Honda Cars India plays a competitive pricing game with the new City

By keeping the price of its latest City almost on a par with the older generation car, Honda Cars India (HCIL) is playing a competitive pricing game for a market that is super-sensitive to hikes in the current economic scenario.
On Wednesday, HCIL launched the fifth generation model of the City. The flagship sedan’s prices range from Rs 10.89 lakh to Rs 13.14 lakh for the petrol version and Rs 12.39 lakh to Rs 14.64 lakh for the diesel one. The new City’s automatic petrol version is only around Rs 40,000 more than the older version.
With it, Honda aims to fill the wide gap in entry-level sedans that include Maruti Ciaz and Hyundai Verna as well as upper-level versions such as the likes of Honda Civic, Skoda Octavia and Toyota Corolla Altis.
“Since the outbreak of coronavirus (Covid -19), customer preference has been changing. The demand in tier-2 and tier-3 cities has been growing. Increasing sales in these regions will be our priority,” Gaku Nakanishi, president and chief executive, Honda Cars India, told Business Standard. He said that the product pipeline and capital expenditure from the pre-Covid phase stays the same. “Our electrification strategy will start with the hybrid model and it remains on track for next year. We believe the hybrid is the most efficient bridge to EVs (electric vehicles).”
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Identifying the customer needs correctly is one of the biggest challenges for us at the moment. Nakanishi points out that a trend like work from home could change preferences. Office goers may no longer want to live in crowded cities and instead prefer smaller towns. Therefore, demand will shift. Also, an aversion to public transport will lead to more people owning personal vehicles.
“We are trying to understand all these changes,” he added. The new City is bigger and more spacious than its predecessor and comes in automatic transmission for the petrol variants. It also offers lane assist technology that first came in the higher-priced Honda Civic.
Interestingly, Honda will also sell the older fourth generation City side by side with the new version, thus segmenting the model into two broad categories.
Puneet Gupta, associate director at IHS Markit, a sales forecasting and a market research firm, points out that HCIL needs to bring in more aggression and needs a turnaround strategy. “In a competitive market like India, car manufacturers need to be very agile in terms of new product launches. They need to align their new models and features and technology to consumer expectations and that too at a competitive price,’’ said Gupta.
Kaushik Madhavan, vice-president of Mobility at Frost & Sullivan, said that historically, there has been a clear distinction between the sedans, for example, between the Honda City and the Hyundai Elantra or the Toyota Corolla and the Honda Accord with regard to features and technical specifications. “Now you see features also being offered in lower segment sedans, and the new City for one will see a lot of value addition,” he said.
The City has been a best-seller for Honda in India for over two decades with annual sales of 20,000 units, only surpassed by the Amaze, another compact sedan.
HCIL senior vice-president and director Rajesh Goel said, “The City was a product conceived and designed with the Indian customer in mind and has tried to bring in contemporary (current) technology to every successive generation.”

Honda recalls 5,088 units of 5 models in India to fix faulty Takata airbags

Japanese auto major Honda on Monday said it is recalling an additional 5,088 units of its previous generation models of Jazz, City, CR-V, Civic and Accord in India as part of a global exercise to rectify faulty Takata airbags.
The company, which is present in India through a wholly-owned arm Honda Cars India Ltd (HCIL), said it has expanded its campaign to replace Takata driver and passenger front airbag inflators in 5,088 units as part of its precautionary global recall campaign concerning Takata front airbag inflators.

It is recalling 2,099 units of City sedan manufactured between 2007- 2013, 2,577 units of CR-V produced between 2003-2008 and in 2011 and 350 units of Accord manufactured in 2003, Honda said.
It is also recalling 52 units of Civic sedan manufactured between 2006-2008 and 10 units of Jazz manufactured between 2009-2012.
The company said replacement will be carried out free of cost at HCIL dealerships across the country from July 29, 2019 and the company will communicate with customers directly.
In April this year, Honda had recalled 3,669 units of Accord sedan in the country as part of a global exercise.
Millions of vehicles globally have been recalled due to defective safety airbag manufactured by Japan's Takata Corp.

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Honda to sell diesel cars in India even after BS-VI emission norms kick in

Japanese auto major Honda will continue to offer diesel models in India even after BS-VI emission norms kick in, unlike Maruti Suzuki which has decided to stop selling diesel cars from April 1, 2020.
According to a senior official of Honda Cars India Ltd (HCIL), the company plans to upgrade its two diesel engines, which power models like Amaze, City, WR-V, BR-V, Civic and CR-V to conform to stricter BS-VI emission norms.

