Nexa way? Honda plans to revamp car sales network to grow market share in India
Yoichiro Ueno, the president and CEO of Honda Cars India Ltd (HCIL) said he wants to resurrect the sales network much on the lines of Maruti Suzuki’s Nexa channel of premium showrooms.autos Updated: Jun 22, 2017 17:37 IST
“A premium brand is a combination of product, dealer facility and services. It is difficult to improve otherwise by just products,” Yoichiro Ueno, the president and CEO of Honda Cars India Ltd (HCIL) said.
After two fairly successful products this year -- the 2017 Honda City and new cross-hatchback Honda WR-V, Honda wants to focus on revamping its dealership network which saw some members leaving last year over slowed sales and inventories.
There are 346 Honda car dealers in 231 cities across India.
Ueno said he wants to resurrect the sales network much on the lines of Maruti Suzuki’s Nexa channel of premium showrooms. “Opportunity cannot change things quickly. We are trying to build a brand image by changing the way we operate,” he said.
According to industry sources, Maruti Suzuki dealers take two years to break even while it takes three years or more for Honda dealers to redeem their investment.
“Last year, motivation of dealers was a big issue. We had issues regarding inventories, which actually affected financial condition of the dealers. We also did not have advanced schemes about sales or clearance of stocks,” Ueno said.
“So we have developed some new initiatives to modernise or elevate our sales process. We are now investing in our dealers, sales network and systems. The preparation stage is finished and we are now in the implementation phase,” he added.
According to IHS Markit analyst Anil Sharma, Honda’s strategy to follow the lines of Maruti Suzuki is a clever way to look at the market. “Honda has always tried to achieve that semi-premium image with its products. However, its sales network has failed to live up to that image. Opening a dealership is fine, but sustainability is also important to keep the sales ticking. What we saw with GM was a great example as to why keeping dealers happy is important,” Sharma told HT.
Honda’s product mix plays a part in this.
Firstly, there’s no mass-selling model like Maruti Suzuki Alto or Hyundai Creta, which would clock more than 10,000 a month. Two: Their products twin, sometimes even cannibalising into each other – Jazz and WR-V and Mobilio and BR-V.
And besides the staple Honda City, which clocks 3,000-4,000 units monthly, no other model does such wonders on the sales chart.
Ueno said the company is reviewing its India line-up. But he also agreed communication and marketing of the products could have been better.
“Honda is a manufacturer, so I believe the product is more important. However, the marketing around it is also very important,” he said.
“The BR-V is very highly evaluated offering for the purchaser. The car itself is very good, but may be our marketing team is not very clearly communicating the benefits to the customers. When we launched, the SUV market was growing. The BR-V has SUV styling, but we did not clearly showcase its other features. Currently, we are reviewing our marketing activities,” Ueno said.
The BR-V indeed had sporty styling, but its structural similarity with the Mobilio killed the MPV. “We have stopped making the Mobilio,” a company executive told HT.
About localising its flagship model Honda Accord Hybrid, imported from Thailand at present, Ueno said, “Our factories are extensively designed for smaller cars, and making an Accord here will take a lot of investment. We are ready to localise hybrid products, but what we need are right conditions. Till the time we cannot have good sales and a clear policy from the government, it is not wise to make that kind of investment.”
In the upcoming goods and services tax (GST), hybrid cars have been placed in the same tax rate slab of 28% as the luxury cars, while electrics would attract a 12% tax.