Can Honda get its mojo back? | Deep Drive Podcast Ep. 18 | Autocar India

Summary

In this episode of the Deep Drive podcast, hosts discuss Honda's journey in the Indian automobile market. They delve into Honda's initial success with the City, its shift towards mass-market vehicles, and the challenges faced with the Brio and BR-V. The conversation highlights Honda's engineering prowess, its struggle to keep pace with market trends, and the potential of the Elevate SUV. They also speculate on Honda's future strategies, including the importance of localization and adapting to Indian consumer preferences.

Takeaways

• 🚗 Honda has a strong brand legacy and is loved by its customers, often being considered a top choice for driving experience and reliability.
• 📉 Despite its loyal fan base, Honda has seen a decline in its market share and brand strength in India, partly due to strategic missteps and late entries into market trends.
• 🛠️ Honda's engineering prowess is evident in its cars' performance and innovation, but this has sometimes conflicted with market demands for practicality and cost-effectiveness.
• 🚗📉 The Honda City has been a significant model for the brand in India, but its evolution has seen shifts from performance to practicality, reflecting Honda's attempts to adapt to market changes.
• 💡 Honda's entry into the small car segment with the Brio was too late and misaligned with the market's shift towards premiumization, leading to a lack of success for the model.
• 🛑 Honda's management changes and lack of continuity in strategy have impacted the brand's direction and ability to keep pace with market demands.
• 🚫 The discontinuation of models like the Civic and CRV in India was a strategic decision to focus on profitability over market share, which has disappointed many Honda enthusiasts.
• 🌐 Honda's focus on exports has been a bright spot, with the Elevate model showing strong export demand, highlighting the potential for India to be an export hub for the company.
• 🔄 The transition to new platforms like the pf2 signifies Honda's commitment to future growth, with plans for electrification and new models that may better align with Indian market needs.
• 🤔 The lack of localization and slow adaptation to market trends, such as the shift towards SUVs and diesel engines, has been a challenge for Honda in maintaining its competitive edge.
• ⏳ Honda's future in India hinges on its ability to quickly adapt to market trends, localize production effectively, and leverage its strengths in engineering and customer loyalty.

Q & A

What was Honda's initial strategy when they entered the Indian market in 1998?

Honda's initial strategy was to launch the Honda City, an Asian car specifically designed for the Indian market, focusing on performance and driving experience, which was different from the global models.

How did Honda's approach to the Indian market change between 2010 and 2020?

During 2010 to 2020, Honda attempted to become a volume player, shifting from a premium brand to a mass-market brand, which resulted in a loss of its premium appeal and a disconnect with the evolving market trends.

What was Honda's first car in India, and how was it received by the market?

Honda's first car in India was the Honda City, launched in 1998. It was well-received for its driving experience and performance, especially its engine, despite its bare-bones interiors.

What was the impact of the Brio's failure on Honda's strategy in India?

The Brio's failure led to Honda losing faith in the Indian market, causing them to miss out on several market cycles and trends, and contributing to a decline in brand strength compared to competitors like Hyundai.

How did Honda's management changes affect the brand's performance in India?

The constant change in top management led to a lack of continuity in strategy and vision, impacting Honda's ability to adapt quickly to market changes and consumer demands.

What was Honda's approach to the compact vehicle segment in India, and why did it not work as expected?

Honda attempted to enter the compact vehicle segment with the Brio, but the platform was compromised and low-cost, leading to poor interior quality and NVH, which customers rejected.

What is Honda's current market share in the Indian passenger car market?

As of the April to June quarter mentioned in the script, Honda's market share in the Indian passenger car market is about 2.5 to 3%.

What is Honda's strategy regarding exports from India, and how has it been beneficial for them?

Honda has been using India as an export hub, with the Elevate model exporting over 50,000 units, which has improved their bottom line and profitability.

What is the significance of the pf2 platform for Honda's future in India?

The pf2 platform is Honda's future platform that is expected to be more electrified and will underpin a range of models, including SUVs and sedans, potentially shifting the center of gravity for Honda's products to India.

What are the challenges Honda faces in the Indian market, and what strategies might they adopt to overcome them?

Honda faces challenges such as a shrinking portfolio, low market share, and being out of sync with market trends. They might overcome these by localizing more models, understanding Indian sensibilities better, and introducing new models that resonate with Indian buyers.

What is the current state of Honda's product lineup in India, and how does it reflect their strategy?

Honda currently has a lean product lineup in India with only three models, reflecting their strategy to focus on profitability and the export market while waiting for the introduction of new models on the pf2 platform.

Outlines

00:00

🚗 Honda's Brand Appeal and Market Challenges

The paragraph discusses the strong consumer loyalty towards Honda, even suggesting it surpasses the company's own management's appreciation. It reflects on Honda's journey in India, highlighting its transition from a premium brand to a volume player between 2010 and 2020, and the perceived loss of faith in the Indian market after the Brio's failure. The conversation also touches on Honda's late entry into the midsize SUV segment with the Elevate, which missed the competitive window due to delays.

05:01

🏁 Honda's Evolution and Market Adaptation

This section delves into Honda's evolution in the Indian market, starting from the well-received Honda City in 1998 to the brand's strategy shift towards mass-market appeal. It discusses the City's transformation from a driver-centric car to a practical, fuel-efficient model and back, reflecting Honda's DNA of performance and innovation. The paragraph also addresses Honda's late entries into market trends, such as compact vehicles and diesel engines, and the impact on their brand positioning.

10:02

🛠️ Honda's Engineering Philosophy and Market Misses

The discussion focuses on Honda's engineering-driven approach and its commitment to building vehicles that are fun to drive with strong engines. It points out Honda's missteps in entering the diesel market late and discontinuing it due to high NVH levels and a lack of refinement. The conversation also touches on Honda's struggle with value engineering and the challenges faced with their small car platform, which was perceived as compromised and not up to the mark for the cost-conscious Indian consumer.

