Electric vehicle is alike a train, says Honda Cars India CEO Yoichiro Ueno; he explains missing link

By: | Published: October 16, 2017 4:24 AM

An electric vehicle is like a train. A train, on its own, cannot run—it needs railway lines, stations, ancillary infrastructure. Similarly, EVs need a robust infrastructure

Over some Bhutanese food, the president & CEO of Honda Cars India shares with Vikram Chaudhary how the company was able to maintain double-digit growth, every month, during April-September 2017, and his views on electric cars.

I feel at home. The weather is like Japan’s; people too look similar,” says Yoichiro Ueno, president & CEO, Honda Cars India, as we take the dinner table at the upmarket Le Méridien Paro Riverfront, one of Bhutan’s finest hotels. A 30-year Honda veteran, the 54-year-old Ueno came to India last year in April, and under him the company clocked double-digit growth, every month, during April-September 2017. Part of the reason is good sales of diesel cars—Honda, popular for petrol, entered the diesel segment in April 2013 with its sub-4 metre sedan, the Amaze, and since then has sold over 3 lakh i-DTEC diesel engine cars in India. I have been invited to drive all their diesel models in a mountainous setting—diesel engines produce higher torque, or pulling power, than petrol, and thus are easier to drive in the hills.

I order ema datshi—called the country’s national dish for its ubiquity—made from chilli peppers and cheese (ema means chilli and datshi means cheese in the Dzongkha language of Bhutan). Ueno orders a soup. I ask him whom does the company attribute the recent sales success to—good cars or good marketing? “Last year was tough for us. We faced unsold inventory issues—there was a big shift from diesel to petrol. We have been able to sell the inventory this year and that is one of the reasons for growth,” he says. Honda sold 91,269 cars during April-September 2017, with cumulative growth of over 22%. “However, the real reason is that the new City sedan and WR-V crossover are doing very well.” The new City and WR-V, launched in February and March, have sold 44,172 units and 29,084 units, respectively, till September. Sales happen at showrooms and Ueno, since last year, has been working closely with dealers. “We innovated how dealers approach prospective customers, and improved sales skills and vehicle delivery process. Good products, combined with sales strategies, led to higher sales,” Ueno says, finishing his soup. In the 2017 India Dealer Satisfaction Study by JD Power, a marketing research firm, Honda secured the fourth rank, improving from the fifth in 2016. Ema datshi goes well with red rice. I order a plateful. Ueno, who had local spicy noodles during lunch, wants to try something different—ema, it appears, is too strong for his palate. While the City, WR-V and Amaze are in good demand, the Brio hatchback and BR-V, the seven-seater SUV, aren’t selling as well. During April-September, the Brio sold a mere 2,639 units, while the BR-V did 5,725 units. “The Brio has run into tough competition. A lot of new small cars have entered the market,” Ueno admits. Selling the BR-V, however, is a bigger challenge. “We launched the BR-V last year, and projected it as a seven-seater SUV, which it actually is. But because of the very seven seats, perhaps customers started considering it as an MPV, or a multi-purpose vehicle, a van. We need to reposition the BR-V, going forward. Maybe we need to promote the ‘utility’ part in this sport utility vehicle, rather than only the ‘sport’ part.”

The BR-V is based on the Mobilio, the MPV Honda had launched in 2014 and discontinued earlier this year; the reason was muted sales. While Ueno doesn’t get into the MPV versus SUV debate, he adds the MPV market is declining. “One of the reasons is that vehicle personalisation is coming to India,” he says, and “SUVs are more personalisation-friendly vehicles.” I, however, argue that Toyota Innova is also an MPV, and it sells like hot cakes. “That vehicle is in a different, more expensive segment. For a three-row, seven-seater MPV to succeed, it should have enough space for a large family, but then it becomes bigger and costlier.” Apart from the Amaze, Honda hasn’t made any other India-exclusive car. “Our strategy is to launch global models in the local market. India had some unique regulations, such as sub-4 metre sedan. So we made the Amaze. Going forward, we believe that the Indian market will get more and more internationalised. Our focus is on developing the Indian market further with global models, rather than making exclusive models for India.”

Earlier this year, the then energy minister Piyush Goyal had reportedly said that, by 2030, not a single petrol or diesel car should be sold in the country. And during the SIAM Convention last month, roads minister Nitin Gadkari told the assembled automakers they would be bulldozed into switching to electric and alternate fuel vehicles if they did not do so voluntarily. How does he read such statements?

“Promoting electric vehicles is important, but an electric vehicle is like a train. A train, on its own, cannot run. It needs railway lines, stations, constant electricity supply, ancillary infrastructure. Similarly, for electric vehicles, simply having a good battery or technology is not enough. It is important the government sets standards and makes a roadmap. However, such a roadmap, once finalised, has to envision a future 20-30 years in advance,” he says. Globally, hybrid technology (internal combustion engine plus electric motor) is considered the stepping stone to full electric. In India, it appears we are directly jumping to electric. What are his views on electric versus hybrid?

“The benefit of a hybrid car is that it doesn’t need electric vehicle infrastructure,” Ueno says. For the record, electric vehicle infrastructure can be massive—from power plants to charging stations to thousands of kilometres of electric wires, hundreds of battery storage spaces across the country and so on. “Moreover, in an electric vehicle, if the initial source of power is coal, you are burning coal to run your car. In a hybrid, you are burning petrol, but in a far more efficient manner,” Ueno puts across the oft-repeated argument. “Promoting hybrid vehicles should be the right step, along with electric, but the current government is trying to accelerate towards electric. Maybe a bit too fast,” he adds, ordering some snacks. I, meanwhile, search for a sweet dish in the Bhutanese menu—the red rice has left a nutty flavour. The server tells me the Bhutanese cuisine doesn’t include sweet dishes. Instead, he suggests suja (butter tea). It’s a hot drink meant for cold climes, salty rather than sweet, definitely an acquired taste. Globally, Honda has a good portfolio of hybrid vehicles, but the challenge, Ueno says, is battery. “We can turn our existing cars into hybrids, but the battery cost is high—almost half the cost of the car.” Electric cars remind you and me of Tesla. “They are really nice looking cars,” Ueno smiles. “Tesla is playing an important role globally in the electric vehicle market. They appear to be very passionate, and have established a strong brand in just a few years.” The CAFE norms, or corporate average fuel efficiency—targeted at reducing the carbon footprint of the auto industry—will be introduced in two phases: 2017-18 and 2022-23. Under CAFE, mileage improvement is to be decided on the basis of litres of fuel consumed by a car to run 100km—the target is 5.2 litre/100km for 2017-18 and 4.77 litre/100km by 2022-23. “To achieve CAFE norms, diesel is a better fuel, because it burns more efficiently—there is twice as much compression of the fuel in a diesel engine, compared to petrol. But it’s a difficult situation. The government is not supporting diesel. We have to think how we move ahead on diesel versus petrol keeping CAFE in mind,” he says. As I finish suja, Ueno shares how BS-VI—from April 1, 2020, onwards—although great for the auto industry, poses a unique challenge. “To meet BS-VI, the cost increase for diesel engines is higher compared to petrol. For example, the PM filter for diesel is five times costlier than the same for petrol. We are in a spot,” he says.

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