-oriented customer segment.



But sales results in India were disastrous for both the products in a thriving segment. The Indian audience completely rejected the very idea of an ASEAN-focused narrow body concept and uninspiring design slapped on India. The newly developed diesel engine was a big savior for both products, as it contributed 45% sales of BRV and 66% sales of Mobilio.

2023 Honda’s 2nd Attempt : Honda Elevate

Design and SUV stance

This time Honda’s Indian management must have been very serious about Indian business, as decisions have real-world consequences. And they must have asked the product planner to make an ‘SUV’, that Indians want.

The designers gave the Elevate an upright stance and designing the rest of the car with modern character lines elsewhere, along with 220 mm ground clearance (highest in segment).

But then that would have miffed Honda’s engineers as to what will happen to the dynamics of a car without a streamline design and high ground clearance that adversely affects the center of gravity.

Engineers could have gone on strike, but Japanese culture of protest is a little different; they simply overwork. Drive the Elevate, and one would realize how Japanese engineers overworked on suspension to give this car a surprising confidence-inspiring handling characteristic around the corners, even with such high ground clearance, without compromising much on ride quality. It is an altogether different experience than what Honda City customers were used to in India.

But then they also could not defy physics, and upright right stance took a big toll on fuel efficiency (15.3 to 16.9 kmpl in MIDC test cycle, carried out at ARAI test center), which is worse in segment. Though real-world efficiency doesn’t drop drastically as in the case of turbocharged petrol engines in the segment.

Pricing



Honda launched the Elevate in India in July 2023, with a single 1.5L naturally aspirated petrol engine having 121 PS power output and 145 Nm of torque, mated to a 6-speed manual transmission, and an option of CVT technology-based automatic transmission on the top three variants. There were four variants, priced between ₹ 11-16 lakhs, with CVT-equipped variants carrying a surcharge of ₹ 1.1 lakhs.

By August 2024, Honda increased the prices in the tune of 3% to 8% across variants in steps. Base variant SV had the highest price increase of ₹ 90,000. Only upgrade SV, V, and VX variants received were 6 airbags, rear center 3-point seatbelt, sun visors with vanity mirror, and a 7” part digital instrument cluster in April 2024.

Elevate Sales Report Card

It has been a year since launch, and now is the right time to evaluate the performance of Elevate in India.



Sales were robust in 2023, with an average run rate of 4,519 units. This is partially due to Honda brand loyalists, who got a worthy crossover product to upgrade to.

From February 2024 onwards, Elevate lost traction when Creta Facelift was launched, and March saw official discounts on Elevate, followed by increased calling to prospects who had shown interest in 2023 but were not offered a test drive due to hardheadedness.

Come April, and sales settled under the 2,000 mark, and the discount amount soared as well. By looking at Elevate’s value proposition, this was predicted by many at the time of launch in July 2023 itself. Now Elevate, with a single engine offering, is struggling to gain traction in the intensely competitive 4.3m crossover segment in India.



But then there are green shoots. By January 2024, Honda India has started bulk export of Elevate from India to overseas markets, including home country Japan. Average export stood at a considerable level of 3,291 units in 2024.



Add domestic and export sales figures in one place, and things don’t look so bad for Elevate. But then there is more than what meets the eye.



Honda India has a production capacity of 10,000 Elevate at the Tapukara plant in Rajasthan to cater to local and export markets, and the same is target for all its suppliers. And by January 2024, Honda has ramped up the production to over 9,000 units, seasonality notwithstanding. But when local demand fell short of targets, Honda India had to ramp down production to near half from May 2024.



With a rapid production ramp up towards the end of 2023, and a slow-off take in the local market, despite good export volume, led to a staggering inventory (finished goods) pile-up of 8,758 units in April 2024 at Honda’s Tapukara plant, filling up all yard space. Eventually Honda has to cut down production to bring down inventory, which is at an alarmingly high level.



To quantify this in financial terms, base variant price is considered here, and GST, dealer margin, and Honda margin have been removed to arrive at finished goods cost, which was multiplied with inventory to get a ballpark figure of finished goods inventory value for that month.

