Honda India's near-term plans for 2014

We attended a Round Table chaired by Mr Jnaneswar Sen, Senior Vice President Marketing and Sales, Honda Cars India.

About the Mobilio

• Mobilio will be launched in Q2
• Pilot production going on at Greater Noida
• Both Petrol and Diesel variants will be offered
• 90% localised
• Internal space should make it a segment leader - He refused to comment more on actual dimensions since vehicle needs to undergo homologation
• Space for 7 passengers
• Attractive styling
• Good fuel economy
• It will be longer than the Ertiga

About the Jazz

Honda Jazz will come in later this year in diesel and petrol

• Still deciding on model variants
• Still deciding on production location
• Will come with an automatic variant
• Will be competitively priced - Honda wants volume. 72% localised
• I got the feeling they might miss the festive season and launch soon after that. Reasons being Mobilio takes priority and the new plant has not reached full capacity as yet.

Other Products

• The Vezel will NOT come to India
• Still to decide on a small SUV - cost, segment appeal, forecasted numbers are still not clear in order to take a decision
• The CRV will not come with a diesel in the foreseeable future
• The Civic replacement will not come for a while as the segment has shrunk. In fact, total segment sales are much smaller than the total number of Civics Honda used to sell at one time
• A contribution to the shrinking D segment was that the City and Verna provided very similar space etc. for a much lesser price
• The current Civic saloon cannot take the diesel engine
• Honda are focusing on volume as a strategy and also to please their dealers
• Diesel / Petrol split for the Amaze and City is 55/45
• Petrol sales are improving since people are anticipating diesel price hikes
• Current waiting list: City = 3 months, Amaze = 3 weeks
• New Accord might be introduced. Honda hopes to counter the Superb with better styling, and in terms of space & comfort (very subjective factors)
• The possibility of an Accord hybrid was not dismissed
• Don't see product cannibalisation as an issue, the high end Amaze buyer and the low end City buyer might share similar demographics, but the psychographic profile is totally different

Will the Amaze be revamped with equipment to counter the Xcent?

No - Honda will focus on durability, quality, reliability, fuel efficiency and space. You can add accessories but you cannot add space!

Financials

Financial Year ending 2014 has been rewarding due to the following factors:

• Introduction of the diesel engine which has propelled sales of the Amaze and City
• Capacity has been enhanced by the second plant in Rajasthan coming on line
• 2013-2014 - Highest annual sales in India have been achieved. 1.34 lakh cars which was an 83% growth (admittedly from a lower base)

Production

• Future expansion will come from Rajasthan which has three times the space (Noida 150 acres, Rajasthan 450 acres)
• 10,000 Amaze and Brio were exported (mainly to South Africa)
• Rs 232 crore of components were exported
• Honda exports diesel components to the UK
• 2016-2017 production is targeted at 3 lakh cars. Honda India want to contribute 5% of all Honda cars sold. It is currently 3%
• Labour relations are an integral part of Honda's respect for the individual policy. No contract workers for core functions. All manufacturing personnel are actual associates or trainees
• Efforts on to ramp up the Rajasthan plant to meet demand
• Noida produces 1.2 lakh cars per annum on three shifts
• Rajasthan is yet to achieve 1.2 lakh cars, Honda are being cautious about introducing additional shifts too soon

Dealer Network

• Expanding this year from 170 dealers in 17 cities to 250 dealers in 25 cities
• Big push is in Tier 3 cities
• Getting dealer principals on board is not an issue
• Only one dealer in a tier 3 city gave up the Honda franchise ever
• South India accounts for 37% of the market. It's a little weak since diesel cars are a dominant factor

Couple of Interesting Nuggets

• Honda actually created the homologation regulations for hybrid vehicles for the Indian government in order to introduce the Civic hybrid
• A lot of manufacturers are looking at how the Celerio AMT will perform, as this could restructure the whole market. Honda had an AMT Jazz, but it was not reliable in the long term
• Spurts in customer demand happen due to fear of price rises (as opposed to actual price cuts)