Wednesday, October 12, 2011

Indian buyers pose tech challenge to Honda

Indian buyers have forced Japanese auto giant Honda Motor Co (HMC), admired the world over for beautiful cars that sport cutting edge technology, to face a bitter truth. The company may be miles ahead of rivals in hybrid and fuel cell technology that will fuel cars in future, but it is woefully trailing in diesel technology that customers demand now.

"There is a realization in Honda that there is some catching up to do in diesel. For years, gasoline has been the fuel of choice in most countries and Honda has accordingly invested resources to develop advanced petrol engines. We have also invested in future fuels. But now, there is a demand for diesel from not just India, but Europe and parts of Africa as well" said Seki Inaba, director (sales & marketing) HMCas Indian subsidiary Honda SIEL Cars India Ltd (HSCIL).

Absence of diesel from its portfolio has battered HSCIL with sales of CR-V, Accord and Civic touching an all-time low. Against 200 CR-Vs a month that HSCIL did two years ago, it now sells 30. Accord and Civic have also dropped significantly and now clock 120 units and 250 units a month respectively. And it has taken price cuts to shore up Jazz sales from 200 units to 600 units.

"Since 80% customers prefer diesel vehicles due to the skewed fuel pricing, we are majorly handicapped. The hardening of yen against the rupee hasn't helped matters. The CR-V that is completely imported, is the worst hit of the lot," the official said.

With the parent company yet to take a firm call on what to do with diesel power-trains, there is no possibility of Honda cars being powered by diesel engine in over a year. Till that happens, HSCIL will bank heavily on City and the recently introduced small car Brio.

Inaba has no illusions about how many takers there will be for the attractively priced Brio (Rs 4-5.15 lakh ex-showroom). Aware that diesel makes up for 70% sales in this segment too, Inaba says he will be more than happy if Brio matches City sales to touch 50,000 unit per annum. "We are not here for numbers. In any case, given the current constraints, we cannot be here for numbers. We will be happy if we sell 100,000 cars in a yearas time, up from 60,000 units last year?"