Honda Cars hopes BR-V will help clock double-digit growth in FY17

Japanese automobile major Honda is optimistic of achieving double-digit growth in the current financial year. It is betting big on the Honda BR-V, a compact SUV which would hit the roads in May. The company, which reported two per cent growth in 2015-16, is hoping to increase its footprint with this launch.

The strategy includes expanding its product portfolio and increasing sales points. It is planning to invest Rs 380 crore, to increase capacity in anticipation of higher demand. To support the BR-V, it plans to increase the capacity of its Rajasthan plant to 180,000 units. It also has a plant at Greater Noida with a capacity of 120,000 units. After the expansion at Rajasthan, its total capacity would increase to 300,000 units per annum.

“With the current network, we have covered almost all the market. The environment is challenging and the industry is under pressure, which is why we could grow only by two per cent.” said Jnaneswar Singh, vice-president, sales and marketing, Honda Cars India.

Last year, the growth was driven by compact SUVs, premium hatchbacks and entry sedan segments. The trend is expected to continue. To cater to the premium hatchback segment, Honda has launched the Jazz and for the company SUV segment it would launch the new SUV. The selling quotient for the latter would be style, premium interiors, three rows with seven seats — which the company claims is a first time in the segment, pricing and quality. This is the kind of vehicle in which people can go anywhere, added Sen.

In 2015-16, Honda reported sales of 192,059 units compared to 189,062 units in 2014-15.

One of the drivers for growth was the new Jazz. The company has sold 41,400 units since then.

To be more price competitive, it plans to launch the BR-V with more than 90 per cent localisation, the level which five of its models already has. It also plans to add another 45 new sales points. "With this, Honda is entering into a new segment, the company is expanding its play field with the product and it will certainly contribute to the company's growth. It will also add to our image," remarked Sen.

Unlike other original equipment manufacturers (OEMs), Honda's export market exposure is only in few thousands. It exports to Africa and neighbouring markets. It also plans to launch Accord Hybrid — an expected flagship model later. Sen said the demand is moving from diesel to petrol. The price gap has also increased for the smaller segment due to various factors including infrastructure cess — which was more on diesel vehicles compared to petrol and the uncertainty in minds of customers due to the Supreme Court ruling.

"We need to follow the market demand pattern and can adjust, but, it depends on the market. Competition in every segment is increasing and we need to fight with the new models coming in. We are expanding our network to take on them," said Sen.

According to Siam data, Honda Cars India's market share dropped to 6.88 per cent in 2015-16 from 7.27 per cent in 2014-15. The dealer network with the company till March, 2016, is 295 dealers in 188 cities.