Honda To Focus On Premium Products To Grow India Business

The company, which on Thursday introduced an updated version of its mid-size sedan -- City, plans to focus on products which are over Rs 10 lakh price tag powered by petrol and hybrid powertrains. The company, which is present in India through a wholly-owned subsidiary, plans to do away with diesel models in the country. In a press briefing, Honda Cars India President and CEO Takuya Tsumura said the company would focus on the Rs 10 lakh and above segment over the next few years.

"In the passenger vehicle segment more than 40 per cent sales are coming from models priced over Rs 10 lakh. We expect this to grow more. Our focus would be on model introductions in over Rs 10 lakh segment," he noted. Tsumura said that for Honda models like Amaze and City, top trims currently contribute over 60 per cent of the sales. He noted that new models would be a mix of new models and full model changes of the existing product range. The company is also planning to bring in imported models to the country as part of its strategy to focus on premium products in the country. Honda has already initiated a revamp of its sales network across the country with an investment of Rs 260 crore.

Of this, Rs 100 crore has already been invested so far. Honda has seen its market share in the domestic passenger vehicle segment drop from 5.44 per cent in FY19, to 2.79 per cent in FY 22. The automaker in recent years has discontinued models like CR-V, BR-V and Mobilio in the market and now relies on its sedan portfolio -- City and compact sedan Amaze to bring in the volumes. On the company's strategy regarding powertrains, Tsumura said that globally Honda has outlined a direction to focus on electrified and hydrogen powered models going ahead. "India is also part of the plan but every market is different depending on infrastructure," he noted.

Tsumura said that following the global trends, the company would not be manufacturing diesel vehicles in the country. On chip shortage, he noted that some impact still remains on the company's production schedule. "Some impact is there but Honda has prioritised for India so we are good for the first half of the year," Tsumura said. The company's Tapukara (Rajasthan) based plant is currently producing 1.2-1.3 lakh units per annum and the capacity utilisation is expected to increase with the introduction of the new models, especially the new sports utility vehicle later this year, he stated. The manufacturing plant currently has an installed production capacity to roll out 1.8 lakh units per annum. It can further be ramped up to produce around 2.2 lakh units annually.

Tsumura said the company has made profits in the last two years by taking various cost reduction steps and is now looking for growth in the country. On sales growth expectations in the upcoming fiscal, Tsumura noted that the company expects to increase its sales with the launch of the new SUV model. On a query regarding exports, he said the company has exported around 23,000 units so far this fiscal and expects it to increase in the next fiscal. Honda on Thursday launched the new version of City with 1.5 litre petrol variants priced between Rs 11.49 and Rs 15.97 lakh (ex-showroom Delhi).

The strong hybrid trims (eHEV) are priced at Rs 18.89 lakh and Rs 20.39 lakh respectively. "India as the lead market for the model, we are excited to introduce the new City with sportier new look and enhanced new features for advanced safety, connectivity and convenience," Tsumura said. The expansion of Honda Sensing application in petrol trims and new grade introduction for e:HEV is aligned with Honda's global vision to promote safety, environment friendly and fuel-efficient vehicles that meet the changing needs and preferences of today's consumers, he added, Tsumura said the company expects 15 per cent of the City sales to accrue from the eHEV (strong hybrid) variants going ahead.