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Honda aims for a bigger footprint in the Indian car market

It is a big player in India's two wheeler market with a market share of about 28 per cent, second only to its erstwhile partner, Hero MotoCorp of the Munjal family.

twitter-logo Chanchal Pal Chauhan        Last Updated: September 22, 2016  | 19:05 IST
Honda aims for a bigger footprint in the Indian car market

{mosimage}There are few companies like Honda Motor.

It is a big player in India's two wheeler market with a market share of about 28 per cent, second only to its erstwhile partner, Hero MotoCorp of the Munjal family. It has now shown intent to script a similar success story in the highly complex Indian car market but its journey in the segment has not been a smooth affair till now.

Known for its engineering prowess, Honda entered the Indian car market in 1997 with its first manufacturing unit at Greater Noida. Its debut model, the City, ruled the country's sedan market for a long time helping it to gain market share and quickly emerge as the fourth largest in the tally, just after Maruti Suzuki, Hyundai and the utility vehicle major Mahindra & Mahindra.

Now, it is aiming for a much larger footprint in India -- its fourth largest international operations after US, China and Japan -- and is making a strong pitch for a rational tax structure. Yoichiro Ueno, the newly appointed President and CEO of Honda Cars India, in his first interaction with the India media in New Delhi disclosed the company's intention of bringing some of its global models to India that will not just comply with harsher crash standards but also make the Indian market much more vibrant. "Indian market lacks diversity. There are so few categories and models, leaving so little choices for the customers. Just a few sedans to small SUVs are the craze and then there a lots of regular hatchbacks. I believe, India the world's fastest growing car market, may soon overtake Germany to become globally the fourth largest, so we need to add to our portfolio with many new fresh offerings," he said.

Honda, now operating as a fully owned subsidiary (after ending the joint venture with Shriram Group in 2012), now wants the favourable tax structures for under 4-metre length cars-that make them more affordable than other passenger vehicles-to end.

"It is our policy to have a global line-up with some modification and if the regulations of Indian market become more universal, customers will be able to enjoy more global products," said Ueno. "The Indian government may have promoted fuel efficient smaller, nimbler cars, but as we evolve we expect the taxation regime to be in tune with the global order that will eventually lead to a seamless integration of this critical market with the global market."

The GST is a huge opportunity to rationalise the Indian tax structure in a transparent manner and remove the anomalies of multiple taxes on different categories, according to Ueno. The excise duty on small cars in India currently stands at 12.5 per cent compared with 24-30 per cent for larger vehicles. Honda's models sold in India-such as the City, Mobilio and the newly launched BR-V-are in the higher tax bracket.

It could be a reason for its dismal performance. Ueno admitted Honda's performance in India in recent months has been below expectations despite the recent debut of BR-V, a compact SUV tailored-made for India. It has been trying to clear the high inventory with dealerships and is confident of sales picking up in the festive season. It is aiming to sell highest ever volumes of 200,000 units this year. Honda's sales had come under pressure due to the shift in consumer preference towards petrol cars in recent months, even as it introduced diesel in all its models.

Honda is also looking to give a push to its dealer network across the country-it will grow to 345 by the end of the financial year from 309 currently across 197 cities. And new cars like the globally renewed Civic could bring back the lustre back in the executive sedan segment.

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