New Delhi: The local unit of the Japanese carmaker, Honda Cars India Limited (HCIL), has confirmed a product launch for the booming SUV segment in India.
The confirmation comes after long speculation by the Japanese carmaker in this hot selling category which constitutes almost 35% of the total passenger vehicle segment.
“Last time I said that we were investigating and preparing, but now I can confirm that Honda is under development of a new SUV product specially developed for the Indian market since the customers are focusing more on SUVs and its segment share is increasing,” Gaku Nakanishi, president & CEO, HCIL, said on the sidelines of the next-gen Amaze launch.
“Yes, we are late but the SUV market is crowded so it was important to study everything and then develop something to meet customer expectations. We are developing a brand new India-focused SUV,” Rajesh Goel, senior VP and director, marketing & sales, HCIL, said.
According to ETAuto sources, the new product development is at a very early stage under codename 31XA. It will be built on a completely new platform globally and will take on the likes of Hyundai Creta and sister-brand Kia’s Seltos in the mid-size SUV segment. The Start of Production (SOP) for the upcoming SUV is scheduled for August 2023.
However, the company was tight-lipped about the specifications of the new product.
Yes, we are late but the SUV market is crowded so it was important to study everything and then develop something to meet customer expectationsRajesh Goel, senior VP and director, marketing & sales, HCIL
About Honda’s entry into the emerging EV segment in the country, Nakanishi said, “COVID has already affected the schedules for the hybrid model, but we plan to launch it by next year.” Honda had earlier mentioned that it is planning to begin its electrification journey with the launch of a hybrid product.
In December 2020, ETAuto broke the news that Honda Cars India was wrapping up its production at the Greater Noida Plant after running it for over two decades. However, the company continues to operate its corporate office and R&D department from there. The company’s entire production was shifted to its Tapukara plant, which has a total capacity of 180,000 units. Honda declined to confirm if the company has any intention to utilise the Noida plant for contract manufacturing or leasing it.
“Last year, our production capacity utilization was 30%, this year our projection is that it will be 70%,” Honda said.
The company said it will continue to focus on premium products and expects export sales this year to grow four times of last year. HCIL has been exporting models including Amaze, WR-V and City to Nepal, Bhutan, South Africa and SADC countries. In January, it began exports of the 5th generation of Honda City to the West Asian countries.
Honda said that it faced production hiccups in the beginning of the current financial year due to semiconductor shortage, however at the moment, it is “not affected much.”
The Japanese carmaker has a dealer network of 331 outlets in 242 towns and cities in India. Going forward, it is not looking to grow in larger cities and may consider growing in newer areas but only with existing dealer partners.
Honda also said that the market rebound has been good after the second wave. The company expects the momentum to be good for the festive season which starts with Onam in Kerala. However, price hikes and semiconductor shortage still remains a hurdle for the industry.
Honda Cars product portfolio in India includes Honda City, WR-V, Jazz and Amaze.
COVID has already affected the schedules for the hybrid model, but we plan to launch it by next yearGaku Nakanishi, president & CEO, HCIL
SUV boom
SUVs have been the guiding light for domestic sales during the past two years in the otherwise weak Indian automobile industry. OEMs are also constantly upgrading themselves with innovative technologies and product launches.
However, over the years HCIL has lost its share in the market. Back in July 2014, Honda Cars was the third-largest carmaker with monthly volumes rising 40% to 15,709 units, overtaking the homegrown player Mahindra & Mahindra. In April-June FY15, the company displayed the best performance with almost 7% market share. However, with the lack of an upgraded portfolio, currently its market share is around 3%.
Meanwhile, the company’s performance was also affected owing to the entry of new players in the market. Korean carmakers like Hyundai and Kia took the industry by a storm with their SUVs. SAIC-owned MG Motor also has three UV products in the portfolio and is ready to launch the Astor SUV soon.
M&M’s XUV700 launched last week is attracting the consumers with its pricing and technology. In such a scenario, Honda’s debut product in the segment makes sense to get back to the game.
In the calendar year 2015, the SUV segment contributed only 13.5% to the overall passenger vehicle sales in India. This number went up to about 26% in CY2019, and 29% in CY2020.
