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Old 25th May 2011, 12:11   #1
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Default Honda India : The Way Forward

Honda India is losing market share. And how!

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If you drive 1,500 kms a month (average for the primary car of an Indian household) and your car delivers about 9.5 kpl (average fuel efficiency for petrol sedans in a crowded Mumbai or Bangalore city), your monthly fuel bill just went up to a whopping 11 grand! I doubt anyone was sweating over the latest Rs. 5 / liter petrol price hike as Honda India was. After all, they are the sole car manufacturer in India with a petrol-only range of vehicles. And few potential customers driving 1,500+ kms a month would be short-listing a petrol sedan anymore.

As recent as calendar year 2007, Honda was the No. 5 manufacturer in India with an annual sales volume of 60,386 cars. Arch rival Toyota, Ford and General Motors were all placed below Honda. Further, Honda's entire sedan range at one time (5 years back) - the City, Civic & Accord - were No.1 in their segment. Even the CRV topped the premium SUV segment in some months, outselling the diesel Ford Endeavour at times. Honda was, perhaps, one of the few manufacturers that led each and every segment it was present in.

The last 3 years, however, tell a different story. Honda just sat by the sidelines and watched as newer brands (including rival Volkswagen) & cars flooded the market. No change in strategy from the boys in Noida. Then, Indian petrol prices increased by over 50% in the 2 years from May '09. That Honda goofed up the Jazz' pricing & missed an opportunity at volumes is bad enough. But in recent times, the Honda City - the brand's sole segment leader - was overtaken by the Volkswagen Vento as well as the Maruti SX4 (rejuvenated by its latest diesel avatar). Despite losing market share, the Civic's price has only gone up, and the car now sits well behind competitors like the Toyota Altis & the Chevrolet Cruze. The Skoda Superb brought an unbeatable value proposition to the 20 lakh rupee segment (Link to Thread (The 20 lakh rupee Game-Changers!)). Honda continued to sell the Accord with a sparse level of kit. Net result? Forget the Superb; in March 2011, the Accord was outsold by the notably more expensive C Class & 3 series. Yet, the most shocking is the positioning of the CRV. The previous-generation CRV cost 16.xx lakhs (ex-showroom Delhi) in 2005. In 2006, the current gen CRV was launched @ 18.4 lakhs. Today, that same AWD MT variant retails at a whopping 24.xx lakhs, and that's ex-showroom! On-road is more like 30 lakh rupees.

While the Indian car market grew by 30 % odd in the most recent financial year (April 2010 - March 2011), Honda actually lost market share points. And from its No. 5 position amongst Indian car manufacturers in 2007, Honda ranked No. 9 in March 2011, and No. 11 in April 2011. Everyone has grown in the last 3 years...every car manufacturer, except Honda. Sure, Honda currently has some supply issues due to the Japanese tragedy. But clearly, that's a temporary situation and not the real problem. March 2011 factory dispatches were completely unaffected by the Japanese situation.

Let's run a SWOT analysis on Honda's current situation, and have a constructive discussion on the brand's way forward.


  • Brand Honda has a huge following in India. Just like one can't go wrong with a Maruti for 5 lakhs, the perception is the same for the 9 lakh rupee Honda City. A fuss-free ownership experience is guaranteed.
  • Generally fuel efficient & spacious; two factors Indians love. The Jazz & City, especially, are fuel efficient cars, and the most spacious from their segment as well. The Civic surprises many people with smart interior packaging, while the Accord can take the fight to the Mercedes E-Class for comfort.
  • All-rounded products. Honda's are usually fast & fun to drive, supremely reliable and require little maintenance.
  • Safety : Insists on selling all of its cars with ABS & Airbags as standard.
  • Contemporary line of products. Honda sold 3 entirely different generations of the City in only a decade (OHC, NHC and ANHC). Honda doesn't sell outdated cars in India; its product range is as contemporary as they come.


