Honda bullish on petrol, to go local with new CR-V

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SummaryEven though car sales have sharply turned towards diesel models, Honda remains bullish on the demand for petrol SUVs.

Even though car sales have sharply turned towards diesel models, Honda remains bullish on the demand for petrol SUVs.

The Japanese carmaker will launch the all-new CR-V SUV next month with the pricing expected to be slightly lower than the outgoing model on plans for local assembly at its Greater Noida facility.

The current CR-V model, priced at about R22 lakh (ex-showroom, Delhi), is imported from Japan as completely-built units and attracts customs duties of 60%. To be price competitive in the domestic market, Honda, therefore, has to make do with slim margins. The new CR-V will, instead, be imported as knocked-down kits and assembled locally, attracting around half of the previous customs rate at 30%.

This is likely to aid Honda in marginally reducing prices and improve profitability — its losses, in fact, had almost trebled to over R600 crore in FY12 on dropping volumes.

Jnaneswar Sen, senior vice-president for marketing & sales at Honda Cars India, said, “The new CR-V will be assembled locally and only be available in petrol. We do sell a diesel variant in Europe, though it is not suitable for Indian conditions. We ran out of the last generation CR-V about six months back as imports had stopped — the last few models were sold at a discount.”

The plan to stick to a petrol SUV, and not add a diesel variant, is surprising, said analysts, especially when most of the competition is rapidly launching new diesel vehicles. Diesel vehicles today account for almost 60% of new car sales, almost double of the 30%-mark about two years ago. Honda, however, has no diesel model in its current domestic range, which is one of the reasons why sales had plummeted 3.8% (to 59,463 units) FY11 and 8.47% (to 54,427 units) FY12.

Honda's first diesel car in India, the Brio-sedan 'Amaze', will only debut sometime around May-June this year. This will feature its new 1.5 lite i-Dtec engine, which will be manufactured locally at its second facility in Tapukara (Rajasthan), and will later be used in the Jazz, Brio and City models as well.

“Currently, we are utilising 70% of Greater Noida plant's 1.2-lakh-units annual capacity. We hope to completely utilise the plant after we launch the Amaze next fiscal. After that, we may build a new car plant at Tapukara,” Sen said.

Honda, which bought out domestic partner Usha International's stake in its car JV last year, invested almost R700 crore in

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