15:02

🚀 Honda's Strategic Shifts and Export Focus

This paragraph examines Honda's strategic shifts, including their decision to focus on profitability over market share, which led to a reduction in their product portfolio and manufacturing footprint in India. It also highlights the success of Honda's export strategy post-2020, with the Elevate's export numbers crossing 50,000 units, contributing positively to the company's bottom line.

20:03

🌐 Honda's Global Challenges and Future Prospects

The conversation explores Honda's global challenges, including increased competition from Chinese brands in Southeast Asia and the need to adapt to market changes. It mentions the development of the pf2 platform as Honda's future direction, which will include electrified options and is expected to be a significant part of their strategy beyond 2027. The paragraph also expresses concerns about Honda's current market share and brand strength in India.

25:05

🔄 Honda's Market Share and Export Strategy

This section discusses Honda's current low market share in India and their strategy to utilize the country as an export hub. It acknowledges the brand's strong dealer ecosystem and the positive consumer sentiment towards Honda vehicles. The paragraph wraps up with a note of optimism for the future, hoping that Honda will introduce models that resonate more with Indian buyers and capitalize on their export potential.

30:06

🎖️ Honda's Legacy and Hopes for a Resurgence

The final paragraph reflects on Honda's deep-rooted legacy in India, from its two-wheeler days with Hero Honda to its presence across various segments. It acknowledges the brand's current challenges but maintains a hopeful outlook for a resurgence with new models and a better understanding of Indian market sensibilities. The conversation concludes with a reminder of Honda's potential and the need for swift action to reclaim its market position.

Keywords

💡Honda

Honda is a well-known Japanese multinational automobile manufacturer that produces cars, motorcycles, and power equipment. In the video's context, it discusses the brand's history, its reputation among Indian consumers, and its various car models, such as the Honda City and Honda Brio, which have had significant impacts on the company's market presence in India.

💡City

The Honda City is a compact sedan that has been a significant model for Honda in India since its launch in 1998. The video discusses its evolution, its role in establishing Honda's brand image, and its importance as a continuous nameplate with a strong legacy in the Indian market.

💡Brio

The Honda Brio is a small car that was introduced by Honda to target the mass-market segment in India. The script mentions the Brio's failure and its impact on Honda's strategy, indicating that the model did not meet the expectations and contributed to the company's challenges in the small car segment.

💡Elevate

The Honda Elevate is a midsize SUV discussed in the video as a product that came late to the market, missing the opportunity to be competitive due to the segment's evolution. It is an example of Honda's efforts to adapt to market demands but facing challenges due to timing and competition.

💡Market Share

Market share refers to the percentage of the total market's sales that a particular company or product captures. The video script mentions Honda's declining market share in India, which indicates the brand's shrinking presence and the challenges it faces in maintaining relevance in a competitive market.

💡Premium Appeal

Premium appeal refers to the desirability and perceived high quality of a product or brand, often associated with luxury or a more upscale market segment. The video discusses how Honda, in its efforts to become a volume player, may have lost some of its premium appeal, affecting its brand image and customer perception.

💡Value Engineering

Value engineering is the process of improving the value of a product or service by analyzing its functions and reducing costs without affecting its quality. The script mentions Honda's challenges with value engineering, suggesting that the company's approach to cost reduction may not have met the expectations of the budget-conscious Indian consumer.

💡NVH

NVH stands for Noise, Vibration, and Harshness, which are key aspects of a vehicle's interior quality and ride comfort. The video script discusses Honda's challenges with NVH, indicating that some of their models, including the Elevate, have been perceived as noisy, affecting the overall driving experience.

💡Export Hub

An export hub is a location from which a company ships its products to other countries. The video mentions Honda's strategy to use India as an export hub, leveraging the country's manufacturing capabilities to serve other markets, which is a pivot from focusing solely on the domestic market.

💡PF2

PF2 is mentioned in the script as Honda's future platform for its vehicles, indicating a shift towards electrification and a more global approach to product development. The platform is expected to underpin a range of new models, including SUVs and sedans, and is seen as a strategic move for Honda to regain market momentum.

💡CAFE Standards

CAFE stands for Corporate Average Fuel Economy and refers to the regulations that require manufacturers to meet specific fuel efficiency standards for their vehicles. The script mentions Honda's non-compliance with CAFE standards and the potential fines, which underscores the need for the company to develop more fuel-efficient or electric vehicles.

Highlights

Honda's brand loyalty is strong, with many 'Honda lovers' who are passionate about the brand.

Between 2010 to 2020, Honda aimed to increase its market share but potentially compromised its premium image.

The failure of the Brio and subsequent products led to Honda losing faith in the Indian market.

Honda's initial success in India was with the Honda City, which was well-received for its driving experience.

Honda's naturally aspirated engines have been a cornerstone of their brand, especially for small capacity engines.

The second-generation City was more practical and fuel-efficient, winning 'Car of the Year' in 2004.

Honda's third-generation City returned to performance and emotional driving experience, differentiating from the market trend.

Honda's strategy shifted from a top-down approach to a bottom-up approach, starting with the City and moving up to higher models.

The Indian market's shift towards diesel and SUVs was missed by Honda, impacting their market presence.

Honda's entry into the small car segment with the Brio was late and did not meet customer expectations for quality.

Honda's approach to value engineering and understanding the budget car customer was not as refined as competitors.

The Honda CRV and Civic have passionate followers, indicating a strong brand following for certain models.

Honda's focus on profitability over market share led to a reduction in their product portfolio and manufacturing footprint in India.