  • NO DIESEL! Petrol is priced stratospherically high today, and even those cars owners with deep pockets feel the pinch on every full tank bill. I reiterate that Honda is the only manufacturer without a diesel engine in its lineup, and that is the biggest disadvantage today. Honda has merely 1 diesel engine worldwide. That's the outcome of being overtly dependent on the USA market, I guess.
  • Poor business strategy. Whoever signed off on the Jazz' final price was obviously out of tune with market conditions. The poor Jazz is so over-priced that it was destined to become a market dud, and currently sits at the bottom of the segment. While competition offered new cars with diesels & a long list of features, Honda did not react at all. Then, for some reason, their cars seem to suffer fatter prices hikes than the competitions.
  • Poorly equipped cars for the price. The Jazz wasn't equipped with a 200 rupee parcel tray on launch, my '07 Civic doesn't have a USB / iPod connector, the Honda City was introduced without climate control / alloy wheels / a CD player (!!!) and the Accord...well, looks naked next to the Superb's class-leading equipment list.
  • Honda was once a technological tour de force. The first to bring variable valve tech, excellent automatic transmissions and more with the original Honda City. But where is the technological innovation today? Where are the direct-injection petrols, dual-clutch transmissions and turbocharged small capacity petrol motors that your competitors have already introduced in the market?


  • BRIO! I hope Honda has learned its lessons and will give the Brio a VFM pricetag. The upcoming Brio hatchback has the potential to give Honda India previously unseen volumes. Simply put, the Brio is make it or break it, in terms of the mid-term future for Honda.
  • Jazz : This girl's never going to move at the current pricing, Honda. Swallow a bitter pill, cut the price by 1.0 lakh and watch her fly out of showrooms. No one has a problem with the product; each ownership review speaks highly of the car's quality & capability. Unfortunate that a nearly flawless product is made to fail due to flawed business strategy.
  • Diesels. When Maruti - a onetime strong opponent to diesel cars - can say "If you can't beat 'em, join 'em" and tied up with Fiat for diesels, why can't Honda outsource oil burners? Plus, the Civic & Accord can make use of Honda's own 2.2L CTDi diesel that it sells in the UK.
  • Add better equipment levels to the City, Civic & Accord. Don't make them look sparse in all product comparisons. This is the easiest to manage, and can be accomplished in a quarter.
  • Honda seldom offers discounts, at least officially. Well, pick a leaf from BMW's super aggressive strategy. Offer 0% finance deals for slow movers like the Civic & the Accord.
  • Dual fuel variants. There's no better time to introduce factory-installed, precision-engineered, CNG & LPG variants. Build them and then, market them hard.


  • Volkswagen & Hyundai, both make for exceedingly formidable competition. When I drove the Vento, I commented that this is the first sedan capable of going against the Honda City. And I was right. VW has the brand power to compete with Honda, mega financial muscle and diesel engines. Hyundai has already overtaken Honda at the global level. Quite honestly, there is no difference in overall quality & reliability between Honda & Hyundai now. Hyundai's cars also have a premium attached to them, but they have diesels and are far better equipped.
  • Petrol prices are only poised to rise higher. Another round of rate revisions is likely in the near future.
  • Over-crowded segments. The Indian car market has defied global trends by posting phenomenal growth rates through 2009 - 2011. Every global car manufacturer is strengthening Indian operations. Competition is going to get fiercer from Maruti, Hyundai, Toyota, Volkswagen, Ford, Skoda & Nissan.

Last edited by GTO : 24th February 2015 at 12:04. Reason: Typo
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Old 25th May 2011, 12:31   #2
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Default Re: Honda India : The Way Forward

GTO; we certainly cannot argue against stats and it does seem that Honda's fortunes depend a lot on the Brio. A few interesting analogies you have mentioned here, which I would like to expand on, based on my experience/ interaction with fellow petrolheads:
- The Jazz; perhaps Honda can plonk an outsourced diesel unit and re tuen prices by a bit, say 30K. A diesel Jazz at that price would also be an attractive proposition in the premium hatch segment.
- While I agree with your observation that people would not want to go for costly petrol cars, this situation may change if (a big if nevertheless) our Govt. decides to get off the diesel deregulation tiger that it has been riding. Honda should however not rest on the possibility of this taking place anytime soon!
- The Mini SUV or SUV CS segment is largely unexplored in India and they could have exploited this by having first mover advantage. The only relevant news in this segment is the Xylo CS for now
- The goodwill they have generated should be put to good use. I keep getting the same comment everytime someone sees my Jazz 'you cannot go wrong with a Honda'
The only problem is whether Honda will also dig their head into the sand and go the Fiat way of being unable to exploit all this goodwill they built.

