[wheelguy]

With sales almost volumes halving in the past four years, Honda Cars India, Japan's leading carmaker, is considering to restructure its manufacturing operations and cut cost, which may mean closing down one of its two units.

• May move production from Greater Noida to Rajasthan, sell land acquired in Gujarat few years back.

• If the plan goes through, the Greater Noida plant may be transformed into R&D hub and CKD assembly unit.

• Greater Noida plant had an annual capacity of 1.2 lakh units whereas the current production dropped to 2,500 per month. Current capacity utility rate stood at ~20% and even the cumulative utility rate is expected to drop to ~40%.

A large senior management team led by Masayuki Igarshi, chief of Asia Oceania region for Honda, and the team from Thailand visited India earlier this week to review the mid-term plan for India, which included restructuring of manufacturing plans.

“The senior management’s visit was one of the periodic meetings where we discussed ways to enforce greater competitiveness in our future products and strategy. HCIL firmly believes in India’s future growth potential and we are committed to bringing the latest products and technologies for the highest level of customer satisfaction,” said the spokesperson.

“With over a couple of decades presence in the state, Honda cannot claim tax benefits anymore and where the plant is located is also becoming a residential town. The option to move manufacturing to Tapukara has been going on for the past two years; it is not a question of ‘if ’, but a question of ‘when and how’ – that’s what the management has been vigorously studying,” said a person on the condition of anonymity.

“Strategy may bring in short term cost optimization benefits for Honda. For me, however, it's a big setback to the local Yogi government. This presents an opportunity for new automakers, especially from China, to tap into the readymade facility if Honda indeed concludes the sale to get a quick market entry," said Kaushik.

Source: ET Auto

[Sunil2307]

When the going was good, all these manufacturers turned greedy, and now instead of acknowledging the true fact/ reason behind the slump, they are all trying to fix the wrong problems.

[sandhyab]

Hahaha, I love Honda cars, being an owner of Accord myself but they turned greedy and wanted to position themselves as a premium brand without having anything premium about.

It's the managements fault for the position they are now.

[GRAND23]

This is a bad move. I was a Honda fan and even today I admire their cars but not as much as I use to follow them in earlier days.
There was a time Honda use to set the standards in terms of engine performance, quality, reliability, space and other manufacturers use to follow them.
But today situation is really bad and I am personally feeling bad to Honda.
I don’t think Honda is in bad situation due to only greedy. There might be various reasons such as operating cost, lack of management support, lack of vision/strategy for Indian market.

May be Honda sees shutting one of their plant as an opportunity to bring down the cost. But I personally suggest Honda not to make this move.
I see this is a perfect situation to Honda to bounce back. Ask me why?
The era of hybrid cars and electric cars have just begun. Though hybrid technology will rule for some time before electric car takes control.
Honda has the technology and they need to bring into our market as soon as possible. Remember, in India first move has a lot of advantages and if delivered rightly the sales will surely help Honda to be one of the top in the Indian automotive markets.
Today,the way I see is the manufacturer who has potential to fight against Toyota/Suzuki hybrid/electric cars is Honda. If not now, then never.

[Shreyans_Jain]

Increase the prices, drop your quality levels, don't update engines, give up on your USPs and loose control over dealeship practices.... This had to happen.

Honda India is a case study in how to ruin a painstakingly built brand. A multi time now dissatisfied Honda customer here.

[sgiitk]

I have been a fan of Honda, at one time having four (Civic VAT, City V, Amaze and Brio AT) in the family. Me having retired we have removed the City. I love the cars, but yes downsizing is the call of the day.

[M00M]

This is a stupid move by Honda India. Since the last 5-10 years they've lost focus of the Indian market and while people may or may not agree with me, I personally believe that the current / last CEO / India head / MD is to be blamed. They lack the knowledge of India and they try to follow Toyota. Toyota launches Etios so Honda made amaze. The problem is that Toyota quality levels are still up there and Toyota is happy with low sales but higher profitability while Honda wants high sales and high profits. Now how does that happen ? You cut quality and you compete with brands that are not in your league like Maruti or Hyundai. Maruti is known for tin cans, Honda wasn't.

I think they're confused who their competitor is and they don't know how to product plan or quality or price points.

I think the revival plan should be expedited in other ways.

1. Launch latest products from overseas, while maintaining quality levels without being greedy on profit margins.
2. Get rid of low quality products.
3. Expedite launch of EV and immediately launch hybrids.
4. Reduce dependence on city and give all models all engine / gearbox combinations and if that means that the WRV gets a 1.5 auto and it cannibalises the city, then let it, because there are people who will only buy the city and some who will only buy the WRV auto. As long as cannibalisation happens in-house it should be ok and good for the company. The moment you let the customer walk out due to want of an AT they go to Hyundai or Maruti and buy the Venue or Brezza. Bad move by Honda should've been rectified by now.

