Honda India would rather be late than sorry in the SUV segment 

by Mayank Dhingra & Sumantra B Barooah 21 Oct 2019

The HR-V was close to being productionised for the Indian market but Honda scrapped the project as a result of the slowdown and plummeting volume projections for what would have been a premium product

Unlike its other underperforming Japanese counterpart, Honda’s passenger vehicle entity in India is still on safer ground when it comes to a positive image in the buyer’s mind and a relatively fresh product line-up in a highly competitive market. But the carmaker is still falling short of capturing buyer interest in one of the most trending and lucrative product segments – SUVs.

Honda Cars India (HCIL), which saw a spurt in sales after the launch of its WR-V crossover in March 2017, with the Jazz-based crossover clicking with customers in the sub-4-metre and the sub-Rs 10 lakh crossover space almost immediately, shooting up its UV market share from 3.54 percent in FY2017 to 6.50 percent by end-FY2018, it is again facing the heat from the competition in the form of Hyundai’s Venue and Mahindra’s XUV300.

Honda has seen a significant drop in the sale of its UVs over the past year with merely 10,143 units sold between April and September 2019 (April-September 2018: 19,446), leading to a market share drop from 4.19 percent to 2.27 percent. Clearly, the initial buzz around the WR-V didn’t sustain for too long and the crossover could only manage a flash sprint to the 50,000 unit-mark and not really endure its performance.

Now, the carmaker has realised that the combined portfolio of the three SUV offerings — WR-V, BR-V and flagship CR-V – is rather inadequate to tap into the true potential of the UV segment in the country where its arch rivals Maruti Suzuki and Hyundai have been ruling the roost for quite some time. New entrants like Kia Motors are not making life easier either.

In an interaction with Autocar Professional, Rajesh Goel, SVP and director, Sales and Marketing, HCIL, said, “While we have the WR-V, BR-V and the CR-V, considering the market requirement, we still have to focus a lot more on our SUV line-up. That’s a stated statement by our president.”

“The bigger question, however, is that unlike the sedan or the hatchback segments, where you have a very homogenous product mix in lieu of the excise duty structure differentiating on the basis of length and engine capacity, in the UV segment, everybody is trying to find their unique positioning.

“And, it is very important going forward what you do and that is why we will take a little more time. We are still in a study-phase and when we are ready to announce, we will announce something in that space,” he added.

Strategy flip-flops
With an aim to increase its market share across various segments (4.57 percent between April-September 2019), HCIL has been attempting to launch a few of Honda’s global bestsellers in India, but with little success. For instance, after failing in 2013, it took a second shot at localising and introducing the Honda HR-V (Creta rival) SUV in India after observing the massive potential of the segment, but has recently scrapped the project due to the general slowdown in the automotive market and plummeting volume projections for what would again have been a rather premium product.

Similarly, the carmaker had invested heavily into a new small-car project for India in 2015 christened ‘Indian small-car revolution’ (ISR), but took a decision midway to call it off. Such moves in the past few years hint at its inability to gauge and assess the market requirements in the best possible manner, for which the company is actually paying the price of getting left behind the competition by at least three years.

New compact SUV by 2022
While all major carmakers have a proper ground-up compact SUV model currently on sale in the Indian market, Honda has only started off with conceptualisation of a brand-new compact SUV based on the second-generation Amaze, which it plans to launch only by 2022 – a massive loss of opportunity.

The only positive sign here is that the company isn’t completely oblivious of the same and could do something remarkable when the time arrives. “Yes, we are losing time in the SUV segment and it’s a fact. But it is better to lose time when you are researching rather than when we have launched a wrong product,” acknowledged Goel.

A slow first-half FY2020
With a 35 percent drop in sales in this fiscal until September with total sales falling to 60,870 units in the first half of FY2020 (H1 FY2019: 94,419), the carmaker, like most others, doesn’t see any major signs of a recovery.   

The Honda City and the Amaze compact-sedan continue to be two of its biggest volume drivers with the City touching cumulative sales of 12,745 units in the first six months of the fiscal (19,074 / -33%), and the Amaze along with the Jazz hatchback garnering some 36,334 sales numbers (55,899 / -35%). The WR-V has slid 50 percent to 8,238 units from 16,324 it sold in the same period last year.

“I think this year our volumes will be definitely lower compared to last year, but where we are able to end is to be seen. It will all depend on the run-off of BS IV. We are adjusting our plans according to the month-on-month reduction in volumes that we are seeing till now.

“There’s been a double whammy – one is the weakened sentiment, and the other is the heavy monsoon leading to floods in certain parts of the country – which are killing the buyer interest even in the festive season,” Goel concluded.