Honda Cars, the local subsidiary of the Japanese carmaker, has been struggling to arrest its falling sales, which the company said is because of shift in diesel cars and bad inventory management.
To get back on growth, the company is looking at “re-designing its sales strategy” and “inventory management”.
Two years ago, Honda heavily focussed on bringing out diesel variants of the City and Amaze. However, things changed as the market shifted towards petrol.
The company said that they had not anticipated that the consequences of the shift at Honda would prolong “so long”.
As a result, between April and January, Honda’s domestic sales dropped by 33% to 1,03,161 units compared to last year, according to data from Society of Indian Automobile Manufacturers (SIAM). The passenger cars segment grew by 9.17% during the same period.
“Two years ago the wholesale numbers were higher compared to retail numbers,” said Yoichiro Ueno, president and CEO, Honda Cars India Ltd, after the launch of the new Honda City on Tuesday. The difference was 10,000. To put that in context, dealers had three months of inventory in stock.
The situation curbed the liquidity of dealers, and often locking their capital position, resulting in poor “dealer morale”.
Ueno decided to revamp the sales strategy, policy and schemes, and put proper sales systems in place. That has helped bringing down the stock position from three months to three weeks.
“If retail is good, wholesales follows... It is important -- how much we deliver to the customer, and not to the dealer,” Uneo said.
Meanwhile, Honda has been struggling to sell its multi-purpose vehicle (MPV), Mobilio. The company is also contemplating taking the car off the roads. “We might or might not... The volumes are not very high. Also, once the BS-VI is implemented, we will have to see the investments. BRV (the new SUV) is taking away a lot of the MPV customers,” Uneo concluded.