Product line up in my opinion should be Amaze - Jazz - WRV - City - HRV - Civic - Accord - CRV and also the Pilot SUV.

Cmon. Honda all these suggestions should be implemented if you're listening and they come from a loyal customer who has only bought Honda's in the last 15 -19 years. Wake up and correct your mistakes.

[Sk8r]

Call me sadistic, but I feel happy when OEMs who have increased prices unrealistically are thinking to shut shops. Fun fact : Top end Petrol retails close to 18 Lakhs !

So yes, whilst it's good to have a healthy variety of options and competition it's not good to jack up prices in the long run. You are only successful until the bubble bursts !

[CarguyNish]

I am a loyal fan of Honda cars, I have liked them very much, every car infact except Mobilio & BRV. Even now, I dream of Pilot and Element SUV to make it here sometime.

But, Honda is too greedy, they are always late to the party, they should have launched HR-V in 2014 itself to be segment benchmark. Now we'll not see HR-V ever I guess. Their Accord was also very good, but was overpriced.

Now, they are relying heavily on Amaze & City. They could have done good volumes from Jazz if they had priced it well or equipped it well. Neither is going for it.

Just 3 days back, I got a call from Honda Dealership, I had enquired for Civic. They said that they are offering 2 lakh discount on Civic. I asked them does the Civic come with Diesel AT option, to which she said that it comes only in MT. I knew that, but was checking the skill level of that SA.

I said I am ok with Petrol AT, provided they give me enough discounts on that. Later I even asked them, how about the one in showroom which has been there since launch ? They do have a VX Diesel in there as display car.

I told him that I'll buy that same piece if you give me 6 lakh discount on current VX Diesel Price. The SA acknowledged my point. He said he'll check and call back. I will definitely put my money if they offer that much discount, since they don't seem to have that much queries for Civic.

So, like someone said above, it's the management that has put Honda in this position. They need to realise this and make the change as soon as possible. Otherwise, Honda will be another Chevrolet in Next 5 years.

[vsrivatsa]

Disappointing news being a Honda Car Owner. With the Hector and Seltos marching ahead with so much of sales despite the slowdown - there is no one to blame but Honda and its strategy for this disaster.

And they are talking about launching the 2020 City soon - unfortunately the company seems to be too much focused around its existing cars like Civic and City and these are segments where the market is heading only downwards.

I don't understand why can't a Global Giant like Honda bring 2 SUVs, one sub 4m and one C2 SUV and cash in on the opportunity

[rahulskumar]

Honda has lost their quality quotient in recent years and has been selling cars with sub standard material especially in Indian market. We can see huge panel gaps even on brand new cars. Paint and body quality is also not that great. I see dents on body panel even when hit with small stones, I had to do color restoration within 3 months of purchase as Honda did not acknowledge the issue. They started telling this is due to car kept outside in the sun, washing too many times, but it was actually quite opposite and I always baby sit my car. The car hardly ran 200 kms in the initial 3 months and was always kept in closed parking. After 2 years, I see the paint peeling off at some places especially the edges. They never acknowledge the quality issues. I still love my car as I have invested my hard earned money and next step is to get it repainted in another 3-4 years. My 2009 Honda Accord in US had great body panels and the paint quality was top notch. Even after completing 2 lakh miles in 8 years, the black paint still had the shine even though the last 2 years she was parked completely outside in the California heat.

Honda even have technical issues with their 1.5 litre turbo engine option available in Civic, Accord and CRV in US markets. Just search "cold weather oil-dilution problem"and one of the solution provided by Honda is not to take the car for short spins.

Such companies should close down their operation and exit India, now a days we have better brands to choose from. I have made sure none of my family members or friends buy a Honda until they start improving their product quality. All of them are really happy with their decision of not buying a Honda

[deehunk]

Honda enjoyed all the free benefits, the cheap land they got now has an appreciated value, why would they do business now? Lay off workers, sell off plant and land and repeat the same strategy in Gujarat after 5-6 years. This is happening in every city and evey industrial area, stop giving absolute ownership of lands to industries.

[Nithesh_M]

Always fun when people blame manufacturers instead of blaming their elected reps for creating the slowdown in the first place.

Its not like manufacturers proposed to make cars expensive by voluntarily electing to skip BSV and jump straight to BSVI.

Or its not as if the manufacturers themselves created panic by declaring all cars in the country will be electric by 2025 thereby causing panic amongst potential buyers who feared their new ICE vehicles will be scrapped soon.

I'm sure the manufacturers didn't collectively propose to enforce mandatory 5 year insurance on purchase of new cars thereby killing the middle class ambition of buying a car that now costs a lakh more and no longer fits their emi.

I am pretty sure it wasn't the manufacturers who chose to create more panic by proposing to pass bills that hiked ICE registration and rto charges by upto a whopping 2500%.

