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Old 1st May 2014, 14:53   #1
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Default Honda India's near-term plans for 2014

We attended a Round Table chaired by Mr Jnaneswar Sen, Senior Vice President Marketing and Sales, Honda Cars India.

Key Points

Products

About the Mobilio
  • Mobilio will be launched in Q2
  • Pilot production going on at Greater Noida
  • Both Petrol and Diesel variants will be offered
  • 90% localised
  • Main Attractions will be
- Internal space should make it a segment leader - He refused to comment more on actual dimensions since vehicle needs to undergo homologation.
- Space for 7 passengers
- Styling
- Fuel economy
- It will be longer than the Ertiga

About the Jazz

Honda Jazz will come in later this year in diesel and petrol
- Still deciding on model variants
- Still deciding on production location
- Will come with an automatic variant
- Will be competitively priced - Honda wants volume. 72% localised
- I got the feeling they might miss the festive season and launch soon after that. Reasons being Mobilio takes priority and the new plant has not reached full capacity as yet.

Other Products
  • The Vezel will NOT come to India
  • Still to decide on a small SUV - cost, segment appeal, forecasted numbers are still not clear in order to take a decision
  • The CRV will not come with a diesel in the foreseeable future
  • The Civic replacement will not come for a while as the segment has shrunk. In fact, total segment sales are much smaller than the total number of Civics Honda used to sell at one time
  • A contribution to the shrinking D segment was that the City and Verna provided very similar space etc. for a much lesser price
  • The current Civic saloon cannot take the diesel engine
  • Honda are focusing on volume as a strategy and also to please their dealers
  • Diesel / Petrol split for the Amaze and City is 55/45
  • Petrol sales are improving since people are anticipating diesel price hikes
  • Current waiting list: City = 3 months, Amaze = 3 weeks
  • New Accord might be introduced. Honda hopes to counter the Superb with better styling, and in terms of space & comfort (very subjective factors)
  • The possibility of an Accord hybrid was not dismissed
  • Don't see product cannibalisation as an issue, the high end Amaze buyer and the low end City buyer might share similar demographics, but the psychographic profile is totally different

Will the Amaze be revamped with equipment to counter the Xcent?

No - Honda will focus on durability, quality, reliability, fuel efficiency and space
You can add accessories but you cannot add space!

Financials

Financial Year ending 2014 has been rewarding due to the following factors
1: Introduction of the diesel engine which has propelled sales of the Amaze and City
2: Capacity has been enhanced by the second plant in Rajasthan coming on line
3: 2013-2014 - Highest annual sales in India have been achieved. 1.34 lakh cars which was an 83% growth (admittedly from a lower base)

Production
  • Future expansion will come from Rajasthan which has three times the space (Noida 150 acres, Rajasthan 450 acres)
  • 10,000 Amaze and Brio were exported (mainly to South Africa)
  • Rs 232 crore of components were exported
  • Honda exports diesel components to the UK
  • 2016-2017 production is targeted at 3 lakh cars. Honda India want to contribute 5% of all Honda cars sold. It is currently 3%
  • Labour relations are an integral part of Honda's respect for the individual policy. No contract workers for core functions. All manufacturing personnel are actual associates or trainees
  • Efforts on to ramp up the Rajasthan plant to meet demand
  • Noida produces 1.2 lakh cars per annum on three shifts
  • Rajasthan is yet to achieve 1.2 lakh cars, Honda are being cautious about introducing additional shifts too soon

Dealer Network
  • Expanding this year from 170 dealers in 17 cities to 250 dealers in 25 cities
  • Big push is in Tier 3 cities
  • Getting dealer principals on board is not an issue
  • Only one dealer in a tier 3 city gave up the Honda franchise ever
  • South India accounts for 37% of the market. It's a little weak since diesel cars are a dominant factor

Couple of Interesting Nuggets
  • Honda actually created the homologation regulations for hybrid vehicles for the Indian government in order to introduce the Civic hybrid
  • A lot of manufacturers are looking at how the Celerio AMT will perform, as this could restructure the whole market. Honda had an AMT Jazz, but it was not reliable in the long term
  • Spurts in customer demand happen due to fear of price rises (as opposed to actual price cuts)

Edit - not in my notes but I just remembered - A prime reason for the D segment shrinking is due to the emergence of the XUV500 and the Fortuner

Last edited by Aditya : 2nd May 2014 at 12:29.
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Old 1st May 2014, 16:03   #2
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Default re: Honda India's near-term plans for 2014

Hi Ajmat,

Any mention about the pricing of Mobilio?. We are in market for an MUV with a maximum budget of 10 lac. The only options currently in the market are Ertiga and Xylo. If the price bracket is similar to Ertiga, we will wait till it launches. What is your opinion?
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Old 1st May 2014, 16:20   #3
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Good report and thanks for sharing it here in crisp way which says a lot about Honda's plans for the Indian market.

