Having been on the fringes of the fast-growing SUV space with limited success and numerous studies, the Japanese automaker has kicked off development work on – made for India – SUV, which may finally hit the roads in the coming 24-36 months. Till then, the company will rely on its bread-and-butter sedans – City and Amaze to drive volumes.
The company on Wednesday introduced a facelift of its most popular model Amaze (at Rs 6.32 lakh to Rs 11.15 lakh) to capitalize on the growing traction of personal mobility.
Speaking on the sidelines of the new Amaze launch, Gaku Nakanishi, president and chief executive officer, Honda Cars India told ET, “The segment volume and segment share of SUVs in India is increasing year by year. We recognize the importance of and the consumer preference for SUVs. We are studying the needs of customers and will try to actualize and supply a vehicle as per customer requirements. We are developing a product focusing on the Indian market.”
There is a possibility that the vehicle may subsequently be utilized globally, added the CEO.
Nakanishi declined to share specifications of the vehicle and the timeline for launch. However, according to people in the know, the all-new SUV is set to take on Hyundai Creta and Alcazar and may hit the road ahead of the festive season in 2023.
To ensure product excitement, the company is planning to bring in the City Hybrid vehicle in 2022.
With consolidation of its manufacturing footprint post the closure of the Greater Noida plant, Honda wants to come back to the growth trajectory, but not at the cost of profits.
Honda Cars India – which had stopped production at its Greater Noida facility last year – said post restructuring capacity utilization in the company is expected to improve to 70% in the ongoing financial year, up from 30% in FY21. The company also expects to return to profitability this fiscal year. “The priority is not to become big, but a solid, firm and flexible company. We were in red last year. But this year, we will be profitable”, informed Nakanishi.
The company had posted a net loss of Rs 1680 crore in FY-20, which is likely to be in red in FY-21 as well, but with better operational leverage, the company is hopeful of breaking into profits in FY-22.
The company says it has witnessed better-than-expected recovery in the local market post the second wave of the pandemic and expects sales to grow in double-digits in the ongoing financial year. “We had expected the market to take 3-4 months to normalize after the second wave. In a good way, our forecast was wrong. We (Honda) should grow in double-digits this year”, said Nakanishi.
The company’s sales had declined by a fifth to 82,074 units in the last financial year. According to the production plan shared with the vendors, the company is eyeing annual volumes of 1.2-1.25 lakh units, which is still more than half of its peak volumes delivered by the company 4-5 years ago.
The company is planning for a production of 5000 units of Amaze per month and Honda may be able to capitalize on the short supply of vehicles at the market leader
Suzuki Dzire.
Since its debut in 2013, Honda has sold close to half a million units of Amaze. It is a strategic model which was designed specifically to cater to the Indian market needs. It is the second best selling sedan in the country for three years in a row.
Amaze has a segment share of 20% and it accounts for a lion’s share of business for Honda Cars India. The model has also started gaining traction in tier 2-3 cities, which already accounts for 68% of the company’s sales. While it is an alternative for the upgraders, close to 40% of Amaze sales come from first time buyers, with automatics account for 20% of the total sales.
On its part, Honda Cars India has tied up with 16 Banks and NBFCs to offer customized and lucrative financial schemes for customers and take benefit from their large network in the hinterland.
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