Honda Cars India, which launched the new version of its popular sedan, the Honda Amaze in New Delhi on May 16, 2018 with prices starting at Rs 559,900 (all India), expects 21 percent sales for the compact sedan to come from first-time car buyers.
The carmaker is optimistic that India, which recently pipped Germany to become the fourth largest vehicle market globally, is tuned to even surpass Japan to become the third largest market in the years to come. The company is betting on the new sedan, which it states carries the company’s DNA of differentiating its products from the performance point of view, offering spacious interiors and a fun-to-drive experience.
Explaining the design philosophy of the new Amaze, the OEM states the vehicle’s positioning is based on its style, it is a much bigger car then one would expect in the sub-four-metre category both inside and outside. Interestingly, it is aimed towards attracting first-time car buyers as the car is loaded with features and offers including the care-free maintenance. Honda expects around 21 percent of the Amaze sales to come from first-time car buyers who are either upgrading from a two-wheeler or buying their first vehicle.
Honda Cars India aims to continue its growth momentum on the back of its three launches (including the Amaze) in FY2019. Speaking to Autocar Professional, GakuNakanishi, president and CEO, Honda Cars India (pictured below), says: “We are planning to launch the new CR-V and new Civic in the second half of FY2019. We expect the Amaze to sell more than the first generation ideally (256,679 units).”
Nakanishi agrees that while the market for the Honda Civic is not huge in India, there are many people in the country who wish to buy the premium sedan. He says, “We have a lot of existing Civic customers who are looking to buy a newer version of the vehicle; that’s the positioning of the product. We have sold around 40,000 units of the Civic in India.”
Rupee depreciation and impact
Mentioning the impact of currency depreciation, the carmaker agrees while it is a cause of concern, the company is not just selling vehicles in India. “The rupee depreciation is bad compared to what it was a year ago. Of course it affects us but we are not only a sales company. We are also engaged in development, engineering and purchasing in India. All of these functions help us to reduce the cost of engineering, production, which in turn helps to compensate to the fluctuations. As much as possible, we do not wish to be easily surprised by these changes.”
Rajesh Goel, senior vice-president and director – Marketing and Sales, Honda Cars India (pictured above), says, “The depreciating rupee is a worry, but localisation helps. For the new Amaze, we have around 96.5 percent local content. What is more worrisome for instance is the custom duty – when it went up around the Budget, most car makers have not been able to offload the cost in the market. I think the Amaze with the 96.5 percent local content is one of the highest localised cars anywhere in the world, 3 to 3.5 percent is the average bandwidth a carmaker normally has. Our localisation levels are almost at the peak level.”
India sales and capacity utilisation
In FY2018, Honda Cars India produced 161,884 cars (+2.28%) and sold a total of 170,026 units (+8.08%) in the domestic market. Exports were 5,611 units (-3.21%). While the passenger vehicle segment sees a significant demand in the entry-level segment where sales are dominated by Maruti Suzuki India, Honda does not aim to compete in each and every segment just because of competition.
“The Indian automobile market is large and there are larger players which have been there for quite a while now, it is not something that has happened today. Based on our plans, there are many segments which have not been tapped at all and each company has its own strategy to tap into that. For us when the market demands a particular product that can be satisfied by Honda Cars, we will be ready with that. It does not necessarily mean that if there are volumes we have to go there, each company has its own strategy. For us it is about offering a product which is distinctive for the customer,” says Goel.
Speaking about the manufacturing capacity, Nakanishi revealed while the company has got enough capacity to meet future requirements, it recently added 40,000 units capacity to its Tapukara facility in Rajasthan, bringing its total installed capacity in India (including the Greater Noida plant) to 280,000 units per annum.