This value reflects under the current accounts side of the balance sheet, which impacts working capital for any company. Maruti’s latest balance sheet in the annual report for reference looks something like below.



Operating Segment Report Card



Creta continues to be the segment leader, in fact, it is now the third best-selling car in 2024 (Jan-July). Kia has reduced production of Seltos to avoid discounts and sell cars profitably; however, it has to offer an insurance scheme and extended warranty as free officially from July onwards to have better traction. Rest everything else is selling at huge discounts.

Conclusion:

The Honda Elevate, which was supposed to be a turnaround project for Honda’s India operation, is not selling well at all in the intended market, i.e., India. Though export volume has the potential to keep the company afloat, but several cost control measures are need to be undertaken to keep the business sustainable with a lower than expected volume.

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Honda Elevate vs. Segment Leader: Hyundai Creta (Gen-2 Facelift)

Q: So why is the Honda Elevate not selling so well in India? The answer also lies in the fact that why segment leader Creta is selling so well ever since its launch in 2015?

A: Because this segment is all about aspirational value, which is much beyond mere functional value.

Design



Design is subjective, and Honda did a fairly good job with Elevate in my view. But facelift Creta took the game further up, which now looks palatable. Honestly, I personally used to hate Creta generation-2 design, and it was quite polarizing. But the new design is clean and more elegant, with those rectangular grille and signature connected LED DRL at the front, make it looks wider and better than everything else in the competition, as is the story at the rear. May be Mahindra Thar Roxx can shake this segment up with its menacing looks, but then that will be another story for the future.

On the interior front, Hyundai changed the whole dashboard design of the Creta, which is something rare in industry from a facelift perspective as it involves high investment. Creta now offers much better in-cabin experience than competition.

Pricing & positioning



Creta here offers three different engine choices along with an automatic option for all. This time, top end Creta FL also gets N Line cosmetic treatment, that too with a manual option on a 1.5L turbocharged petrol engine that even Kia Seltos doesn’t offer.

And here comes Elevate with a single engine option, limited variants, and a limited price range. So anyone looking for a low-running-cost option has to look elsewhere for diesel, CNG, strong-hybrid or BEV. Creta does offer diesel that has a low running cost advantage with no compromise on performance and also the convenience of automatic as an option.

In simple words, with a wider and good spread of price points, there is one Creta for every budget and use case between ₹ 11-20 lakhs, which Elevate doesn’t offer.



For instance, a potential customer has the option to buy a Creta mid-spec SX with a naturally aspirated engine for the same price as the top-end variant of the Honda Elevate, and they will still get a panoramic sunroof, which is a big draw among family-oriented buyers. Moreover, this time, Hyundai’s engine is more refined and fuel-efficient than what Honda has to offer. The only place where Elevate has edge is better boot space and practical design for storing more luggage.

Honda Elevate feature gap



A close look at the feature difference between Creta and Elevate top end variants, shows that there is no true top-end of the Elevate, i.e. beyond the 2018 Creta 1st generation facelift benchmark, Honda has not developed any feature that has high functional value, like ventilated front seats, or emotional value, like a panoramic sunroof.

Basically, Honda is trying to sell a challenger to the Hyundai Creta gen-1 facelift (2018) in 2024. Bringing a knife to a gunfight is a sure-shot recipe for disaster, which is what the Honda Elevate is right now. Even Maruti has been trying so hard with the Grand Vitara since 2022; then why could Honda not do the right feature set development even in 2023?

When purchase decisions are made based on aspirational value along with practicality, Honda fell short to deliver any ‘wow factor’ over entrenched competition to an ever-demanding Indian audience, despite being late to the party.

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Rise and fall of the Honda car brand in India: Glorious past to obscurity



Glory Days (1998-2010): ‘Growth driven by premium product range’

Honda India has had a glorious past of selling premium sedans like the City, Civic, and Accord with premium interior offerings (relatively) and i-VTEC petrol engine technology in those days that has built Honda’s premium brand image (Graveyard of premium sedans) in India.



