Honda's Trouble is due to Lack of SUV's & Tough Competition from Rivals

During 1997, Honda Cars India has been one of the early entrants in the Indian Market, but the company seems to be an uphill drive when it comes to facing the competitive landscape of the domestic market, which is crowded and successful players have carved out their niche. Analysts have maintained that Honda has been unsuccessful in launching the right products at right pricing as well as at the right time.

The company has now decided to phase out three more of its models-Jazz, WR-V and fourth-generation City-by the end of the current fiscal as per the sources. This comes after it discontinued two of its premium models -Civic and CR-V in the month of December 2020.

Due to lack of sports utility vehicle (SUV) options in a market in which preference for such models has been increased manifold and stiff competition from the rivals have resulted in Honda consistently losing its share, when it comes to passenger vehicle (PV) segment. The company earlier had a share of nearing to 5.44% in the nation's PV market in the FY19. It dropped to 3.67% in FY20, 3.02% in F21 and 2.76% in FY22.

The major reason for this decline is the company not having the right product is the right segment at the right time. Honda does not have a strong contender in the sub-four metre compact SUV segment, which accounted for about 21.7% of the PV volumes in FY22 and the mid-size SUV segment, which had a share of nearing to 17.5% during the same fiscal.

However, Honda is developing a new India focused SUV, which would be launched in CY23. Also, stronger rivals such as resurgent Tata Motors as well as Kia India with their robust SUV portfolio, have eaten into the market share of Honda. Tata's share in the PV segment has increased from 8.26% in Fy21 to 12.16% in Fy22, while that of Kia improved to 6.08% in Fy22 from 5.74% in FY21

Eventhough Honda has got a strong presence, in the sedan segment having models like Amaze and fifth generation city, the sedan segment's share itself has declined merely 10.2% of the overall PV market in FY22 from 14.3% in FY20.

Apart from Jazz, WR-V and fourth-generation City, the company's product portfolio includes Amaze, fifth-generation City and City e-HEV(hybrid). The automakers presently manufacture all the vehicles at its Tapukara plant in the state of Rajasthan. In the month of December, for the year 2020, it completely stopped production at its plant in Greater Noida Uttar Pradhesh,

The supply components for Jazz, WR-V as well as 4th generation city from varied warehouses to the Tapukara plant has also slowed down. While the components for these models would be furnished on almost a daily basis before the pandemic, the frequency has now been decelerated on almost a daily basis before the pandemic, the frequency has been now decelerated to once in every 10 to 15 days.

Honda stated "as a policy, we do not comment on market speculation. "Launched in India June 2009, Jazz was very much expensive and it did not attract many buyers. In almost four years, Honda was only able to sell mere 23,170 units of Jazz and in the month of February 2013, this vehicle has discontinued.

In July 2015, the company re-launched the new-generation Jazz, but it ran into stronger rivals such as Maruti Suzuki Baleno and Hyundai i20 and could not attract substantial buyers either. The premium hatchback's sales has stood at 5840 units for the year FY20 and 5724 in FY21 and 5913 units in FY22.

The industry experts FE spoke with stated that both Jazz and WR-V are presently at the end of their lifecycle and Honda might not be able to recover the heavy investment into developing their new generations due to their low sales.

Honda has presently launched the 5th generation city in the month of July 2020, however, it did not discontinue the 4th generation model and kept selling both from its showroom across India.

The customers are preferring the 5th generation city over the 4th generation city as the former is a far bigger car and the price difference between the two is just about Rs. 2 lakhs stated the expert. Besides the customers would like to buy the latest product and not a generation old model, he stated.