Honda Motor Co is working on a next generation car that will be produced with India as the lead market. The company has no plans to introduce the 660 cc engine in India. “We don’t like 660 cc engine cars. They are too small, we don’t consider them cars,” said Mr Masahiro Takedagawa, President & CEO, Honda Siel Cars India Ltd, in an interview with Business Line. Excerpts:
Honda has shown strong sales numbers beginning 2008. So, how do you see this calendar year panning out compared to last year?
Last year was a tough year due to macro-economic policies. Interest rates discouraged consumer motivation. In March 2006, after the Government gave incentives for manufacturing the small car by reducing excise duty to 16 per cent from 24 per cent, car makers had to reduce prices. But to enjoy the deduction, many cars in the B plus segment like Swift Diesel, and the i10 appeared on the scene, stimulating consumers to shift segments. So the B segment grew at 25 per cent, while the C segment got impacted. On top of that Maruti introduced SX4.
Hence, the market, which was growing at 3 per cent, further expanded. This year, we will launch the eighth-generation Accord, which would get good showroom traffic. The Civic hybrid will also give a good message. Interest rates seem to be dropping. So this year should be a good year. Last year, we faced short supplies. But we have now expanded capacity. What kind of growth do you see this year?
Last year, it was 13-14 per cent. This year it should be 15-16 per cent. Last year, the premium segment grew at around 6 per cent. This year it could be at 10 per cent.
Some of the global car makers intend to make India a hub for their small car exports, what are your plans?
As India becomes a design and development hub, we are working on a next generation car that will be produced with India as the lead market. This could then be replicated in other markets. It would take 3-4 years time. But we would not necessarily export.
Would you also be considering exporting the engines being manufactured here?
We have begun construction of the second plant. We will have stamping and some parts of engine manufactured here. But to have a facility to produce a complete engine would take 3-4 years time. However, we will not export them. Honda’s policy is to supply products for domestic demand. In Asean countries where there are FTAs, we have several suppliers who produce these parts and we source them. For instance, our automatic transmissions are produced in Indonesia, manual transmission in Philippines, big bumpers and instrument panels in Malaysia.
So would you be sourcing anything from India for your overseas locations?
India is definitely a larger market than Asean. We are looking forward to the FTAs between India and Asean. Then India will be a part of our supplier network. Currently, we are importing some parts under the early harvest scheme as a part of the Thailand FTA. We can look at some engine parts that can be exported.
Are you considering your 660 cc engine car for the Indian market?
Not at all. We don’t like 660 cc engine cars. They are too small, we don’t consider them cars. They have been made to suit Japanese conditions. Even Maruti that has a 660 cc engine car in Japan, has Maruti 800 as its entry level car in India.
Where does India fit in the Honda Motor’s global operations?
Both Hero Honda and HMSI (Honda Motorcycles and Scooters India) produced 4 million units last year. Globally, Honda produced 14 million units. Roughly 25 per cent of the motorcycles were sold in India. In the case of cars, suppose if we do one lakh units here and Honda’s global production is 40 lakh, India will account for roughly 2.5 per cent of the market at that time.
HMSI is looking at exports from India. Despite a slowdown in the domestic market, Hero Honda is commissioning its second plant. Without venturing into newer export markets, how do you expect growth for the two companies?
Unlike Bajaj and Maruti that can go global, we already have our manufacturing and supply bases everywhere. For Hero Honda and HMSI, the major concern is to keep their number one position in the Indian market.
Are you bringing Honda Financial Services to India?
We are studying the market. Everywhere, Honda Financial Services is profitable. In India, we need higher volumes. So when we do 1.5 lakh units, it would be a good time to consider such a foray.