Honda City



Spanning over 5 generations, Honda City is the oldest nameplate alive in India. When launched in 1998, it was sandwiched between the Opel Astra and Mitsubishi Lancer on the higher end and Maruti Esteem on the lower end of the price spectrum and perceived premiumness. It instantly gained 14% of sedan market share and thereon started building the foundation for the Honda car brand in India.

In the ensuing decade, it not only became a status symbol but also a yardstick of success for middle-class Indians; doctors and corporate executives loved it, which added to the aspirational value of the Honda car brand in India.

Honda Accord



Honda has actually kick-started the premium sedan category in India by launching the global sixth generation of the Accord in July 2001. Initial numbers were not so good, as specs were on the lower side and pricing was on the higher side; also, a generation change was due.

By 2003, Honda replaced it with a newer generation, and the Accord became the segment leader for years to come. Honda has even launched a V6 engine for performance oriented buyers.

Early years for the third generation (India) were good, but the latter half of PLC turned soar as Accord was available with a petrol-only engine, for which demand dried up. So Honda has to make a tough call and discontinue the nameplate.

Honda Civic



With ingredients like a sports car-like silhouette, a twin pod taillamp inspired from Ferrari, a futuristic aircraft like cockpit, and a spirited 1.8L naturally aspirated petrol engine, the Civic became an instant hit among young buyers. Thus, Civic also achieved its highest ever sales mark of 17,329 units in 2007, which is also the best in the segment. Civic often used to scrape its belly on Indian roads due to the low ground clearance and limited boot space it offers, which were major purchase deterrents. The lack of a diesel engine and high petrol prices after 2008 made Civics’ life more difficult, forcing Honda to pull the plug in 2012.

Rapid Rise & Decline (2011 - 2020) : ‘ASEAN region focused product launched in India’



From commanding premium brand image (1998-2010), Honda transitioned into a decade (2011-2020) of selling low-cost ASEAN region-focused products (Brio, Mobilio & BRV) for cost synergy and taking fight to Maruti’s territory to expand presence and market share in India.

These products flopped in quick succession in India and tarnished Honda’s brand image. Amaze survived after a facelift that has drawn looks from the global Accord.

The biggest folly here was not taking into consideration the likes and dislikes of Indian customers. That teardrop headlamp design might work well in the East Asian market, but in India it simply bombed. Interior quality took a sharp plunge as Honda was trying to benchmark Maruti’s cost structure in India.

Diesel Engine Strategy (2013-2023)



The diesel engine developed to address the Indian market at the time of high crude oil prices did work out quite well initially, as Honda’s diesel mix reached up to 53% in 2014. Later, demand has retrenched in the sedan and hatchback segments in general as the government stopped cross-subsidizing diesel in India. Since Honda’s UV portfolio just collapsed in 2017, demand for Honda diesel cars was just reduced.

Still, Honda was able to upgrade the 1.5L diesel engine in the stricter BS6 emission compliance phase. But when BS6-RDE norms came into existence in April 2023, Honda decided to stop diesel engine production completely, and Elevate today neither has diesel nor strong hybrid to attract buyers with low running cost need.

Collapse of premium product portfolio

Honda relaunched the Accord in 2015 as a CBU strong hybrid but it was discontinued in 2017. Due to CBU imports, Accord got outpriced in the segment, and sales were a disaster!

In 2019, Honda relaunched the Civic with a similar petrol and new diesel drivetrain. After only three months on the market, Civic's sales have slowed due to the mismatched value proposition of the drivetrains on offer. Diesel was underpowered, that too without automatic transmission option, and petrol was paired with CVT transmission only, which robbed the driving performance. Rear seat was too low positioned for the Indian market, and the sloping roof line reduced rear headroom, so back seat prospects simply ditched the idea of buying a Civic.

A CKD assembly line was located at Honda’s Greater Noida facility, and while shifting operations to a new plant located at Tapukara in Rajasthan, Honda didn’t have a business case to set up a CKD assembly line because the Civic and CRV weren’t selling well due to Honda’s own fault. Finally, Civic and CRV were discontinued in 2021.