EDIT: by the way, whose car is that?

Last edited by selfdrive : 25th May 2011 at 12:32.
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Old 25th May 2011, 12:46   #3
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Default Re: Honda India : The Way Forward

Well written post. The picture of car in the beginning tell the state Honda correctly .

It is sad to see a legendary car maker having good products, loosing the game. This is what happens when management is not keeping a close tab on ground reality.

Somehow I see a similarity between Honda & Nokia. Both are great companies with great product portfolio & unmatched customer loyalty. However of-late both of them seem to have lost the plot.

Nokia didn't act fast enough to counter Chinese mobiles in lower segment & Android/iPhone in higher smart-phone segment. Management thought that nobody uses dual sim phones and Symbian is best OS for Smartphones. Result is for everone to see. Similarly Honda on one hand didn't took competition seriously and on other hand thought the Indian diesel quality is not upto the mark.
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Old 25th May 2011, 12:48   #4
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Default Re: Honda India : The Way Forward

Nice analysis.

But apart from fixing/improving the weaknesses, what real opportunities are there for Honda?

- One is definitely Brio.
- Another could be electric engines - well, this may be for future, but an opportunity nevertheless. Why can't Honda be a pioneer in that. bring some affordable electric city cars in quick time, and see the magic.

BTW, OHC retired on top its world. A smashed ANHC would have been more appropriate. :-)
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Old 25th May 2011, 12:56   #5
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Default Re: Honda India : The Way Forward

Yes, a lot could happen with a rightly priced Brio. Also nowadays we have at least one news covering Diesel Deregulation, if that happens and diesel prices will go up, again Honda has a chance there by not worrying about investments made in plonking diesel engines unlike its competitors.

Originally Posted by selfdrive View Post
- The Mini SUV or SUV CS segment is largely unexplored in India and they could have exploited this by having first mover advantage. The only relevant news in this segment is the Xylo CS for now
Agreed, I too feel that manufactures might be trying to upgrade the currently burning hot-hatch market to mini SUV segment! Not only Xylo CS, there is one more expected mini SUV from the house of Skoda. Yes the Fabia Scout (Is Skoda planning to launch Fabia Scout in India?).
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Old 25th May 2011, 12:59   #6
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Default Re: Honda India : The Way Forward

As I have mentioned in other threads, its time for Honda to show way in mainstream hybrid cars. I wouldn't worry about direct injection. If they can match efficiency without its use it shouldn't bother.
Honda is not having a problem globally and we are discussing India specific and the major reason is the fuel. They should bring a range of diesels faster.

I think Honda is not able to think of diesels for just the Indian market. They will invariably think about them for global consumption (high emphasis on U.S). In which case, they have to be clean diesels and the investment would be higher and wouldn't come cheaper.
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Old 25th May 2011, 13:01   #7
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Default Re: Honda India : The Way Forward

The rising Yen is also a culprit here. Honda, unlike Toyota and other Japs, depends a lot on importing components/entire CBUs from Japan. That's the reason for rising prices of Civic, CRV etc.

