The year 2014-15 was widely touted as the comeback year of Honda cars in India. Its new small sedan Amaze had captured the imagination of the country, and sales, which had stuttered as the country shopped for diesel-driven cars, zoomed 41% over the previous year.
Honda executives were smiling. But they were brought to earth the very next year, as sales rose just 1.49% year-on-year. Sales from April to June this year are even worse.
Honda’s market share is also down to 4.5% from 7% during the same period, last year. The balloon has well and truly burst.
Is Honda losing its grip on the Indian market? Where have its buyers gone?
The company is facing many problems in India – fewer products, old models compared to entrenched rivals such as Maruti Suzuki and Hyundai, a late reaction to ‘reverse dieselisation’ as petrol makes a comeback.
But Honda’s head of sales and marketing in India, Jnaneswar Sen, does not agree the company is losing steam. “Our base is much bigger – it is three times compared to what it was three years ago. As the base becomes bigger, maintaining growth is tougher,” he said.
Sound argument, but just not true. Maruti sells 10 times more cars than Honda, but still grew at 5.45% last year; Hyundai grew at 10%, with sales four times of that of Honda.
Sen attributes falling sales to reverse dieselisation — the customer reverting to petrol. “We had never planned for a drop – no one plans for that,” he said. Honda is adjusting production, and the first quarter is a corrective, he said. A year ago, 40% of Honda’s sales were in diesel models; now it is down to 28%.
Loathe to change track, Honda kept making diesel cars though the market quickly shifted to petrol, which led to over-supply of diesel cars. “We made those adjustments to the supply chain in the last quarter,” Sen said.
Honda wants to capture the India market on trust. Its City has topped the charts for 14 years in a row, and Brio for four years. But its new models are not pulling their weight. The BR-V sports utility vehicle, pitted against Maruti’s Brezza and Hyundai’s Creta, has sold just 5,975 to Maruti’s 8,000 and Hyundai’s 10,000.
“If BR-V fails then Honda is caught in the trap of having one part of showroom full of vehicles that don’t sell – Brio, Mobilio and BR-V,” said Deepesh Rathore, London-based co-founder of Emerging Markets Automotive Advisors.
Honda exited the premium segment, but Sen said the Accord would be relaunched this year.
On future plans, all he would say was, “We can’t comment of future product roadmap… But we won’t have a car below the Brio.”
The City has slowed, while the Brio has all but faded and the Mobilio never really found a foothold. The Amaze continues to carry Honda India on its slender chassis, but how long can it sustain on its own?