‘Once bitten, twice shy’, but Honda Cars India has been twice bitten and yet it is getting ready for another shot at hybrid cars with the City e:HEV (the carmaker has failed twice with the Civic Hybrid and the Accord Hybrid). Takuya Tsumura, president & CEO, Honda Cars India Ltd, says a learning set has been developed from previous models, and it gives the carmaker the confidence to succeed this time. In an interview with FE’s Vikram Chaudhary, he also talks about why Honda hasn’t been able to make India a major export hub, why hybrid cars is what India needs, and shares his immediate goals. Excerpts:
In its 25-year journey in India, Honda has launched 12-odd car models (Accord, Accord Hybrid, City, CR-V, Civic, Civic Hybrid, Jazz, Brio, Amaze, Mobilio, BR-V and WR-V). Of these, at least eight have been discontinued (Accord, Accord Hybrid, CR-V, Civic, Civic Hybrid, Brio, Mobilio and BR-V), possibly because of low sales volumes. Does this imply that the parent company in Japan hasn’t been able to understand, most of the time, what Indian buyers need?
There could be multiple reasons for Honda Cars India to have discontinued certain car models over the years. Maybe it wasn’t the right car at the right time. Like we launched India’s first hybrid car in 2008, but the market wasn’t ready.
Despite having two manufacturing plants (the now-closed Greater Noida plant and the one in Tapukara, Rajasthan), why hasn’t Honda been able to make India a major export hub (like companies such as Maruti Suzuki and Renault–Nissan have done)?
Well, in FY22, we exported 19,401 cars, as compared to 5,131 units in FY21. We registered a growth of 278%.
But this surge in exports appears a recent phenomenon, because in FY20 Honda exported a mere 3,826 cars, and in FY19 just 4,794 cars. Even the FY22 figure of 19,401 cars is far lower than Maruti Suzuki’s 238,376 cars and Nissan India’s 38,988 cars for the same year…
I have joined recently (and it may not be correct to speak for previous leadership’s actions), but a reason could be that we possibly didn’t have the right model, and more importantly the right connection, to export a large number of cars from India.Prior to India, I was in Turkey, and the made-in-India City sedan is being exported to Turkey, as also to the Middle East and Africa. Those regions want more cars and this could be an opportunity for Honda Cars India.
Honda had earlier launched the Civic Hybrid (in 2008) and then the Accord Hybrid (2016), but both cars failed to find enough buyers. What gives you the confidence to launch yet another hybrid car in India (the City e:HEV)?
Those two were imported models and attracted very high taxes, and that’s why their sticker price was very high (and out of reach of most Indian car buyers). The City e:HEV hybrid, on the other hand, is a made-in-India car and we will be able to price it far more competitively. I also believe the market was not ready for hybrid cars that time, but now it is.
What will be the localisation levels in the City e:HEV?
We are already producing the fifth-generation City at Tapukara. The hybrid technology has been developed upon that model of the City. While it’s difficult to share localisation levels in percentage, some parts of electric motor and wiring etc have been imported, but most of the car is made in India.
Japanese carmakers have been focusing on hybrid-electric vehicles (HEVs) instead of battery-electric vehicles (BEVs). Why?
At Honda, we believe hybrid cars are the most practical solution for India right now; BEVs face a challenge because the charging infrastructure has not been fully developed, especially on intercity routes. Hybrid cars, on the other hand, can be considered self-charging electric cars. These can be driven exclusively on electric power for more than half the time, and are also 40-45% more fuel efficient than petrol cars. Good fuel efficiency, in turn, can help reduce the country’s oil import bill.
The Indian government doesn’t give any tax benefits to hybrid technology (like it gives for BEVs) and treats it at par with petrol/diesel vehicles. How do you view this?
From a taxation point of view, HEVs should be treated somewhere in between BEVs and petrol/diesel cars. Anything in the range of 20-30% effective taxation can help make HEVs popular (BEVs are taxed at 5% and petrol/diesel at about 45%).
Would you give the Greater Noida factory to some other carmaker for contract manufacturing?
No, while there could be speculations in the market, we are running other important functions at the Greater Noida plant.
At one point of time, Honda was among India’s top-five carmakers, but now it’s not. With what kind of goal have you arrived in India?
Our goal is to get a respectable market share in the segments we are present in; for example, in the midsize sedan segment, we have about 44% share, and in the entry-level sedan segment, we have about 16% share. The immediate goal is to keep that share and increase it gradually. Another focus is to grow more than the passenger vehicle industry’s growth (if the latter grows 10%, we will focus on growing 11% and more).
But with carmakers such as Volkswagen and Skoda launching new sedans (Virtus and Slavia), wouldn’t the City be under pressure?
More sedans is good news for the segment, as there will be more options for people who may shift their interest to sedans from SUVs. The midsize sedan segment, in particular, has been shrinking over the last 6-7 years, and more options in the market can help arrest its fall and make it grow.
With fuel prices going up, will you also launch CNG cars?
No, we will focus more on hybrid technology.