Meanwhile, this table gives everybody an idea about 2011 (January to April) marketshare of all the manufacturers -

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Data obtained from Team-BHP's monthly sales threads.
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Old 25th May 2011, 13:06   #8
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Default Re: Honda India : The Way Forward

Honda has to stop viewing India as an assemble and sell market and have to take a long term approach to investing in the country.
  • They need to aim for volumes to drive prices down. Other MNCs even the newer ones like Nissan are already using India as an export base. The numbers will help Honda drive down prices rather than taking a high margin/safe approach, theres so much a Honda brand can justify, an 8 lac hatchback is not one among them.
  • Local manufacture of Diesel engines. One gets a feeling that the japs now a days think with their ego first and then brains. They make their one and only diesel in Japan, a market where no one buys diesels. By the time they ship these to Diesel markets like Europe and India they are overpriced...lol. Once Honda develops a new smaller diesel....hopefully by 2030!!! they need to make it in a market like India, it will be cheap and there will be plenty of domestic demand.
  • Finally they need to start making cars for enthusiasts who once swore by the Honda name. Not only were these cars great to drive but were VFM for what they offered. They do not have a single proper drivers car in their line up today...nada. The crz is an overhyped joke. Other majors like Toyota (FT-86), Hyundai (Veloster) and VW are readying their own affordable sports cars. This used to be a category that Honda owned with the likes of CRX, Prelude, Integra etc....but theres nothing to relate to in their line up now.
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Old 25th May 2011, 13:09   #9
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Default Re: Honda India : The Way Forward

GTO, wonderful analysis of the Honda's position, which one can sum up in no better words as "over-dependence on US market" that you have posted.

IMO Honda's cars are generally perceived as pricey, but, still they sold because of the reliability & the performance that their cars offered. However, now things have changed a lot, especially after VW Vento & slew of good products generally, especially diesel's from Hyundai, Ford & VW. The running costs of the competitors' cars have decreased drastically. Comparing the features that are being offered in these cars, one can also easily comment that Honda cars have the least features for the price they are commanding. The A.S.S. is no better in terms of service & spares cost.
To cut short, Honda cars are now costly/ pricey to buy, run & maintain.

But, Diesel is not the only option IMO. They have the Civic that runs on Natural Gas (~CNG~LPG) in US. I understand that Civic is an entry level small sedan in US & the market to which this car is pitched in US is different, but, these options can also be considered in India. There could be the CNG/ LPG Civic, City & Jazz, apart from the diesel Accord, CRV & Civic for India. After all even Maruti Suzuki is offering cars that run on these fuels (even of these are the base models, & Maruti Suzuki have recently announced that all its vehicles will have the CNG/LPG run drive-train).

Anyway I congratulate & thank you for bringing up such meaningful thread.
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Old 25th May 2011, 13:50   #10
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Im a Big Honda Fan. We only own Hondas in my family and i absolutely love the way they drive,

But i want someone to answer the following-

We have an accord and a civic automatic. Both cars have absolutely trashy fuel efficiency- 6.5-7 for the Accord with a light foot and 8 for the Civic. Average taken out on a tank-tank basis.

What is so special about these Ivtec engines that we have been raving about for years? Even the Skoda, Hyundai engines offer better mileage (petrol engines) Is it possible that we often get taken in by auto pundits and there opinion about certain technologies and forget whats important in these times? I mean fuel efficiency has got to be the no.1 priority now.

Except for the City and Jazz, the big Hondas are really poor performers on the fuel efficiency chart.
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Old 25th May 2011, 13:55   #11
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Honda is hit bad. There is little doubt about that. As mentioned by GTO, they have lost the plot in all the segments they used to dominate. Even their reputation of providing bullet proof reliability took a hit with the recent City recalls.

The blame can probably go to the complacency which we saw from Honda. Missing features. Probably the most glaring reason for their downfall. Most people were till now willing to pay a premium for the good quality (Rough cloth based City interiors aside). That has started to change now, and with competitors upping their game, the trend will only
become worse for Honda.

I think that Honda will continue to suffer for some time, no matter what they do. Their unwillingness to add new features for this market speaks of lack of foresightedness. Also it hints at poor cost structures that prevent them from giving more to customers. Either reason would take time to fix.
The strength till now were products. Even those are now running out. There is nothing new coming from Honda, in terms of technology, as GTO mentions. The design language on new models like new Civic, existing Civic facelift, Accord facelift, is conservative. I was looking forward excitedly to the new Civic, as the eventual replacement for my current City. After seeing the design and largely untouched mechanicals, I am rethinking this. Not having customers graduate to the next model in the lineup would be a big risk for the company going forward.