The Honda Elevate SUV, while well-engineered, arrived late to the market and did not significantly boost sales as expected.

Honda's future models, including the pf2 platform, show promise but are still several years away.

Honda's current market share in India is significantly lower than its historical peak, reflecting recent challenges.

The importance of consistent top management for strategic continuity is highlighted by Honda's fluctuating performance.

Honda's focus on exports from India has been successful, providing a new avenue for growth.

Transcripts

[Music]

there are more consumers that are Honda

lovers than sometimes I feel the Honda

management itself you know because Honda

is really a loved brand in that 2010 to

2020 uh period uh Honda did quite a lot

to become a volumes player but in the

process also lost out on its premium

appeal I think they lost faith in India

after the the Brio failure the Brio

failure the Brio and the Brio products

failure when you want to move from a

smaller premium volume game to more of a

mass Market game your entire value chain

and the ecosystem has to evolve if the

Elevate had come earlier with this spec

it would have been super competitive but

the midsize SUV segment has gone moved

on and I'll tell you why it's come 5

years

today hello and welcome to episode 18 of

our deep Drive podcast power by kotak

Mahindra Prime now we've really been

encouraged by the Fantastic response

we've got from all of you thanks so much

for tuning in and a lot of you have been

asking us to do a specific podcast on

Honda Honda cars in particular and

that's what we're going to be talking

about today and as always I have with me

Katan Katan um Honda I think a company

that uh has been around for a very long

time and uh clearly one that uh you know

has has had a lot of ups and downs

absolutely another Japanese brand after

Suzuki that has really got into the

positive uh mindset of the Indian buyers

uh they really did well to begin with

I'd like to know from you about uh the

start I mean they I think they entered

somewhere in 96 98 and they had a

fantastic start to begin with how did

the journey progress according to you

yeah I I think you know 1998 Auto Expo I

was there it was even before autocar

India I was at Auto India back there

so really I kind of realize how old I am

but 98 was when they really officially

launched showcase the car it was the

Honda City at that time and U it was an

Asian car you know the first concept of

an Asian car it wasn't a global model so

in that sense uh it was kind of

literally paired down for our Market the

cabin wasn't great uh it was a sedan uh

proper three box sedan made in a new

plant in great anoa which uh is still

there but it's no longer a plant uh I

remember it had a state-of-the-art paint

shop so the Honda cities really had a

fantastic paint job at that time

Interiors were very Bare Bones I mean if

you look at it compared to the

Mitsubishi Lancer which at that time was

the competition and the Lancer was uh in

many ways a better car uh because it was

uh you know it had that kind of let's

say a global Bill quality to it it felt

more solid the Interiors were better but

I think what Honda got right right from

that day one was the way the city drove

I remember the first time I drove it

shaur was with me it was uh somewhere

near lonavla uh before the expressway

was there we were going up and down and

we were blown away by the engine 1.5 1.3

also it was a hyper 16 engine 100

horsepower which seems nothing today but

that was an ultra light car and it kind

of for me me it told me what Honda was

which was all about driving you sat low

in that car the Bonnet line of the city

is really low so you had some fantastic

outward visibility and uh you know I

think uh it it it was just an amazing

car to drive probably the best driver's

car of the day uh competed with the Ford

icon which was also there in in many

ways the icon and city were both great

driver's car icon slightly better

handling for sure but that engine of the

City and really that has been the

Bedrock of Honda is its naturally

aspirated engines and Honda as we know

you know for small capacity engines

because of two wheelers they've been

absolutely fantastic on that so for me

that was really Honda establishing

itself and I would say and I don't know

what you think but it was city that was

as much of a brand as Honda I mean today

city is other than the Mercedes E-Class

the longest running name plate uh that

we have because there's been nothing

since uh 98 that has been so continuous

so it's got a very strong Legacy the

city and I think that's really helped it

Honda has milked it we'll come to how

what's happened to the city now but I

think you know with every successive

generation of City people just

automatically bought it because you

rarely found an unhappy City customer so

it was a top- down strategy isn't it I

mean they started with City it was a

bottom up actually right so they moved

up from City Civic interesting point

actually it was a bottom up strategy if

you look at it the city was the base you

had nothing below the city and that's

what kind of thing then you had the

Civic then you had uh I think you had

the CRV before that or the Accord before

that you had the Accord which came right

at the top 2000 Accord came then you had

the CRV and then you had the Civic so

all cars above the city and for at some

point the city was the top model at 1

Point had everything below which we'll

come to and how the brand actually

changed Tac it went more mass then class

in many ways and you know we'll come to

the BRB but I also want to talk

about uh the city as a brand and just a

little bit of the Journey of the city

and I'll take some time on this you had

the first generation City then suddenly

you had a radical change from this Hot

100 horsepower uh sedan to something

that was super efficient and practical

which is the second generation City I

mean it was so radical it had come with

with a fuel efficient engine the idsi

twin Spark engine I think just about 77

horsepower not much then they had an

ivtech later uh it had uh you know a

very radical design it for the first

time had a central fuel tank oh

interesting uh yeah exactly you know

which I think for a very small fuel tank

about 40 42 L and you know he spoke to

the engineers and said you know it's a

small fuel tank what about range they

said well our engines are so efficient

you'll automatically get range super

efficient engine I mean it set records

for fuel efficiency see that that idsi

engine the twin Spark engine but so

different from the earlier one which is

all about driving and emotion this was

all about practicality in fact it won

our car of the year 2004 auto car car of

the year it had these magic seats which

unfortunately the Indian version

couldn't get because there was the fuel

tank wasn't under the rear seats it was

in front uh you could use the space

under that and that design stayed till

you know we got it in the Jazz finally

and it was Honda's Innovation at its

best honestly what of the trigger

according to you why did they move from

