Honda takes big step

"Honda's individual businesses are expanding fast and it makes it necessary to take decisions faster. As part of the strategy, we plan to establish a new company Honda Motor India to consolidate the parts business across the automobile and power products business areas for more synergy."

This is what Masahiro Takedagawa, president and CEO of Honda Siel Cars India (and operating officer of South Asia comprising India, Pakistan, Sri Lanka, Nepal and Bangladesh) had to say recently on the eve of the Civic launch. According to component makers, the new entity is a big step by the Japanese automaker to leverage the strengths of Honda into one company. The fact that it has a carefully selected and nurtured spare parts network has justified its creation.

"We will transfer the auto spare parts business to this company. It also has the potential to coordinate our various operations in India," said Takedagawa. A leading component manufacturer puts the new company in perspective. "We cannot sell directly in the market and deal directly with the spare parts division of Honda's companies as part of a contractual agreement," he said.

Of his company's total supply to Honda, around 10 to 15 percent is sold to the Honda spare parts division. "This might be the first step to leverage this Honda strength and there could be a bigger picture on the anvil," added the official.

According to experts, Honda could be, in its own way, trying to lend some order to the fragmented aftermarket. "It can generate brand loyalty and check quality. The spurious trade can also be controlled. The whole idea is to give better value to the customer," said a supplier. Since Honda's spares business by itself runs into hundreds of crores of rupees, the move to bring it all under one umbrella could generate substantial revenue to the parent in addition to serving customers better.

In addition to its car and two-wheeler businesses, power products is a core business and includes solar panel development as well as multi-purpose engines used to power everything from lawn mowers to speedboats. Honda Siel Power Products makes portable generators, water pumping sets and general purpose engines at its facilities in Greater Noida, Rudrapur and Pondicherry.