To secure Honda's future in India would require a big change in thinking from their team here. They need to be more
forward thinking in terms of their approach to the market. They sat on their laurels for too long. Prices need to be
controlled. And competitors need to be matched in terms of features offered. Brio would be an easy fix. If they get the pricing right, sales are probably assured. The rest of the lineup though would take some time to salvage.
I do hope though that somehow they prove this negative outlook wrong.
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Old 25th May 2011, 14:01   #12
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Originally Posted by GTO View Post
Just like one can't go wrong with a Maruti for 5 lakhs, the perception is the same for the 9 lakh rupee Honda City. A fuss-free ownership experience is guaranteed.
When I bought Honda city six month back, the above point was the strongest positives about the car. I was straight in the showroom after reading this thread of yours http://www.team-bhp.com/forum/indian...-think-so.html (Is the Honda City overpriced? NOPE, I don't think so!)

Coming to topic Honda India is definitely suffering in terms of sales volumes. I find petrol prices and availability of diesel options at similar price range is the main reason for the situation Honda currently is facing. In addition to this they have very poor marketing department I must say. I can hardly see any Honda advertisement on TV, banners on main roads, in newspapers despite of low sales. Just see how well VW market their cars and their sales are reflecting that too.

People love Honda, I know people who bought a Honda blindly without even considering other options. They love to see a Honda in their garage. I too love Honda and their cars. IMO they make most beautiful cars, Honda city is one most well designed car in their segment.

Now what they should do to improve their current situation in India is first to pray that petrol price don't rise anymore now. Secondly, marketing department should start working with new ideas so that people incline towards their cars. Thirdly, bring in diesel mills for their cars as in India people love economy though they will expend in other lavish things but fuel is very important for them (including me). Last and the most important thing is that they should price their cars well so that people can think of affording their cars.


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Old 25th May 2011, 14:07   #13
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I am a die hard Honda Fan. Even my Avtar says so!

I guess 2nd Generation Honda City and 1G(In India) Honda Accord and CRV were priced competitively. But they goofed up on pricing front on subsequent launches of 3G Honda City, and 2G Honda Accord and CRV. I think they over estimated Honda Brand's capacity to charge premium particularly with spot on strategies of new entrants like VW and ever improving Hyundai.
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Old 25th May 2011, 14:11   #14
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@ Akhilesh

On the contrary I think Hyundai's engineering poweress is a lot better than what you think it is. They already have direct injection petrol engines in their line up (Honda doesnt), not to forget they are far stronger than Honda when it comes to Diesels and also make V8 models something Honda has never done, they have 4.6, 5.0 and 5.5 litre versions of the Tau V8.

A decade ago Honda was very good with free revving 4cyl. petrols, great natural induction system all mated to an excellent gearbox. The problem is all manufacturers do the same now and most do it a lot cheaper. The last really amazing engine they made was the F20C used in the S2000, defunct from mid '09. I feel Honda have been struggling to make their engines sweet as before due to tightening emmission norms but on the other hand have not been able to use modern forced induction and direct injection technology. It seems their focus is now on sedate overpriced hybrids. Sad!!
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Old 25th May 2011, 14:27   #15
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Excellent thread GTO!

Reading it, I somehow had this thought in my mind - why did they have to take the older generation cars (OHC, Accord) off the market completely at the advent of newer generations?! They could have still continued with the older models by slashing prices, for a few more years, which could've fetched them some volumes. Afterall, the OHC was the HONDA (in India) which set it up for Honda Siel. I am pretty sure, hyundai managed to sell the Accent for much longer, the same way.

In a way, having cheaper options also would've also compensated (to an extent) the absence of diesels in their lineup, for so long.

Sorry if it's a naive thought!

Originally Posted by selfdrive View Post
EDIT: by the way, whose car is that?
That's Dippy's OHC (AT) when it was smashed up by Linkway Honda (personnel) during a regular service.
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