a really high performing City to a I

think they were looking at where the

market was going Market wanted more

practicality they wanted more mass and

obviously that City sold in huge numbers

but then what I loved about is with the

third generation City I remember the

code also it was 2ps wow uh they went

back to their DNA and that arrow shot

design was uh you know they came back to

the good old uh you know VTech engine

the the the four W per head engine the

way you know the traditional one was and

it was a phenomenal combination of

performance and economy fantastic both

you know you had the space and that was

the first city actually I remember where

they didn't have the CD player oh you

know it was quite a forward-looking

design you know you had the uh kind of

let's say a USB stick in there

interesting uh where you could have your

music and everyone said look everyone

wants a CD player I think you could get

that later as an after fitment because

because people were just not accustomed

to it and look at it today there's no CD

players at all where we are so so that

was the time when uh I think that was

2008 so when the city came then you had

the forun city which also did quite well

uh very different it became much more

mature uh more spacious again going with

the times but I think with the fifth gen

it kind of reflected what Honda you know

I think uh it wasn't too different from

the forun okay and uh clear it was a

little bit more of the same and then I

think by then competition was also

heating up so City frankly uh you know

just by the by its Legacy it sold so

strongly and uh you know I think right

now city under a lot of pressure uh the

sedan Market has gone down and clearly

it's a case of Honda really you know

just

uh betting on the sedan so much when the

market was going down and kaan I think

that's really one thing where you know

maybe Honda has lost out is just that

they've missed uh certain cycles and

Trends and when they've got to them

they've come in quite late oh absolutely

I mean for a longer period of time I

always felt that Honda as a brand was

always an ideal upgrade brand from a

maruti Suzuki and for a long or even

from a Hyundai to be honest even from a

Hyundai and now today Hyundai in terms

of brand strength brand value it's it's

it's more than U Honda which was not the

case earlier absolutely I mean and I I I

just feel that uh uh they've misread

many cycles over the last decade and a

half when uh while they got off to a

great start with the city with the sedan

uh the Indian market was predominantly a

small car market uh clearly like you

said you know over a period of time they

tried to change stack and uh volumes

were growing Indian market was growing

so I thought even Honda felt that you

know this is one of the fastest growing

Market in the world let's uh let's get

into a small car space but they came in

at a time with the Brio uh in 2009 uh

when uh there was an you know

premiumization was catching momentum in

India and people were moving towards a 4

met sedans um with the desire and the

Indigo CS I mean the market had

completely transformed and the came a

bit later right every possible Global

manufacturer was looking at that saom

sedan so Honda said why we're going for

uh the uh smaller Vehicles let's attempt

amaz so amaz also came in late uh there

there was a shift towards diesel

somewhere in uh 2010 2011 again the

entire Market was uh veering towards

diesel cars Honda again lost that uh uh

game and came in 2014 so again the price

gap between petrol and Diesel was going

down again Honda missed the cycle and

for a longer period of time a lot of us

asked you know Market is moving towards

Su where is where are when can we see

the Honda SUV they did have the brv I'd

like to get to know your view because in

that 2010 to 2020 uh period uh Honda did

quite a lot to become a volumes player

but in the process also lost out on its

premium appeal that's right and I think

honestly you know what you said uh it

also reflects certain limitations of

Honda don't forget Honda is a very small

company it's not got lot of Brands it's

a very actually it's you know it's a

fantastic company very engineering

driven very focused and what they do you

know they just do it with absolute

passion I mean for me just talking to I

remember the engineers veloping the

third gen City I mean for them they

literally said they were appalled at the

second gen city which didn't reflect the

Honda DNA of fun to drive and strong

engines so I think that was an

engineering call actually you know that

no Hondas have to be good to drive and

you know the whole and and their engines

are absolutely fantastic I mean you know

they just if you just see uh you know

their their camp followers uh you know

their Camp fingers it's just so it's

just a work of art just every the way

the whole ivtech system works yeah so I

I think U uh but just coming back to

your points I think they did try and go

in for the let's talk about diesel first

now Honda inherently was never strong in

diesel the Japanese don't make diesel so

uh you know Toyota does but it's really

at at at the top end no one makes a

small compact diesel right uh so I think

uh uh you know even Toyota did to some

extent with the with the Lea and all

really not very successful so I think

they tried they came out with an

aluminium diesel which was great because

again Honda's philosophies keep

everything light but with aluminium nvh

is quite high so it was quite a noisy

diesel it was a strong diesel but really

it wasn't The Cutting Edge uh refinement

levels that you associated with that's

right and again if you look at it 2014

to 2020 just 6 years for a diesel I mean

what a waste I mean engine life cycles

are typically 20 years absolutely so

they didn't want to go to bs6 uh they

kind of uh uh you know gave up on the

diesel gave up on the diesel over there

so I think that's uh what happened and

uh you know clearly uh they didn't want

to go into that investment also Honda

was in a different mood at that time

Indian market I think you know when they

went in for the brv and the Bri uh they

thought Indian market is growing same

story about Ford you know I mean the

forecasts were huge that by 2020 we'd be

7 million right uh you know that was the

kind of of thinking at the start of that

decade of 2010 we were really on a you

know moving up but that platform

fundamentally was subpar the Brio

platform it was a compromised platform

it was a lowcost platform and it was and

that reflected in the products that came

out you saw the Interiors they were

cheap Brio also with a glass tailgate

which was reminisent of the old maruti

800 you know there a lot of cost cutting

over there which customers rejected you

know Honda I think got that wrong and

Honda didn't have the experience the way

let's say a maruti or even a Hyundai has

with a Budget Car customer I mean you

need to know what the customer is

thinking you can do your market research

and all that but unless you've gone

through a life cycle of people buying

and owning your products and giving you

that feedback you really don't know

right so they were going in the dark as

