Consistently keeping up its premium brand image in India, Honda Cars has made inroads into various pockets of the country. With a strong dealership strategy, it sees high growth coming in from tier III and IV cities. Honda recently launched its compact crossover car model WR-V in India. In an interview with BrandWagon’s Meghna Sharma, the newly appointed CEO and president of Honda Cars India Ltd (HCIL), Yoichiro Ueno talks about the Indian automobile market and its strategies to go beyond personal business. Excerpts:
Honda registered domestic sales of 14,249 units in February 2017 as against 13,020 units in the corresponding month last year, registering a growth of 9.4%. What has worked?
In 2015, there was a sharp shift from diesel to petrol. From January to March, Honda had to face tough situations — there were discrepancies between supply-demand and demonetisation. November was serious and we saw an impact till mid-January but then things became normal. However, because of our sales strategies and innovative initiatives like launching the new City, we have seen an uptick in sales.
Why has Honda failed to capitalise on segments beyond City?
Traditionally, Honda is regarded as a premium brand and City is a premium model. We have cars in other segments, but maybe our variation from competitors isn’t enough or maybe we are not really meeting customer expectations. But we aren’t doing too badly there. We have frequently said that Honda is a premium car, but that doesn’t mean that all our cars are highly priced. We cannot achieve a premium tag in all segments. We have Amaze at the entry level which is competing with cars like Swift Dzire.
In more than two decades since HCIL was established, how has the market changed?
Aspirations have grown. And thus, products have evolved as well. What was considered luxury then, is mass now. India is still evolving and people are generally replacing or upgrading cars which forms 60-65% of the market; there aren’t many first-time buyers. However, today all international brands are here so competition has increased.
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Which platforms/mediums does HCIL invest in?
In India, traditional mediums like TV and print are very strong, so most of our budget is spent here. But our customers are tech-savvy so we do give high priority to digital as well. Compared to the last fiscal, we are spending 60% more on digital. Digital makes almost 15% of the total marketing budget. We focus on OOH as well.
Honda is for everyone, so the traditional medium is important. One needs to strike the right balance between all mediums.
Honda has made significant inroads in the market with its dealership network…
Though people are open to travelling to tier I towns to purchase a car, we want to penetrate tier II and III cities and for this we must increase our dealerships facilities. At the end of the next fiscal, we ought to reach 370 dealerships. Currently, we have 336 dealerships in 224 cities.
Aspirations are the same everywhere and since Honda is a global brand, people want to be associated with it. People everywhere want a well styled, trustworthy brand. If I break up the demand, tier I cities, which are the top eight cities, form 40-50% of our market. Tier II forms the next 20-25 cities from where the next 25% of the demand comes in. Tier III (Bilaspur, Purnia, etc) sees the last 25% of the market. India is in the early stages of motorisation. And though it starts from big cities, smaller cities grow at a higher pace.
How do you see the automobile sector dealing with issues like the ‘odd-even’ concept or higher taxation on the second car?
We have already started to see the impact. I see families here with more than one car and they cannot find any parking space in cities like Mumbai and Delhi. More people have started to use Ola and Uber.
Earlier we were abrasive regarding aggregators but lately, we have been getting a lot of queries, leading us to proactively do business with them. From last year, we have increased the number of cars we provide to them. Three factors have led to this. First, it is the reliability of our cars. Second, drivers say they feel less tired driving Honda cars. And lastly, the cost of maintenance is less. These are compelling propositions for aggregators.
How do you see the Indian auto market growing?
Currently, market growth is 7-8% and we believe rapid growth will continue. Last year, India exceeded Germany and became the fourth country in terms of the automobile market. In the next 10-15 years, we see India becoming the third biggest market. Real motorisation is still to come and companies like us have time. Achieving high volumes is important and we have made investments to that effect.
Lastly, unlike rivals, why doesn’t Honda have a brand ambassador?
We think with a brand ambassador we are borrowing someone’s image to associate with our product. We want our cars to be the heroes.