Honda Cars India head says incentives will only have a temporary effect

For a long time, Honda Cars India has lagged behind even as competitors have raced much ahead with their new offerings. However, in the past few months, Honda Cars India is back into the competition as it introduced a diesel-powered entry level sedan, Amaze and then followed it up with the latest City. CEO and President Hironori Kanayana was interviewed recently on the company’s strategy to move forward in the race and their plans to introduce a new SUV for the Indian markets. He also spoke at length about adding more dealerships and pressed the need for a just treatment from free trade agreements from Indian authorities.

Honda has exponentially grown and the carmaker’s global sales for the previous financial year reached four million mark for the very first time. For the upcoming 2016-17 period, he added that Honda is aiming for a target of six million sales and the majority of the increase in sales is likely to come from developing markets like India. This implies that Honda should be focusing more on these markets and understandably, it will have to produce more cars to meet the demand of the Indian market. Honda had not introduced a diesel engine car and thus, for expanding the market presence, they launched the Amaze sedan and will also be introducing more cars in the coming financial year. Among its new upcoming cars,  a lot of buzz is already catching up on an MUV and the new generation Jazz, known as Fit in international markets.

The strategy’s second key element is to focus on rising localized content while manufacturing its cars. One reason for this is the difficulty felt in procuring items from overseas owing to the declining rupee. The Amaze entry level sedan was manufactured with 90 percent of content procured locally while the City was built with 92 percent local content. The third element of Honda’s strategy is focusing on tier 2 cities and towns in India. By the month of March, the company wants to have 150 new dealerships spread in different cities and 20 of these to be in new cities and towns. By March, the company is also aiming to have 170 dealers spread to 110 cities as opposed to 102 cities. Honda does not have dealers in tier II and tier III cities and quite obviously, Honda is awaiting more customers from these regions.

The CEO and President also spoke about how the Japanese auto giant looks to fill gaps in their product portfolio. Honda has already announced its plans to launch an MUV and is also looking to introduce an SUV and some other models so it really has several choices to explore. Honda plans to launch the SUV in a couple of years. The CR-V is already doing good business and thus, they are looking for something that falls in the below Rs. 20 lakhs segment.

Honda will be keen on producing more petrol-run cars for the Indian market. The CEO also added that the fuel subsidies in India will not beneficial in the long run.