Flux in small car launch of Honda, Toyota

The launch of two much-awaited compact cars of Honda and Toyota, scheduled to hit showrooms in a few months, may get reviewed as the two companies struggle with component supplies.

While Honda Siel Cars India (HSCI) was originally planning to launch the Brio hatchback around end-August, Toyota Kirloskar Motors (TKM) was looking at June for launching the Liva. Both companies will give the launch plans a relook after a few weeks, when the picture of auto parts’ supply from Japan for the coming months is expected to get clearer.

"We are trying really hard to keep the launch of the Brio to August-September. We do not know what will be the situation of component supplies after May, so it is difficult to say whether the Brio launch will be on schedule," stated a HSCI executive.

Jnaneswar Sen, senior vice-president, HSCI, said, “We import components mostly from Thailand and to a limited extent from Japan. There is a crunch in supplies, which we hope will ease in another three months. We are looking at launching the Brio around the festive season. We have several months to go for the Brio launch and we expect to launch as scheduled.”

OUTPUT CUTS
Honda has been forced to cut output at its Greater Noida factory which produces the City, Jazz, Civic and Accord models, following a shortage in fresh supplies of components from Japan.

The Brio will also be produced at the Noida plant, with trial production having already started. With a price tag of below Rs 5 lakh, HSCI is striving to have more Indian parts in the hatchback and depend less on procurement from Japan.

"This is the most important launch for us and we do not want to make a half-hearted attempt when launching it. We have to be fully prepared for the demand the Brio could create and not make the customer wait for the delivery endlessly," added the HSCI executive.

Of the installed capacity of 100,000 units a year, HSCI was utilising 60 per cent, producing 60,000 units per annum. This run-rate will go down after the company brings about the 50 per cent cut in output.

Similarly, Bangalore-based Toyota stated a review is to be taken next month on the launch plan for the Liva. This is the hatchback version of the Etios sedan, launched by the company earlier this year.

“As of now, the launch of the Liva is on schedule...We would take a call, depending on the situation at the end of May,” said Sandeep Singh, deputy managing director (marketing), Toyota Kirloskar.

TKM pushed back the launch of Liva on an earlier occasion to make room at the production plant for the Etios, which is presently witnessing high demand locally. The car was supposed to get launched in February-March but the company is now looking at June.

It does not wish to have a similar situation for the Liva as had hit the Etios badly, with several customers reportedly cancelling bookings on being asked to wait for more than six months for the delivery.

From a five-day week, TKM is moving to a three day week from this month at its plant in Bangalore. The company is being forced to operate at 30 per cent of the full installed capacity of 150,000 per year. This roughly means a 50 per cent cut in active production of 85,000-90,000 units per year.

Market experts state the Liva is expected to generate huge volumes for Toyota, as the car, like the Etios, is expected to be priced competitively. Both Brio and Liva will compete for space against established players in the same segment, which includes the Maruti Swift, Wagon R, Ritz, Hyundai i10, i20, Tata Indica, Chevrolet Beat and Volkswagen Polo.