Right now Honda is back to square one in India – in terms of volume, market share, ranking, and product portfolio size.



With falling sales of Elevate and City in 2024, Honda is struggling with a brand identity crisis too. Question: What exactly does the does the Honda car brand in India stand for now?

Cutting edge technology, innovation, premiumness, luxury, desirability, sportiness—these are not the words that come to mind when one thinks about today’s Honda.



But a look at a nearly two-decade-old Honda Accord brochure sums up these words quite well.

If somebody thinks that Honda is at least getting basics right with Elevate or City, then they should know that two decades ago Nokia was also getting basics right, and that’s not winning formula for the future. Today Maruti Eeco also has basics right at the right price, but not everybody wants to own Eeco, isn’t it? Otherwise, it has been selling 40,000 units a month. Today’s customer wants the ‘wow factor’!

Honda India Profitability

In an article, Autocar Professional claimed that Honda India has turned back to profitability in FY23. But these headline figures do not explain from where profit is actually coming, i.e., from product sales or allied businesses like aftersales or exports to interlinked companies, as it further involves transfer pricing, sustenance funds from HQ, royalty payments, etc. Especially in the case of MNCs, which have complex and veiled integration with global P&L.

Moreover, Honda has quite a big car park, as it has sold over 20 lakh cars in India and has a good retention rate at the aftersales touchpoint, which is quite profit-rich business for the brand as well as dealers.

But again, the problem is that if product sales don’t bring in profit, companies get into austerity measures, and it is difficult to work with such companies where operations are unnecessarily lean and every penny spent will get scrutinized. There are many such examples, like Jeep-Citroen, Skoda-VW, and Renault-Nissan, where India’s standalone operation is not profitable by selling cars in India, and they earn profit only from aftersales and export business, along with sustenance funds coming from HQ. Their IT and ITES offshore support businesses are housed in separate legal entities, just like Ford.

The austerity situation was similar at Tata and Mahindra before the pandemic. However, if turnaround goes well, then money is spent like water too. For example, several Mahindra’s factories now have large illuminated lettering on entrances since 2022!

Honda India Future

As per the Autocar report, Honda is developing a new platform codenamed PF2 for the future. But with no new crossover launch expected before 2026, Honda India has to rely heavily on export volumes and sedan products (Amaze new generation and current City facelift) in the declining segment.

Honda Elevate's poor show now casts serious doubt on the success of products based on the PF2 platform. Unless Honda starts reimagining Indian business with its own glorious past as true inspiration.



For that matter, every brand in India with monocoque underpinnings should aspire to have a future product portfolio something similar to the above, with a lot of innovation, to be future-ready. There is no sedan here, so Honda should drop the idea of the City new generation and channelize all its resources on the UV category.

[Aditya]

Thread moved out from the Assembly Line. Thanks for sharing!

[sharmanova]

As usual, great analysis pqr

Honda seriously messed up with the Elevate. Only single NA engine option, in a segment where competitors offer Turbo petrol/Hybrid/Diesels at similar prices. Elevate gets only necessary features whereas the Indians/Koreans offer much more. I agree, the price of Elevate ZX is much less than the top model of other SUV's, but when competitors offer more for some extra price, customers are ready to spend that 3-4 lacs extra on Creta/Seltos etc.

Elevate is a car which should've been launched in 2018 but alas Honda launched it in 2023.

[Buzzard_storme]

Wish folks from Honda read this and take it up seriously. With the onslaught of the homegrown TATA and Mahindra, it's going to be difficult for everyone else in the market, save for Maruti and Hyundai!

[StraightDrive20]

Wonderfully put together insights. Honda’s glorious past and the current obsolescence has remarkable parallels to some of the other marquee brands like Nokia who couldn’t innovate timely or simply placed their bets wrong.

Not everything has lost yet for Honda in India though. Elevate remains a product with strong potential if they can bring a facelift quickly which is more 2025 than 2018.

[CrAzY dRiVeR]

Originally Posted by Buzzard_storme

Wish folks from Honda read this and take it up seriously.

