Honda India CEO to increase local content in cars, improve quality

By: | Updated: July 9, 2015 10:18 AM

Increasing the local content in cars and improving the quality of its supply chain will be a priority for Honda Motor Co in India, the new chief executive of the Japanese carmaker's local unit told Reuters on Wednesday.

Increasing the local content in cars and improving the quality of its supply chain will be a priority for Honda Motor Co in India, the new chief executive of the Japanese carmaker’s local unit said on Wednesday.

The carmaker will work to reduce costs by using more local components and it will focus on improving the quality of logistics, manufacturing and dealerships before launching new models, according to Katsushi Inoue, CEO, Honda Cars India Ltd.

“I am going to improve quality further more. However, in this emerging market we need volume as well,” said Inoue, who took charge of India’s third-largest carmaker by sales in April.

Increasing the level of local content in India, expected to be the world’s third largest car market by 2020, is crucial for Honda which wants to sell 300,000 vehicles in the country in the year to end-March 2017.

On average about 90 percent of components used by Honda in cars made in India are sourced locally.

While Inoue said Honda is open to partnerships with local component makers if they meet the company’s quality, cost and delivery time requirements, he did not give the extent of localisation it plans to achieve.

Honda grew the fastest among carmakers in India in the 12 months ended March 31, selling more than 189,000 passenger vehicles – 41 percent more than a year ago and faster than the 4 percent growth in the overall market.

But it trails market leader Maruti Suzuki and Hyundai Motor Co.

India is Honda’s biggest market in Asia and the Oceanic region, making up about 30 percent of the 660,000 vehicles sold in the region in the year to end-March.

Honda, which has invested 30 billion rupees ($472 million) in India since 2013, said it would invest another $60 million to increase production capacity in the country to 300,000 vehicles by 2016 across two plants from 240,000 today.

The focus on improving quality is a global mandate led by Honda’s new CEO Takahiro Hachigo who has made it a mission to restore the firm’s reputation after regulators linked eight deaths to faulty air bags in cars made by Honda. ($1 = 63.5412 Indian rupees)

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