Honda expects India biz to get back on track as it looks to re-enter SUV segment next year

PTI, Sep 18, 2022, 5:14 PM IST

New Delhi: Japanese auto major Honda expects its India business to get back on a growth path as it gears up to re-enter the high-selling sports utility vehicle segment next year, as per a top company official.

The company, which is present through a wholly-owned subsidiary in the country, currently does not have a presence in the sports utility vehicle (SUV) space, which has now become the largest segment in the over 30 lakh per annum domestic passenger vehicle industry.

The automaker in recent years has discontinued models like CR-V, BR-V, and Mobilio in the market and now relies on its sedan portfolio — City, City eHEV (hybrid), and compact sedan Amaze to bring in the volumes.

In an interaction with PTI, Honda Cars India President and CEO Takuya Tsumura said the company has taken several steps in the last few years to make its business constitution ”healthy” once again.

He admitted that the company went through a tough time in the last three years, as globally Honda decided to move towards electric mobility, and the process led to a restructuring of facilities and operations to conform to the new era.

Tsumura noted that the restructuring process led to various actions including the closure of a few manufacturing sites across the globe, including one plant in India as well.

”We did some restructuring in the last few years and it was a bit of a tough time, but I can now say it is done, the company now has a healthy constitution,” he said.

Terming India as one of the most important markets, Tsumura said the Japanese company has now initiated various initiatives like product introduction in the high-selling SUV segment to scale up its volumes in the country.

”I can say that we have bottomed out this year and from now on we are only going to go up,” he noted.

Honda has seen its market share in the domestic passenger vehicle segment drop from 5.44 percent in FY19, to 2.79 percent in FY 22.

Acknowledging that the lack of products in the high-selling SUV segment led to a drop in volumes and market share, Tsumura said the company is now gearing up to drive an SUV model next year to rev up its sales.

”The SUV market has grown robustly and now accounts for around 50 percent of the overall passenger vehicle segment. We are not participating in that segment. We are confident that with the launch of the SUV next year, we will enhance volumes,” he said.

When asked how the company plans to position the upcoming model in a highly competitive segment, Tsumura said: ”We are confident about that model… well it would be hard to become number one player but still, there will be some demand there so we want to attack that area.” He did not disclose details about the size and engine specifications of the upcoming SUV.

When asked about sales aspirations from the new model and by how much it could help the company regain its overall market share, he said the first focus is to enhance production capacity utilisation at its Rajasthan-based plant which is currently hovering around 60 percent.

The development phase of the model is almost done, and the company is now in the process of doing some final adjustments before the start of the mass-production, Tsumura said.

Brushing aside apprehensions about exiting the market, he noted that the automaker is here to stay in the Indian market.

”We are staying. Why do we leave a market which is now the fourth largest market globally? We have been here for more than 20 years, so there is no reason to leave,” Tsumura said.

India is one of the biggest markets globally and Honda’s top management understands its importance, he added.

On new product launches, Tsumura said the company is looking at various segments with an electrification strategy in mind.

The company, which is currently relying on hybrid technology, could bring in battery electric products in the future when the adequate charging infrastructure is in place across the country, he added.

Honda globally plans to launch 30 EV models by 2030, with an annual production volume of more than 20 lakh units.

As part of its business restructuring, Honda has decided to discontinue its three models — Jazz, WR-V, and fourth generation City — in India by the end of this financial year.

In December 2020, the company stopped the production of Civic and CR-V with the closure of its Greater Noida plant to consolidate its production activities at its second plant at Tapukara in Rajasthan.

The automaker had noted that the move has been taken to realign its manufacturing operations with the goal of improving business efficiency.