Although I criticized Chevy for packing up and fleeing the country leaving their customers high and dry, now that I look back at it maybe they saw the situation spiraling out of control and decided to arrest their losses early.

Look at Ford, invested so many billion dollars on plants here they now have to sell to Mahindra at a loss all while selling the Freestyle, Aspire and Figo at not so "greedy" prices leaving them wondering "Buyers where art Thou?"

[navpreet318]

Originally Posted by Nithesh_M

Always fun when people blame manufacturers instead of blaming their elected reps for creating the slowdown in the first place.

Its not like manufacturers proposed to make cars expensive by voluntarily electing to skip BSV and jump straight to BSVI.

We need to have a control on the emissions. This is the need of the hour. We cannot forsake the environment for the sake of minting money or purchasing cars.

Or its not as if the manufacturers themselves created panic by declaring all cars in the country will be electric by 2025 thereby causing panic amongst potential buyers who feared their new ICE vehicles will be scrapped soon.

True. Stupid statement by stupid people who had no idea of the infra required for electrification in the country.

I'm sure the manufacturers didn't collectively propose to enforce mandatory 5 year insurance on purchase of new cars thereby killing the middle class ambition of buying a car that now costs a lakh more and no longer fits their emi.

Wrong. 3 year Third part is mandatory. Not 5 years for cars. and it is just the third party part. Does not make the car more expensive by a lakh. Total cost for example of an insurance of the top GTX+ Seltos is 60K.

I am pretty sure it wasn't the manufacturers who chose to create more panic by proposing to pass bills that hiked ICE registration and rto charges by upto a whopping 2500%.

Hike seems huge when one mentions 2500% but is meagre when one considers that RTO fees was 100 in some places and has been made 1000. Not that big a number eh. Get to the base. Uselessly putting up such percentages is not correct.

Although I criticized Chevy for packing up and fleeing the country leaving their customers high and dry, now that I look back at it maybe they saw the situation spiraling out of control and decided to arrest their losses early.

Chevy had a slew of failure products. That was pushed further down by bad management of service for the products. Dealers are bad too. Company officials were arrogant. Moreover the products just were not up to the mark. Most of them. Some were very good too. So yes company has to arrest losses.

Look at Ford, invested so many billion dollars on plants here they now have to sell to Mahindra at a loss all while selling the Freestyle, Aspire and Figo at not so "greedy" prices leaving them wondering "Buyers where art Thou?"

Now I'm a dealer and saying this. Companies have gotten greedy over time. Especially the car companies. Yes the value of money has degraded but just look at the way car prices have spiraled compared to commuter two wheelers. And that too at no extra value addition.

Look at the CRV for instance. Why wouldn't anyone choose a Fortuner or a Endy or any other car in that segment over it?
They have a 1.9L deisel which they sell in UK. Yet they chose to fit the 1.6 at such exorbitant prices!

There are car companies which have upto 100% margin on their products. This isn't exactly proper business.

Insurance and other expenses are a very minuscule amount in the EMI. The car cost is the major cost which has not made it out of budget.

[Nithesh_M]

60k is a lot for most salaried people who make 5 lakhs or less a year even without a housing loan already eating into their savings.

It may not matter to people who are well off but it damn sure is big enough for people to decide if they should pick a top end car from a segment below or go for a base model of a car a segment above, a conundrum most well off people never come across.

Unless everyone knows the cost incurred by a manufacturer in research, development, manufacturing and other overheads on individual car models and can somehow extrapolate the profit margins there is no way anybody can tell who is greedy and who isn't.

Every manufacturer does cost cutting in India especially in the sub 10 lakh segment and some above it.

For eg:

A top manufacturer spends pittance on chassis integrity but prefers to focus r&d on providing a car filled with gizmos and a frugal yet efficient powertrain built to a price to say they "offer more for less".

Other top manufacturer thinks providing premium interiors with good material, connectivity and paint quality will distract customers from poor chassis build quality overall.

There's a new entrant now who is emulating the quirks of the above two and is starting to establish itself as a viable third alternative.

The manufacturers that prefer to put their money on a decent engine/build quality but has no spare budget to add premium interiors or teenage attention grabbing gizmos to match the above rivals on pricing is ultimately ending up as the biggest loser.

Some manufacturers really don't care if Global Ncap highlights the fact that they make 0 star cars in Asia but other manufacturers can't afford to lose their brand image which is why Toyota and Honda had openly declared a few years ago that they are not willing to build cars to compete with entry level cars in India. A segment that makes many manufacturers a chunk of money.

I think it was Toyota boss who said building cars in that price range is against their values of providing safe cars.

Greed is subjective. For some the omission of in car features maybe greedy but for others manufacturers selling unsafe cars is greedy.

What's more valuable? A 10" touchscreen infotainment system or a life?