to what they thought again brv and

mobilo again very compromised products

they didn't look uh you know anything

special they didn't feel special again

the Interiors were quite sparten by the

standards at that time and don't forget

at that time I think especially the

Koreans they were really pushing hard on

you know giving more features and and

and and things like that yeah and

there's one other issue with uh why

Honda and SUVs in a way I wouldn't say

don't go together or why Honda is not so

inclined towards SUVs again I was

talking to a Honda engineer they hate

High Vehicles oh they do they want

everything low slow lung so when you

have a low slung SUV it doesn't have the

SUV STS correct and uh it doesn't really

look like an SUV CRV again a classic

case if anyone who's had a CRV will

swear by it it's absolutely brilliant to

drive even we've driven the CRV it is so

planted Honda likes low center of

gravity that's how it is all their cars

are low slung the Civic when it was

launched great car huge ground clearance

problems because it was very low I mean

they don't like their car stall it's

like it it it kind of is is like a

philosophy they want the car as low as

possible going back to the first

generation City if you ever jump into a

first gen city you'll see how low you

are sitting but again you have that low

window line which gives you great

visibility so I think clearly that was

the issue with thing but having said

that they've literally kind of eaten

Humble Pie and look at the Elevate it's

one big boxy tall SUV which has a lot of

Road presence so literally the marketing

the market they've listened to the

market and given that but again very

very late so you know it's so many

missed opportunities from Honda and

Honda is a brand that you know everyone

loves I mean people whove had a Honda

they just love the cars and the sense

one get is that you know Indian Honda

owners uh love Honda more sometimes than

the company does because they haven't

really put their whole heart into it

right now I you know playing out of

character is something that Honda tries

to avoid right I mean so absolutely you

know I'd like to I mean I'd like to

delve a little bit on that small small

car platform and their Endeavors to go

compact what was your assessment when

they uh pivoted from uh you know the

bigger sedans and premium vehicles uh

when the shift happened towards more

compact vehicles and at that point in

time there was a lot of noise about

wanting to design in India make in India

right size for India right cost for

India uh were there any positives or

learnings out of the platform that they

did uh while uh I mean I mean I was uh a

Brio owner and I had a great time

driving around that vehicle and again I

swear by Honda car and and I kept

telling my wife that you know if he ever

uh graduate to a next vehicle it'll be a

Honda but again the options that are

there they're very limited so I'd like

to get to your get to know your views

about the transition from uh sedans to

the compact vehicles uh engineering wise

or strategically product positioning uh

uh you know what was it what what is it

that Honda got it wrong or what is it

that they learned from it so I think

basic basically what they got wrong was

uh I think it was a poor spec of

platform I mean whether it's tortional

rigidity

nvh uh you know even today the Elevate

is a noisy vehicle because something

like nvh or you know noise the thing

about it to get an incremental

Improvement in nvh you have to spend a

disproportionate amount of money that's

how it is it's that's how nvh is you

know it's not not an easy thing to get

you have to really uh you know spend a

lot lot of materials on ring material at

source your engine has to be you know

you need counter rotating there's a lot

of stuff which has to be done to get nvh

to a certain level and that that costs a

lot of investment I think the thinking

is that you know we can compromise a bit

on nvh I mean as it is everyone blows

their horns and stuff like that but the

point is it kind of takes away that uh

slight feel now I mean the engines are

super refined but you know even if you

see here in the city you know you can

hear a bit of road noise tire noise now

even the Elevate you can here some nvh

so I think even in the Brio platform

that was one uh issue There Was You know

I think one thing was there is there was

no compromise on the engines engines

were absolutely phenomenal in fact I

will never forget when we tested the

mobilo a test of flexibility of that

engine how flexible that ivtech is in

third

gear 10 to 150 I mean it pulled from 10

km an hour all the way to 150 I don't

want to tell you where I did it but it

just shows that is a test of flexibility

of engine you know how tractable it is

and they're the masters of natural

aspiration in this sense but you know

that's what they've just stuck to

they've not given anything else right

now which we can talk about but again

coming back to the platform it was uh

you saw the Interiors you saw the

quality of plastics um it really was uh

even you saw the IP the fonts that were

used it looked like there were just some

cheap transfer on it it really was very

very cheap the HVAC control knobs I

think the interior was really not great

and up to the mark and you could see

there a lot of cost cutting in there and

customers rejected it the problem with

Honda and a lot of global oems is they

don't know really how to Value engineer

or they don't want to Value engineer

because then they say no it doesn't meet

our standard then the only way they can

save cost is to start DEC contenting or

using something which isn't uh you know

up up to the right luxury spec which uh

people want it also calls for a lot of

different approach right when you want

to move from a smaller premium volume

game to more of a mass Market game your

entire value chain and the ecosystem has

to evolve exactly and I think Honda is

another company that you know has got

into what people call a red ocean which

is maruti stuff I remember Kalos tavara

said we don't want to get into a red

ocean which is a sea of losses where

companies like you maruti are they just

waiting to deu they know that market uh

no one can beat them at that game uh the

kind of uh perception of cars is

different over there the aspirations are

a little different you know they want

more the features they want the

superficial stuff more than sometimes a

hardcore solid engineering and you know

Honda they just couldn't play in that

game why why only Honda Toyota also

failed miserably over there Ford M

failed miserably over there I mean

everyone's failed miserably even Nissan

and Renault even with the quid haven't

really been able to crack it they've

come closest to it so it was a big

mistake I think everyone's learned don't

go into that territory just forget that

and move more up Market but that's where

the volume was at that time that's where

the heart of the market was now it has

moved up the center of gravity has moved

up into you know the 10 20 lakhs uh

segment over there so I think that's

what it was and Honda felt that look if