The auto major plans to start rolling out models with upgraded BS-VI engines in both petrol and diesel from the fourth quarter of this fiscal.
"From our experience, for the fuel choice among petrol or diesel, 80 per cent of customers make a rational choice based on consideration of driving distance and recovery period. However, there are still 20 per cent customers who make an emotional choice towards a particular fuel," HCIL Senior Vice President and Director (Marketing & Sales) Rajesh Goel told PTI.
The company will take care of these 20 per cent emotional choice buyers as well, he added.
Goel acknowledged that fuel dynamics will change after BS-VI implementation from the next year with a price gap increasing between petrol and diesel models.
"But we believe the demand for diesel will not vanish immediately. Therefore, we will continue to offer the diesel models in line with market demand and gradually move towards future alternatives," he said.
The company currently has two diesel engines in its line-up and they will be made BS-VI compliant, Goel added.
HCIL currently sells Amaze, WR-V, City and BR-V with 1.5 litre diesel engine, while Civic and CR-V are powered by 1.6 litre diesel powertrain. The models are also available with petrol engine options.
With diesel cars set to become costlier from the next year with the implementation of stricter BS-VI emission norms, major automakers are contemplating about the future of such vehicles in their portfolios.
Already, market leader Maruti Suzuki India (MSI) has stated that it would discontinue diesel models from 1 April 2020, when the BS-VI norms kick in as it expects the increased cost would put most of the diesel cars especially the smaller ones out of reach of small car buyers.
Besides, Tata Motors has also hinted to phase out small diesel cars from its portfolio as demand is expected to slow down due to upcoming BS-VI emission norms. Ford, on the other hand, has said, it will continue to sell diesel models in the country.
Goel said, the company's progress towards implementation of safety regulations and BS-VI regulations was on course.
"Smooth run-out of BS-IV vehicles and switch over to BSVI vehicles will be a key task during this financial year. HCIL will progressively introduce BS-VI compliant models from fourth quarter of this fiscal," he said.
As for the recently launched models such as Civic and CR-V, petrol variants are already complying with BS-VI norms, he added.
The Bharat Stage VI (or BS-VI) emission norm would come into force from 1 April 2020 across the country. Currently, the vehicles sold in the country conform to BS-IV emission standards.
The Bharat stage emission standards are standards instituted by the government to regulate the output of air pollutants from motor vehicles.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Honda two-wheeler unit eyes expansion with Rs 8-bn investment in FY19

Honda Motorcycle and Scooter India (HMSI) plans to invest Rs 8 billion in the ongoing financial year to expand operations in the country.
The company, which posted a growth of 22 per cent in 2017-18, aims to grow in double digits in 2018-19 as well.

"We will invest close to Rs 8 billion this financial year as we aim for double-digit growth for the third consecutive year," HMSI President and CEO Minoru Kato told reporters here.
The investment would mainly go into improving efficiency at manufacturing plants, getting new tools and equipment for BS VI upgradation, and new product launches.
During 2018-19, HMSI plans to expand sales network to 6,000 touchpoints from 5,700 outlets last financial year.
"We will enhance our presence, especially in rural areas," Kato said.
The company, which is already number one contributor to parent Honda's global two-wheeler business, also plans to launch a brand new model and 18 upgrades of existing products in 2018-19 , he added.
The two-wheeler major is also targeting to expand its best dealer network to 250 outlets in the financial year. The network stood at 200 touchpoints last year.
It is also considering introducing a customer loyalty programme during the year.
On company's 2020 plans, Kato said the two-wheeler maker is set to upgrade to BS VI emission norms much before the deadline.
HMSI has started upgrading its facilities for the same, he added.
He, however, said the entire two-wheeler industry might see volumes fall post-2020 due to significant price hike in BS VI compliant products.
"It (BS VI) will, however, open up various export markets for us," HMSI Senior VP sales and marketing Y S Guleria said.
The company exports to around 27 countries, including Sri Lanka and Nepal.
Overseas shipments contribute around 5 per cent of the company's current volumes.
When asked if the company is looking to introducing electric models in the country, Kato said, "we are evaluating but there is no concrete plan yet."
In 2017-18, the company sold a total of 6.1 million units.
The company's installed capacity across its four plants stands at 6.4 million units.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)