Waiting for the Jazz and CR-V to be relaunched with a diesel heart. Good to see 90% localisation for the Mobilio.

Surprised to see only 72% localisation for the Jazz which could be slightly higher prices.

Anurag.

Last edited by a4anurag : 1st May 2014 at 16:25.
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Old 1st May 2014, 16:37   #4
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Default re: Honda India's near-term plans for 2014

Quote:
Originally Posted by ajmat View Post
Attended a Round Table chaired by Mr Jnaneshwar Sen , Senior Vice President Marketing and Sales, Honda Cars India
Great write-up! Are there any plans of ramping up City CVT production to reduce the wait times?
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Old 1st May 2014, 16:54   #5
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Default re: Honda India's near-term plans for 2014

Quote:
Originally Posted by ajmat View Post
About the Jazz

Honda Jazz will come in later this year in diesel and petrol models
- still deciding on model variants
- still deciding on production location
- will come with an automatic variant
- Will be competititively priced - they want volume - will be 72% localised
- I got the feeling that they might miss the festive season and launch soon after that. Reasons being Mobilio takes priority and the new plant has not reached full capacity as yet.
[b]
Surprised to see only 72% localization for Honda Jazz. The new City which is based on Jazz platform is 90% localized so there is no reason why Honda cant achieve the same or better for Jazz.

Lower localization would mean higher cost and hence a repeat pricing disaster. I dont see them coming up with a competitive price with 72% localization.

From what I know, the interior and exterior parts of Jazz would be same as City and in fact there is a high possibility that some of the features we see in City may not make it to Jazz to keep costs down.

Given that Mobilio will be produced at Noida plant which is operating at 100% capacity, Jazz will definitely be produced at Rajasthan plant.

Also when you say Q2, are you talking about calendar year (Apr-Jun) or Financial year (Jul-Sep)?
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Old 1st May 2014, 16:56   #6
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Thanks ajmat for a good report. Honda has more plans than i actually thought.

Good to see that they are making aggressive plans to capture significant market share. So, we can expect more competition with fierce advertising in B2/C1 and C2 segments. Good for the customer.

Also, do you have any info on by when they are targeting "No waiting list" with their current product line up. For Suzuki, it took years to match demand & production volume.

Good. They are planning to re launch Accord. Sad to see that Civic wont be back. Do you have any info on why they are not planning to re launch Civic? and why they are planning to launch Accord?

Would you please elaborate your statement "Honda actually created the homologation regulations for the government in order to introduce the Civic"
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Old 1st May 2014, 17:01   #7
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Default re: Honda India's near-term plans for 2014

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Originally Posted by ajmat View Post
The Vezel will not come to India
Hope you meant Vezel will not come to India in 2014. Since it's launch in Japan, I am hoping they will bring it to India soon. If not 2014, at least 2015/2016. Hope Honda does not disappoint us.

Last edited by Simhi : 1st May 2014 at 17:02. Reason: corrected 2106 to 2016
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Old 1st May 2014, 18:03   #8
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Default Re: Honda India's near-term plans for 2014

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Hope you meant Vezel will not come to India in 2014. Since it's launch in Japan, I am hoping they will bring it to India soon. If not 2014, at least 2015/2016. Hope Honda does not disappoint us.
Honda had earlier mentioned that Vezel is not for India market at all. It only has a petrol or Hybrid engine both of which are not suitable for India. Secondly, the Vezel will not be able to meet the price points they are targeting.

India will get a compact SUV based on Brio which will allow them to price it competitively.

You can safely forget the Vezel for India.
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Old 1st May 2014, 19:29   #9
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Default Re: Honda India's near-term plans for 2014

Quote:
Originally Posted by DrvSafe View Post
Hi Ajmat,

Any mention about the pricing of Mobilio?.
No indications of pricing could be given.