Originally Posted by StraightDrive20

Not everything has lost yet for Honda in India though.

The number of mistakes Honda can afford is something other brands would be so envious off! Imagine a brand coming out with all of the below and people still hoping they will do better soon!

- Mobilio
- B-RV
- 4th generation City
- The diesel debacle
- New generation civic with all the wrong options
- Discontinuation of all premium models
- Nothing except Amaze planned for next 3 years
- Launching their most important product - the Elevate with an average spec sheet, options list and engine options!

Coming to the Elevate - the media reaction as I attended the first unveil event itself should have warned Honda that it is not going to be a hot seller. Its a product without a proper USP just trying to keep up with the competition in multiple categories and never managing to achieve the bar in any!

[SmartCat]

I suspect Honda's focus is elsewhere:



Honda is probably speccing its products to suit ASEAN markets. After all, ASEAN region has GDP equivalent to India's, half of India's population and 2x to 3x GDP per capita.

From Honda's point of view, their strategy is working well:

[Vernafied]

Not to forget the service quality of their service centers. My 5th gen City is due for 50K service and I am not able to gather the courage to go to ASC instead of thinking about FNG but not sure about spare parts availability.

[SchnelleKurven]

I was recently looking to the Honda city ZX manual (4th city in family) for a wife/kid/driver use case.

After following up for test drive (got it after some time) there has been zero interest from the dealership to even give a quote. I am amazed that when the brand is facing dearth of buyers, it is the probable buyer that is following up. Says a lot about the brand. A very sad Honda city fan.

[Dead_Pedal]

Originally Posted by Vernafied

Not to forget the service quality of their service centers. My 5th gen City is due for 50K service and I am not able to gather the courage to go to ASC instead of thinking about FNG but not sure about spare parts availability.

True. The quality of work has gone down with their usual "not my car" attitude. I've never walked out of a Honda service center post service without being satisfied with them.

Unfortunately, Honda genuine parts aren't available on boodmo anymore. Please correct me if I'm wrong.

Part availability at Honda service centers usually isn't a problem with the tiny portfolio of their products on sale. Issue is with their discontinued models whose parts take a week or two to arrive but availability has never been an issue. Hopefully, with their new warehouse coming up at Dodballapur things should improve(at least for customers in South India).

[M00M]

Originally Posted by Vernafied

Not to forget the service quality of their service centers. My 5th gen City is due for 50K service and I am not able to gather the courage to go to ASC instead of thinking about FNG but not sure about spare parts availability.

There’s no issue with the servicing. I have 3 Honda and all 3 are discontinued models . The only issue is with OEM accessories as no one keeps them but the parts are all available on order from the factory.

Anyone considering a sedan should in my eyes buy the city it’s a far better product than the competitors . And elevate is much more balanced product then the competitors. Every one cribbing about engine power I have to ask where is the speed limit to push the car ? It’s strange we complain about turbo this and that but the German trip has stuck around with the same 2.0 and 2.0d since 15-20 years and no one seems to complaint about that .

Elevate is a good product, balanced and far more reliable than any Korean .

[theabstractmind]

BR-V was an underrated product. Functionally I think it was a car built for the large families. The kind where it would have ideally slotted between an Ertiga and Innova. What they possibly didn't realize is that people saw a Brio underneath - the first folly. Next, form over functionality is something we Indians are okay with, not the other way around, unless the product is from a particular manufacturer. It was underspecced for the price. At that price point, they should have matched the features on a Creta to stand a chance. Finally, the death of diesel and lack of a Diesel AT cost it. It should have become a good airport vehicle, or a multi-purpose family vehicle with ease.

And, even though I personally didn't like the 5th Gen City for its light nature, I think Honda's typically age well. And inherently use longer lasting materials. And I have rarely heard that they ever broke down. Possibly that reliability and long-lasting quality is what makes them more expensive. But, the public doesn't want it, all the more now when average replacement cycles for a car is seemingly lower. I don't have data, but the sheer number of less than 3 year old cars in the used market is a marker.