Team-BHP - ET article: How Honda’s Car & Bike divisions are bucking India's slowdown

Quote:

India's Rs 3,40,000-crore automotive industry has a big problem this Diwali. Sales are down, customer discounts are steep, inventory is high, plant shutdowns are routine, and layoffs rampant. "This is the worst I have seen in more than a decade," says Mumbai-based Ajay Srinivasan, director, at Crisil Research. From his perch in suburban Mumbai, Srinivasan keeps a close track of the auto industry.

Far away in Greater Noida, Gnaneshwar Sen, senior V-P (sales & marketing) of Honda Cars India Ltd (HCIL), too has a problem, albeit of a different kind. He is grappling with too many customers, long waiting periods and a severe production shortage.

"The demand is there but we are just not able to make more cars," he shrugs. Honda dealers and staff are working their fingers to the bone as showroom footfalls this Diwali season show a 50% jump over a year ago. Bookings are two times those of last year, the sub 4-metre sedan Amaze that was launched in April has 10 weeks of back orders, and the compact Brio 15 days. From November, HCIL will add a third shift at its plant but Sen is worried that may not be enough.

Not far from Sen's corporate office, his counterpart at the two-wheeler business, Honda Motorcycle and Scooter India (HMSI) in Manesar, Y S Guleria is facing a similar problem of plenty. With 1.25 lakh bookings for HMSI's two-wheeler, customers will have to wait two weeks for delivery. Ahead of the Diwali season, Guleria's colleagues are working on Sundays. All scheduled leaves and holidays have been cancelled. "We are working hard to give the best to our customers," he says.

ET article: How Honda’s Car & Bike divisions are bucking India's slowdown-whatsworkingforhondaandwhatarethechallenges.jpg

Source & Full Article: http://economictimes.indiatimes.com/...w/24763861.cms

I really liked reading this article and my love towards Honda as a company made me post this here. I know it is a long post but a nice read. Want to dig in deep on the two Honda's and its way up till date.

Cheers,
Anurag.

The only thing I can say about Honda Cars is "Better late than never". That they have been content being fringe players in the Indian market is entirely their fault. The early success of the City and the brand pull had gone to their heads and they disregarded the needs of the Indian Market long enough waiting for Indian Car buyers to "mature up" to accept the Honda offerings iz Petrol cars and essentially overpriced Jazz.

TIll now the comapny has been a one horse Pony. Earlier it was the City and now the Amaze. It remains to be seen if the City replacement is as successful as its predecessor. The move up the totem pole has also been on account of falling sales of othe manufacturers like Tata, Mahindra & the VW group. Let us see if Honda can sustain the momentum in the next 4-6 quarters. For the sake of Indian Car buyers I sure hope they do not squander this opportunity . We deserve better products at realistic prices and more competition delivers just that.

Typically half-baked Economic Times Article.

While Honda finally got a diesel engine & the price of its cars right, the only reason things are looking up for them right now is they were so down & out before! Sales are up, yes, and credit where it's deserved. Still, is 10K units a month worthy of such an article? Toyota, Tata, Mahindra, Hyundai & Maruti have all sold more.

Fact is, the only Honda that's bringing in the volumes is the VFM Amaze. I'm surprised the article even makes a reference to the Brio as it is an under-performing hatchback. Where the Swift sells 15K and the i10 10K units, the Brio has sold merely 1.5K units in the last two months. 500 units lesser and it's entering flop territory.

Main reason behind the wait period is NOT high demand; it's the measly 10,000 units / month production capacity.

What the Amaze did to Honda, the EcoSport did to Ford. Ford doesn't even get a single mention in the article!

And when it comes to bucking the trend, I think Mahindra & Hyundai are doing a far better job.

Quote:

Originally Posted by GTO (Post 3277718)

Typically half-baked Economic Times Article.

While Honda finally got a diesel engine & the price of its cars right, the only reason things are looking up for them right now is they were so down & out before! Sales are up, yes, and credit where it's deserved. Still, is 10K units a month worthy of such an article? Toyota, Tata, Mahindra, Hyundai & Maruti have all sold more.

Fact is, the only Honda that's bringing in the volumes is the VFM Amaze. I'm surprised the article even makes a reference to the Brio as it is an under-performing hatchback. Where the Swift sells 15K and the i10 10K units, the Brio has sold merely 1.5K units in the last two months. 500 units lesser and it's entering flop territory.

Main reason behind the wait period is NOT high demand; it's the measly 10,000 units / month production capacity.

What the Amaze did to Honda, the EcoSport did to Ford. Ford doesn't even get a single mention in the article!

And when it comes to bucking the trend, I think Mahindra & Hyundai are doing a far better job.

lol:

To be frank I was waiting for your reply. I knew this was going to come from you. I agree on your part and the artocle boasts more on the Amaze but it doesn't mention the lack to produce more of it.

The article has moulded the reader that the demand has created the waiting proud rather lack of production capability which is leading to the waiting.

Anurag.

Just adding to the point that the demand was due to less production capacity, in chennai if you visit sundaram honda, if you don't have preference for colour and wanted SMT, we were told we can get the diesel version by a week. This was few weeks back. Typically it looks like the Amaze had a strong start and once maruti lowered the waiting periods for Dzire/swift (diesel versions), looks like amaze can also be bought without any waiting time given that you take whatever the dealer offers!

Having tens of thousands of customers whose bookings are open is a badge of pride? That's new to me. The fact is that Indian carmakers absolutely suck at demand forecasting and supply management. Making customers wait is a stupid strategy in my opinion. I myself waited 3 months for a brand new car while there were other variants of the same model that lay languishing in the stockyards for years afterwards. I almost went with my second choice on a couple of occasions! To be fair, Honda is not alone in this. But that's hardly a rationalization!

Credit where its due: hats off to the Marketing guy who thought this could be pitched as a success story!

ET is trying a futile marketing campaign for Honda. Its unsettling to note that they could boast about frustrated customers waiting for months to get their cars. The article should have instead focused on how Honda is failing to deliver Amaze, their only car that sells, on time. It would have been understandable for a Maruti or a Hyundai that have multiple cars in their portfolio (and most of which sell well).