Quote:
Originally Posted by a4anurag View Post

Waiting for the Jazz and CR-V to be relaunched with a diesel heart. Good to see 90% localisation for the Mobilio.

Surprised to see only 72% localisation for the Jazz which could be slightly higher prices.

.
The outgoing Jazz has 72%. The newer Jazz will be higher in terms of localization but this has not been finalised.

Note the CRV will not come with a diesel heart

Quote:
Originally Posted by damager21 View Post

Given that Mobilio will be produced at Noida plant which is operating at 100% capacity, Jazz will definitely be produced at Rajasthan plant.

Also when you say Q2, are you talking about calendar year (Apr-Jun) or Financial year (Jul-Sep)?
Q2 this year 2014 i.e by June end. They have not decided where to buid the Jazz as yet.

Quote:
Originally Posted by gemi_kk View Post


Also, do you have any info on by when they are targeting "No waiting list" with their current product line up. For Suzuki, it took years to match demand & production volume.

Good. They are planning to re launch Accord. Sad to see that Civic wont be back. Do you have any info on why they are not planning to re launch Civic? and why they are planning to launch Accord?

Would you please elaborate your statement "Honda actually created the homologation regulations for the government in order to introduce the Civic"
They need to ramp up the Rajasthan factory. Just remember that current market sentiment in a bit fragile. If they develop rashly develop extra capacity and have excess labour, it will lead to a lot of heart burn

The Civic segment had shrunk. They want to focus on volumes and they also have an obligation to support their dealers who have stood by them and not saddle them with potential white elephants

My bad - Honda wrote the Homologation policy for hybrid vehicles in order to sell the Civic - have edited the statement

Quote:
Originally Posted by Vid6639 View Post

India will get a compact SUV based on Brio which will allow them to price it competitively.

You can safely forget the Vezel for India.
Let me also add that this is still undecided. They need really see if demand in that segment exists and whether it can be priced right. My guess is that they will see what success Suzuki and Hyundai come up with first.

As you can observe, Honda is avoiding experimentation for the time being and is focusing on volume in segments where it knows the best. They have the talent to respond fast to new segments but not the resources to experiment and get distracted.

Last edited by ajmat : 1st May 2014 at 19:31.
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Old 1st May 2014, 20:04   #10
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Default Re: Honda India's near-term plans for 2014

If Honda is targetting volumes , why are they not concentrating on Brio Diesel ? If you observe the premium hatch market is also shrunk a bit thanks to the sub 4 metre sedan launches. i20 used to sell 8000 units easily at one point of time and has now settled to 5000-6000 units monthly. So dont think that Jazz will sell more than that.
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Old 1st May 2014, 20:09   #11
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Default Re: Honda India's near-term plans for 2014

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Originally Posted by ajmat View Post
The Vezel will NOT come to India
Still to decide on a small SUV - cost, segment appeal, forecasted numbers are still not clear in order to make a decision
Quote:
Originally Posted by ajmat View Post
Let me also add that this is still undecided. They need really see if demand in that segment exists and whether it can be priced right. My guess is that they will see what success Suzuki and Hyundai come up with first. As you can observe, Honda is avoiding experimentation for the time being and is focusing on volume in segments where it knows the best. They have the talent to respond fast to new segments but not the resources to experiment and get distracted.

So the premium 15-20L segment will still have to wait. Typically have not seen Honda define a segment. They will surely wait for a torch bearer. I was quite hopeful on this segment. A compact SUV will only add to a quickly crowding segment. A premium 4m+ would have easily defined a new market.

Last edited by ampere : 1st May 2014 at 20:11.
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Old 1st May 2014, 20:21   #12
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Vezel would have been an instant hit, had it been launched in India. I wanted an offering from Honda in the XUV 500 segment. Alas that's not going to happen any time soon !!
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Old 1st May 2014, 20:46   #13
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Good to know that Honda has a very clear Indian strategy. Sadly this means we will not see some of cars in their lineup that we would love to have here. Maybe later when the preferences shift.
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Old 1st May 2014, 21:40   #14
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To sum it up, can we say that Honda is behind volumes as it is playing below 10 Lakhs only (majority sales). Not much focus on Civic, CRV segment for now. Companies are coming to realize the India middle class potential!
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Old 2nd May 2014, 08:48   #15
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I wish Honda could develop an AT box for the Jazz diesel. We understand that the i20 diesel AT was not so popular due to their pricing. But, the market is slowly warming up to automatics.
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