What is the significance of this elevation?
Rather than my promotion, this is Honda’s pure commitment to the Indian market as well as the South West Asia region. The Indian market is doing well and Honda has been here for 20 years. We have four companies in the country and this is already a large scale of business. There is need for more synergies in certain areas of operations and Honda understands the importance of India.
What will you be responsible for?
Well, until yesterday, I was focusing on the car business but now I will look after the four Honda arms in India as well as Pakistan where there are three companies and three line-ups. Bangladesh, Sri Lanka and Nepal also fall under my purview. It is my view that Honda’s success story in India can be replicated in neighbouring countries and it is here that the country has a vital role to play. This is a large and fiercely competitive market and the lessons learnt here can be put to good use. We are also looking forward to free trade agreements (FTAs) in the ASEAN region and this will give a good opportunity to Indian vendors. Export competitiveness will help them become a lot stronger in critical areas like quality, cost and delivery.
What do you have to say about the Honda bike brands in India?
On bikes, Hero Honda has grown rapidly while Honda Motorcycle & Scooter India (HMSI) has not done so badly, considering it began from scratch. Effectively, their combined market share is strong and on expected lines. In the future, they need to grow even stronger and possibly collaborate in some strategic areas. There is fierce competition from local players like Bajaj Auto and TVS Motor Company but then market share is not our focus. The key is to see how many customers support Honda’s products. The Indian bike user must be among the happiest in the world because he has a wide array of products to choose from.
In terms of brand recall, is HMSI still a little way behind?
HMSI began operations in 1999 and you need to compare the growth of Hero Honda till 1999 and the period from 1999 to 2005. How different were they? Had Hero Honda been the only subsidiary to represent Honda in India, I wonder if it would have grown to this level. The company made a tremendous effort because of Bajaj and TVS. In that sense, we are satisfied with what we have done and technology-wise also, HMSI has become a benchmark for Hero Honda as well. It is a good relationship that has emerged in the process.
Moving on to cars, is a two-tier excise duty structure a good thing?
It is a good thing that excise duties have come down, even if it is for small cars alone. After all, they account for 70 percent of the market and customers deserve to get the right breaks while buying them. As for our business at Honda, it is natural to ask why only small cars were considered. Why did this not include larger ones or for that matter even two-wheelers? It is my view that the efforts to promote greater market penetration for small cars could also be extended to bikes. After all, six million buyers buy them every year. Honda has always welcomed India’s moves to go in for a fair and equal tax approach unlike other ASEAN countries where incentives are given for one-tonne pick-up trucks as in the case of Thailand or multi-utility vehicles in Indonesia and the Philippines. Some countries also have differential duties on engine displacements. I, therefore, hope that the near future will see the Indian government look at other cars or even bikes for similar incentives.
Do you think this is a fair structure as it exists today?
Well, the government has to consider a lot of aspects. From our side, tax reduction gives greater options to customers. One must bear in mind that CKD import duty is down to 12.5 percent, which is a good thing. The market will be stimulated eventually and sales could improve across all segments. Globally, it is a common trend to support small cars across the world because they help in the cause of clean air and also in easing traffic jams.
Will Honda bring a small car to India?
We are trying to figure out what the customer expects of Honda in that kind of segment. Obviously, it must be something different that goes in line with our experience and reputation. This is the challenge and it will involve a lot of work in design, cost, concept etc. The City, Accord and Civic will take care of reaching the 100,000-unit mark by 2010. The new model is not included in this estimate and we need to build another plant to go beyond one lakh cars. Honda believes in taking one step at a time and eventually our objective is to keep the customer happy.