New Delhi:
The local unit of the Japanese carmaker Honda Cars India (HCIL) will discontinue the production and sale of its premium hatchback Jazz and WR-V in the Indian market, two sources aware of the matter told ETAuto. With this, the carmaker will have only three models on sale and a very meagre part of the market.According to the first source, the company will stop producing Jazz after October 2022 while the crossover WR-V will not be produced beyond March 2023. The carmaker will also stop the production and sale of the 4th Generation Honda City by December 2022 in the country. However, the 5th generation of the sedan will continue to be available in the market.
As these three models go off the shelf in India, Honda Cars will have only three models on offer: Honda City, Honda Amaze, and Hybrid City. WR-V and Jazz have been among the best-selling cars for Honda in. Discontinuing them will create a vacuum for a larger share of the Indian car market.
ETAuto reached out to Honda Cars India for a response, however they declined to comment. “We can’t comment on market speculations,” said a HCIL spokesperson.
WR-V was the first model developed by Honda R&D Centre of Brazil in collaboration with Honda R&D center of Japan and was the first product from Honda to clock 50,000 units of sales in India in the first year of launch and accounted for almost 28% of the total sales of HCIL in the market.
“If the decision to exit the hatchback segment is confirmed, I personally feel Honda is missing a trick by not playing in the most affordable segment in India. For many customers in this segment, Honda is an aspirational brand. This will mean, for a first-time buyer with a limited budget, Honda will no longer be in the consideration set,” Kaushik Madhvan, Independent Consultant, Mobility, Frost & Sullivan, said.
However, according to our sources, the carmaker is gearing up to launch a new compact SUV soon after discontinuing the WR-V. The carmaker will start the production of a new compact SUV codenamed 3US/31XA in August 2023 and the expected volume is at about 40,000 units in the first year. The lack of SUVs in its portfolio has shrunk its market share to below 3%. In fiscal 2022 utility vehicles outsold passenger cars for the first time ever and the likes of Honda suffered while others like Kia, Hyundai, and , which have an SUV-heavy portfolio, gained.
WR-V will have one of the shortest lifecycle products for the carmaker in India while Jazz had three generations across 13 years. Jazz touched the peak annual sales of 42000 units in 2016. Industry pundits suggest that the carmaker is looking for products that are premium in terms of profitability and product. In December 2020, the carmaker stopped production of its premium cars Honda Civic and Honda CR-V with the closure of its old plant in the country.
Probably the strategy to stop production of Jazz and WR-V is in line with premium aspiration set by its previous President and CEO who had said they will not sell any car below Honda Amaze.
Recently, its newly-appointed CEO told ETAuto that the company has been profitable in FY2022 after two consecutive years of loss. “This is a very important market….world’s fourth biggest. Compared to three-four years ago, we are a bit scaled-down but our business is now becoming stronger. Fortunately, with the actions that we took (shutting down Greater Noida), we are back in profit, “President and CEO of Indian operations Takuya Tsumura had said recently.
Honda Cars’ market share shrank from a high 7.26% in 2015 when it sold 192,059 units to below 3% today with less than 90,000 unit sales in a year. As of 2020, it decided to shut down its oldest factory in Greater Noida which had a capacity of 120,000 units per annum.
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