Honda Cars eyes comeback with a slew of new SUVs across multiple segments

Firm kick-starts feasibility study on a pure electric model

Honda Cars India is confident of making a comeback in India’s competitive passenger vehicle market, and plans to launch a raft of new SUVs targeted at multiple segments starting next year. The local arm of the Japanese carmaker has also started a feasibility study for a pure electric model and is sharpening focus on exports, the firm's top official said, adding that the worst is behind for the maker of the City and Amaze models.

“We are not happy in this position. The sedan is less than 20 per cent of the market and SUV is 40-50 per cent. We were late to get into the segment (SUV) but we are participating in it now. It was the bottom and we are returning now,” Takuya Tsumura, president and CEO, Honda Cars India told Business Standard. He did not give details on the timelines and positioning of the upcoming models.

The first SUV, expected sometime next year, will be in the “mainstream SUV segment” for domestic and exports and will help  the firm raise its capacity utilisation rate, which is currently close to 60 per cent of the installed 180,000 units a year. Honda has been stepping up exports year on year. It shipped 20,000 units to Mexico, Turkey and other markets in 2021–four times the 2020 volumes–and is eyeing similar levels this year.

Honda, the fourth largest passenger vehicle maker till FY19, with a market share of about 5.5 per cent, is now at the eight spot. Heightening competition and a rapid change in buyer preference from sedans to SUVs caught the firm on the back foot.

At the end of FY22, its share reduced to 2.86 per cent from 2.99 per cent a year ago, according to retail sales data from Federation of Auto Dealers Association (FADA).

Despite being a late entrant, Tsumura who took charge of the India operations this April, is confident of making a strong comeback. “We are late in terms of having a presence in the growing segments. We are still strong in sedans. Even today we have many enquiries about the City hybrids but because of the chip shortage it’s not easy to meet the demand. We are sure we will come back strongly,” he said.

In the absence of a competitively-priced SUV in the mass segment, it ceded ground to Tata Motors, Mahindra & Mahindra, Hyundai Motor India, Kia Motors India, among others. The BR-V and later the WR-V didn’t live up to expectations. The CR-V, a “bestseller in many markets,” didn’t work in India “as it was ahead of its time,” says Tsumura.

Amid shrinking volumes and mounting losses, Honda was forced to consolidate its India operations by closing down one of its two plants and announcing a voluntary retirement scheme in 2020. Subsequently, the line-up of India models has also shrunk from eight in FY19 to three now--City, City Hybrid and Amaze. Though the firm continues to produce and sell the WR-V and Jazz, it is likely to discontinue them in the months ahead.

Tsumura said the restructuring in India was part of the global re-constitution of the business amid the electrification trend.

“Worldwide there are changes in the business constitution. We have to gear up for electrification. We had to close the Turkey and UK factories. Even in Japan, we had to close one of the factories because of all the changes,” he said.

Globally, by 2030 Honda plans to have two thirds of its sales coming from electrified vehicles including hybrids, hydrogen and EVs. By 2040, it will see only EV and hydrogen.

According to Tsumura, as many as 30 models (EVs and hybrids) are in the works at the parent company and some of them will come to India at some point. “We have started the feasibility study for EVs in India,” he said.