Renault wants to launch a car in every segment in India, and by 2013-14, the French auto major is looking at having 70 dealers. Renault also had an advertising campaign inviting Indians to join them the company in driving the change. It was a call for passionate entrepreneurs to join in the revolution. Not just Renault, every other car maker wants to expand its dealer network. However, we believe Honda has gone to the extremes.
Honda Motor Co. plans to increase car dealerships by 28 per cent in India. The car maker plans to increase its dealerships from the current 117 in 71 cities to 150 in 90 cities by March 2012. We believe all these efforts have been drafted to reverse the dwindling sales effect.
Well Honda, why don’t you try plan B? Just lower the price of your models and Indians will surely go for them. It, however, looks like Honda already knows the trick. Its New Small car, expected in the country next year, will carry its lowest price. In an interview in Greater Noida near New Delhi, Jnaneswar Sen, Vice President, Marketing, said, Honda Siel Cars India Ltd. plans to offer a car for less than Rs. 5,00,000 ($10,675) in the second half of 2011.
SIAM says that car sales in India are mostly driven by the little ones that are lesser than 4 metres in length. These cars, which are mostly sold for lesser than Rs 5 Lakh, constitute nearly 79 per cent of sales. So, Honda seems to have realized the Indian mindset finally. The New Small car will be pitted against the Maruti Swift, VW Polo, Hyundai i10 and Nissan Micra.
During the past few months, Honda’s sales numbers have been mysteriously diminishing. The figures have declined 4 per cent in the four months to July in India compared with an increase of 35 per cent industry wide in Asia’s third-biggest vehicle market. Cars of less than 4 meters in length, most of which are sold at less than 500,000 rupees, accounted for 79 percent of the sales, according to the Society of Indian Automobile Manufacturers.
Honda believes that by opening so many dealerships and introducing the New Small car, it would be getting closer to the customer and also increasing advertising catch up with rivals. “This is the fastest growing segment,” said Sen. “If you consider the population of the country and the car penetration, the auto industry is barely scratching the surface. There is space for everybody.” Surprisingly, last year’s data reveals that India has just 8 cars per 1,000 people while the U.S. has 435, Russia 231 and China 24 cars for every 1,000 people. The increasing new car prices, stringent emission norms and growing car loan interest rates are believed to be reducing the sales figures further.
Getting back to Honda, the car maker plans to initially build the new car at the Greater Noida facility which has an annual capacity of 100,000 cars. Jnaneswar Sen said that the plant currently produces 61,000 units. Honda will consider making cars at its second plant in the western Rajasthan state after evaluating demand, he added. Honda will also produce some parts locally. Sen also said that the company is looking at increasing the number of parts suppliers from the current 105 to 124 by mid 2011, thus lowering import costs