you are to be serious in India we can't

just do it with the city we have to go M

so the thinking was right because the

forecast was also over there but I think

Honda should have you know been a little

bit more how do I say respectful of what

the customers wanted at that time and I

think there were some changes in Honda I

think the golden period for Honda was

when uh you know the MD takasan who

unfortunately just passed away recently

from cancer you know I mean really

really sad I think he was there for a

good solid four five years so you had

that continuity you had that vision and

that was Honda at its peak you know I

mean it could at one point do no wrong

all the products were doing well and

then honestly after that management came

and then each one had a different view

absolutely this is one factor that we've

kind of often said in some of the

previous episodes that constant change

in top management has really impacted

many Global multinational corporations

just discontinuity in strategy uh the

approach of one MD to the other is so

very different and where does the new MD

comes from that also matters a lot

exactly that also matters absolutely

we've seen that we've seen that in so

many companies we've seen that in scod

and on the flip side that's one of the

reasons why maruti is where it is I mean

just look at that consistency I mean I

mean you've got the two top men the

elderly gentlemen Mr bav and Mr Osamu

Suzuki being there from day one amazing

still controlling the Reigns and that

really is one of the reasons for maruti

success as well so you're absolutely

right too much change uh and I think

frankly to be honest I I I I don't think

they came with that Focus I think they

lost faith in India after the the Brio

failure the Brio failure the Brio and

the Brio products failure right that

time also they lost faith in that hey

everyone's talking about this is a big

new Golden Goose The Market it wasn't

you know I mean it was always the market

waiting to happen which never happen a

hard period from 2014 to 2020 yeah

exactly and and the market barely grew

absolutely so I think they lost interest

now Hondas being a small company they

have other issues in other markets as

well they have limited R&D of course so

you know they can only deploy so much so

why would they deploy it in a country

where they are making uh not making any

money they would typically deploy that

in other uh markets as well you know

they've got the US they've got Japan

they've got other markets where they

have to be more present and if you look

at it also their products really not

anything there globally aligned with

India I mean all our India products Mass

ones are specific for India right and

even amaz you know which uh was a sub

form again they did a good job on that I

mean if you look at it the way they

integrated the boot the space inside so

Honda Engineers are brilliant you know

they they can do it when they want to

but I think then it got into a stage of

they wanted to be profitable I think

that was what they were looking at so it

was profitability over market share and

even at the expense of brand led to a

massive correction they had to shut down

their great anoa Factory uh the

workforce was almost uh almost haved uh

uh the portfolio was pruned but that

phase of 2014 to 2020 the difficult

period that we were talking about also

led to a lot of confusion there was a

lot of back and forth with regards to

CBU CKD models they felt maybe they were

going little too a little too Mass so

they wanted to bring back the premium

appeal and in the process they

introduced and discontinued I mean that

that again really this stop start is

really not good for the brand we saw

that with the Civic again I mean it was

uh the first Civic was fantastic other

than the ground clearance it was such a

futuristic car you saw that cockpit it

had it was really again Honda Innovation

at its best I mean that Civic was

fantastic butter smooth against the

Corola which was the more practical one

but the Civic was the much more

appealing one and I think at it PE Civic

was doing about 1,800 units a month wow

you can imagine so that was really how

and and at that time when that segment

hadn't evolved so really around 2010

that's right yeah I think yeah 201 2010

exactly so uh I think U you know Civic

they got it back they skipped a

generation they got it back and uh again

they just closed Civic and CRV because

uh they they losing money no no no the

plant shut down right they Clos the

plant I think again this two plant

strategy has been millstone around many

oems like including Ford you know I

think finally they realized uh this

plant is you know you can't be producing

cars here it's making a lot of loss so

they cut they wanted to cut their losses

so they stopped production there but

instead of investing in retooling

tapukara to make these cars which was

again a cost they didn't want to do that

they just stop making the CRV and uh the

Civic okay there were small volumes but

it was really important from a brand

point of view there are so many CRV

lovers there's so many Civic lovers and

that's exactly what I'm saying I think

there are more consumers that are Honda

lovers than sometimes I feel the Honda

management itself you know because Honda

is really a loved brand you know people

love the cars they swear by them and

like you there are very few unhappy

Honda customers because it's got a

delightful brand of you know emotion is

good to drive and they are reliable and

they are efficient and they are cheap to

run and maintain they just go on and on

and on it's not like some German Brands

you know which are great fun very

appealing but then you know they hit you

sting you with some fat uh maintenance

costs and and and things like that you

know and some unreliability this Con

that con AC goes one lakh for that you

know that sort of thing Hondas no they

just go on and on somewhat like Toyota

but they what's fascinating is that they

are so much more complex than Toyota in

terms of their engineering to Toyota's

philosophies just keep it simple if it's

going to cause a problem don't do it I

mean sunroofs in Toyota they never had

it because in case of leakage they

didn't want that hassle you know but

Honda you know will find an engineering

solution to you know give that emotion

and factor in the reliability as well so

I think it was a difficult period but

kitan right now also I think let's talk

about the present Elevate has come in uh

it's done well but still not got the

numbers absolutely I mean uh if you were

to really reflect on the numbers uh

prior to elevate launch Honda's average

monthly sales had come down to almost

4,000 5,000 uh launched in last August

uh one was hoping that these numbers

would significantly move up uh let's

take a quarter of April to June of uh uh

this calendar year and numbers are again

back to 4,000 5,000 clearly one was

expecting El to do a lot more in the

Indian market uh I'd like to get to know

your views as to why why do you think uh

the company has not been able to sustain

that initial momentum I I had heard

these uh numbers of 20,000 bookings just

