Honda’s under-utilised Indian plants to serve as export hubs

DukeNukem · 9th August 2012, 13:48

Could this be a case of desperate times calling for desperate measures? As its sales dwindle in the face of stiff competition & rising petrol prices, Honda Siel has decided to focus on exports instead, by turning India into a major manufacturing and export hub.

The sharp rise in petrol prices have led to diesel cars currently dominating sales in the Indian car market. However, Honda does not have a single diesel car in its portfolio. Honda's sales have been hit and its market share has shrunk to just over 2%. Offering price cuts on models like the City and Jazz have been of no avail. The well-priced Brio has failed to set the charts on fire too.

In this glum scenario, the move to focus on exports could help Honda’s cause in India. The rising dollar and India’s cheap labour established this trend, which manufacturers like Hyundai, Maruti Suzuki and Nissan have exploited fruitfully.

Its under-utilised production at the Greater Noida plant can now be ramped up to serve markets like South Africa and also South Asian nations like Nepal, Sri Lanka, Bhutan and Bangladesh. Honda’s Thailand hub has traditionally served most of these markets.

Related thread

Honda India : The Way Forward

sgiitk · 9th August 2012, 15:01

Why not?

Specially, if we keep with our silly policy of supporting Diesel leading to massive market distortions. The fact that Diesel adulteration is widespread and we are not willing to tighten up on the Sulphur content (since our cosseted PSUs are unable to produce it) does not help either.

mayankjha1806 · 9th August 2012, 15:05

Economically also it makes sense to export the petrol only car parts to countries which predominantly run Petrol only cars (eg USA), the other alternative could be temporarily shut down operations as the consumption in India is minimal, this might lead to job loss and in future restarting the operations would be a problem.

Excellent move, i must say.

ankur_fox · 9th August 2012, 15:25

Quote:

Originally Posted by DukeNukem

Could this be a case of desperate times calling for desperate measures?
Related thread

Honda India : The Way Forward

It is a cautious situation, Honda cars are good, their engines reliable. However, I see it as a very good example of Honda's production facilities to be tuned to cater to domestic and export markets. I don't think its a desperate measure, it just makes good business sense to maximize the use of your current production capacity. So one could see it as a strategic move to combat the current demand deficit rather than a move of desperation.

vb-saan · 9th August 2012, 16:35

Good move indeed! The other manufacturing hubs in Asia (e.g.; Thailand, Indonesia) are not providing any major price advantage comparing to India. So instead of expanding there, why not use the available facilities here? Competitors are also doing the same (e.g.; Vento Petrol exported to Malaysia as Polo Sedan).

shortbread · 9th August 2012, 17:38

Almost all the major car-makers have been using India as an export hub for years and Honda has had an epiphany NOW!!!! What next Honda finds out that diesel engined cars are in more demand than petrol, Eureka!!!

For more than a decade Honda has had it easy in India, why didn't they focus on ramping up production, increase exports, greater volumes, economies of scale and lowering prices then?! Took them two decades to realize that one 2.2 diesel engine will not serve an entire range or the global diesel demand.

Its ironic that their Indian two wheeler division has responded brilliantly to the Indian market and has also made it a major export hub!!

9th August 2012, 13:48	#1
DukeNukem BHPian Join Date: Jun 2012 Location: Mumbai Posts: 84 Thanked: 201 Times	Honda’s under-utilised Indian plants to serve as export hubs Could this be a case of desperate times calling for desperate measures? As its sales dwindle in the face of stiff competition & rising petrol prices, Honda Siel has decided to focus on exports instead, by turning India into a major manufacturing and export hub. The sharp rise in petrol prices have led to diesel cars currently dominating sales in the Indian car market. However, Honda does not have a single diesel car in its portfolio. Honda's sales have been hit and its market share has shrunk to just over 2%. Offering price cuts on models like the City and Jazz have been of no avail. The well-priced Brio has failed to set the charts on fire too. In this glum scenario, the move to focus on exports could help Honda’s cause in India. The rising dollar and India’s cheap labour established this trend, which manufacturers like Hyundai, Maruti Suzuki and Nissan have exploited fruitfully. Its under-utilised production at the Greater Noida plant can now be ramped up to serve markets like South Africa and also South Asian nations like Nepal, Sri Lanka, Bhutan and Bangladesh. Honda’s Thailand hub has traditionally served most of these markets. Related thread Honda India : The Way Forward
	(1) Thanks

9th August 2012, 15:01	#2
sgiitk BANNED Join Date: Dec 2007 Location: Gurugram Posts: 7,969 Thanked: 4,788 Times	Re: Honda’s under-utilised Indian plants to serve as export hubs Why not? Specially, if we keep with our silly policy of supporting Diesel leading to massive market distortions. The fact that Diesel adulteration is widespread and we are not willing to tighten up on the Sulphur content (since our cosseted PSUs are unable to produce it) does not help either.
	() Thanks

9th August 2012, 15:05	#3
mayankjha1806 Senior - BHPian Join Date: Jan 2011 Location: Bangalore Posts: 2,160 Thanked: 978 Times View My Garage	Re: Honda’s under-utilised Indian plants to serve as export hubs Economically also it makes sense to export the petrol only car parts to countries which predominantly run Petrol only cars (eg USA), the other alternative could be temporarily shut down operations as the consumption in India is minimal, this might lead to job loss and in future restarting the operations would be a problem. Excellent move, i must say.
	() Thanks

9th August 2012, 16:35	#5
vb-saan Team-BHP Support Join Date: Feb 2010 Location: S'pore/Thrissur Posts: 7,273 Thanked: 12,404 Times	Re: Honda’s under-utilised Indian plants to serve as export hubs Good move indeed! The other manufacturing hubs in Asia (e.g.; Thailand, Indonesia) are not providing any major price advantage comparing to India. So instead of expanding there, why not use the available facilities here? Competitors are also doing the same (e.g.; Vento Petrol exported to Malaysia as Polo Sedan).
	() Thanks

9th August 2012, 17:38	#6
shortbread Senior - BHPian Join Date: Apr 2008 Location: KL 7 Posts: 2,394 Thanked: 6,313 Times	Re: Honda’s under-utilised Indian plants to serve as export hubs Almost all the major car-makers have been using India as an export hub for years and Honda has had an epiphany NOW!!!! What next Honda finds out that diesel engined cars are in more demand than petrol, Eureka!!! For more than a decade Honda has had it easy in India, why didn't they focus on ramping up production, increase exports, greater volumes, economies of scale and lowering prices then?! Took them two decades to realize that one 2.2 diesel engine will not serve an entire range or the global diesel demand. Its ironic that their Indian two wheeler division has responded brilliantly to the Indian market and has also made it a major export hub!!
	() Thanks