within few months of the launch but they

could not sustain the momentum what

according to you from a product

standpoint that you saw was missing so I

think look I think the Elevate is a

really solidly engineered product I

personally think it looks good it's got

the road presence Honda have gone the

other way they've realized you have to

give Road presence really against the

grain of what engineers want because

they want Arrow they want that low CG

which I've been talking about but

they've delivered it I think interior

packaging is Good Very functional uh

ride and handling again superb all the

HRA attributes are there but frankly

it's not enough and again it goes back

to one point the Elevate has come to be

honest 5 years too late again late

because if the Elevate had come earlier

with this spec it would have been super

competitive but the midsize SUV segment

has gone moved on and I'll tell you why

it's come 5 years today because in 2019

in fact our own mayang dingra broke the

story in autocar Pro Honda was on the

verge of Lo launching the HRV which is

again a midsize SUV it was called the

2xv was the code I remember that and

they pull the plug at the last minute

they had tooled up for it in fact they

compensated suppliers wow you know uh

for the tooling which they and they paid

them off because obviously the suppliers

and invested the last minute they pulled

the plug they suddenly got cold feet

they

realized um K had launched a CS mg was

there and they had come with a dazzling

array of connectivity equipment

touchcreen you know how the Koreans do

it I mean just a kind of full uh you

know carpet bombed everything that was

there with multiple variants DSG diesel

the works and suddenly they realized hey

I mean you know we will not be

competitive under equipped for the

market and localization wasn't very high

localization at that time they could

only manage 30% and they took the call

that look we haven't uh you know got uh

and then they started working on uh I

think 3 us is this uh this thisat

platform yeah that's right so they

started working on that but you know

this it's taken very very long and the

problem with Honda and a lot of Japanese

manufacturers once they start along a

program they don't they're not flexible

they don't uh change at the last minut

you've decided the spec this is the

product then you have will you will go

on you won't deviate from that that's

what they do so it was the probably the

elevat the sense I get is the the

planning of it the specking of it what

it should have and you have to bake that

right into the uh design right now was

done much earlier so panoramic roofs or

sunroofs wasn't such a craze they've

given just a standard sunroof in there

you know a lot of other features the

other thing is just one engine option

not enough to play in a segment where

there are multiple engine options half a

dozen options from Rivals exactly you

know you've got Turbo petrols you've got

diesels you've got hybrids they don't

have that they don't have a diesel which

I think is very important in the segment

Su space exactly I mean creta Top Dog in

the segment a lot of great big

proportion is still diesel uh no hybrid

I mean maruti has shown that hybrid is

an option that's really the tragedy that

Honda was the first soall yeah but they

didn't do it but again I think it's

Honda not wanting to commit now to be

competitive fair enough you can't do it

with with importing the hybrid system

the city hybrid is about 4 lakhs more

than the standard City and it would be

much more than this it would be much

more than let's say the Grand mataras

and the high Riders but Honda should

have kind of foreseen this localized put

their money and localize the hybrid

system because they're very strong in

that to offer a hybrid so they have a

turbo Petrol in this again which would

have been strong because SUVs need that

mid-range punch they need that feel

again it may not have been the biggest

volume seller but would have all added

up so I think right now what Honda is

banking on are the exports and kaan I

think exports has been something that's

worked quite well for them hasn't it yes

I think after 2020 after correcting and

restructuring the operation uh there was

a call taken that uh let's start

utilizing India from export standpoint

as well uh surprise surprise that

elevate export has crossed already

50,000 units and clearly that uh adds to

the bottom line uh thanks to all the

restructuring activity that sumur rasan

the current MD had undertaken when he

came on board just before covid uh the

company had posted their best ever

revenues profitability F that's the

thing so I mean while we are we might

lament what Honda hasn't done I think at

the end of the day they made profit

didn't they now absolutely I mean they

had to take those hard calls and

eventually that added to the bottom line

uh the focus postco was to become lean

mean and sharpen their focus in the

market uh but again uh the market was

shifting towards lot more Alternatives

so it was a hard call for them to choose

what to do so the only way to ensure

that uh you know you are uh

operationally more profitable is to

export more uh so I think uh the model

which is uh exported as WRV in Japan is

already in strong demand there and uh

even in the future the export potential

is only going to grow so I think they

changed the T again uh from uh focus on

sales to more of a using India's a

export Hub but one factor which I felt

uh right from the development of Brio

right up until the Elevate development

uh they could have very well done with

the R&D Center here uh exactly but I

think you know Thailand was such a

strong base it was a mother plant of the

city right and but I think still they

could have done something and look at

Thailand now I mean they're struggling

over there yes absolutely a Sim yeah

exactly Chinese makers exactly just

Horas in fact just this month just like

India they've shut down their second

Factory they're consolidating in in

Thailand in Thailand as well um they are

facing seeing tremendous competition

from Chinese Brands there uh the volumes

in the Thailand Market has been hovering

around 100,000 units so clearly looking

at the challenges that they facing in

Southeast Asia looking at the volumes

that they have in India and the wish

that they have of exporting more out of

India I understand that there have been

several top level visits that have

happened in India so clearly one is

hoping that given the fact that you know

top board members having visited India

and with southeast Asia becoming weaker

proba probably the stakes with regards

to India is only going to get bigger uh

in fact I'd like to get to know from you

about the Elevate platform and what what

can one expect because uh they got it

wrong with the Brio platform but with

the Elevate platform can they do a lot

more they can do a lot more I think as

we know they're looking at a full e on

this platform right but what I've also

heard there's a bit of a push back uh

for the EV because the way the EV u i

mean the question is no there's another

plan I mean it's a transition to an all

new platform called the pf2 okay pf2 is

their future platform right so again

everyone don't worry Honda is going

nowhere everyone thinks that you know

when companies do bad they're going to

pack up not the case at all Honda has

got a future they are banking on this

it's just that they're a little slow and

they keep missing the trends as we've

said you know they completely miss the

SUV Trend and they've just come with one

Elevate which again could have been so

much more in fact Honda could have done

so much more seven seater Sub Compact s

made midsize SUV just come with this so

they really not put their heart into it

but again they've decided not to go

hybrid again uh what it tells you is

that hybrid is very expensive and they

can't do the hybrid cheap doesn't make

sense without government shops uh

obviously they have to do electric

because they have to meet Cafe as it is

Honda is not Cafe compliant right now

and if the fines were imposed I think it

would be up to 50,000 rupes per car and

from I understand they made a provision

in their book for that so you know it's

it's it's quite a lot because the the

current range uh they just cannot be

Cafe the current delays in eveve could

actually POS well it's not not I think

it will happen I think the Indian uh you

know India wants it but I think the

thinking maybe in Japan is that look we

coming out with pf2 which will be in 27

that will also have an EV so pf2 has got

a lot happening on it you'll have uh an

all you'll have an SUV which is even

bigger than Elevate on the pf2 so it

might be even a seven seater you'll have

the next gen City on pf2 uh you'll have

a subcompact SUV on pf2 so pf2 really is

the future platform and you know that's

really but it's a long way off what's

the timeline like I think 27 27 yeah so

I think the be uh the electric um you

know let's say Elevate is due for n26

this is happening 27 so you know you're

already going to have and that the pf2

is an electrified platform as well so it

can take uh and it's hybrid as well

right so they're doing everything what

they should eventually we're going to

get a localized hybrid from Honda yes

you will get a localized hybrid from

Honda that's the feeling but it is

taking time you know they've just again

been a little slow to this but it is

exciting they have a exciting future

it's just that in the transition what

they do so I think we will see uh an

electric U uh Elevate which they have

talked about but I think again you know

it's uh I I don't think they're putting

too much of their their heart into it uh

but I think they're banking on pf2 I

think they've realized like all

companies have realized India is a very

critical Market we have to make it work

in India they've seen what's happening

in Thailand they've seen what happened

and I wouldn't be surprised that with

pf2 the center of gravity starts

shifting to India more for these

products but you know Honda really sad

in a way that you know it's such a great

brand I mean I I've had such fantastic

drives in a Honda I mean for me

that first gen City and and even the

current city in many ways you know it

just puts a smile on your face where the

wages revs to you know beyond 7,000 RPM

just a just a joy uh but you know this

the market has moved on a lot and

they've really not followed not been in

Cadence or in sync with market trends uh

forget about being in sync you know

they've been laate to it normally you

should kind of predict certain uh you

know let's say Trends which they've been

unable to do with so there's a need I

mean it's always appears to be more of a

half-hearted approach maybe it's time

for them to go full hog uh you know with

the new platform bring in lot many

models and and probably understand the

market better uh like you mentioned I

mean exactly but I think also you know

it's been the pursuit of profits which

has been driven them for the last many

years and as you said you know they've

made money so uh you can't you can't

fault them on that so you know exactly

you know while we may lament and you

know social media will take off on them

uh you know at the end of the day you

know you you are answerable to

shareholders you're answerable to other

stakeholders so they are making profits

and you know that's been their

profitable thing but I think it's come

at the expense of a huge dent to what

was such a strong brand today I think

Honda you know in terms of brand

strength is much weaker than even a

Hyundai is and I think in the long run

it'll take a lot to kind of claw that

back so uh though it's still very strong

and they still can do it uh and you know

people love Hondas as Hondas but you

know that that tribe is getting smaller

and we are seeing that from the sales

numbers no absolutely I think uh I was

just looking at the numbers closely

April to June quarter in passenger car

market their market share is about 2 and

a half 3% and in the SUV space the UV

space their market share is less than 1%

so clearly uh with the volumes probably

even the Mind share is getting uh

affected uh and my biggest concern is

from now up until 2027 all that they

have is the nextg amaz uh which has been

delayed now been delayed it's was to

come you're right the next year inaz it

was to come I think this year is going

to Jan from what I understand right

absolutely so again a new model coming

in the sedan space uh I mean I'm also a

sedan lover and I'd love to see many

more sedans in the market uh I'm glad

they are sticking to it but again it's a

very difficult Market to kind of sustain

uh for the future and until that time I

think uh the game is going to be about

utilizing India based for exports and

hopefully they'll localize a lot more

hopefully they'll understand the Indian

market Indian sensibilities Indian

nuances and read the market uh better

for the future or else again given the

Deluge of new models that we are seeing

from the likes of Tata Mahindra and uh

the the top players in the market it's

going to be a very very difficult

Journey for them absolutely and if you

look at it kaan I mean just looking at

it how they shrunk in terms of their

portfolio I only model only three models

right now you know earlier you had Brio

you had mobilo you had brv you had a CR

you had a Civic maybe not all together

at one time you had the city of course

which has been the backbone of Honda in

India for the last uh you know 25 plus

years since 98 right now down to three

models obviously again you know they've

kept it lean to be profitable but in

India to be profitable you you end up

being marginal as well absolutely you

know that's very hard to be profitable

and super mass and relevant and in the

thick of the game uh you know I think

Hyundai's managing that brilliantly I

think today Hyundai is a case study of

how a global OEM can come in and you

know really uh even though they just

have 16 17% of the market it's still a

big chunk absolutely absolutely uh so

but I think with Honda I think with pf2

there there is hope I think they

realized it's a global platform as well

so there'll be a lot of exports on that

they've tasted the success of exports

and I think that's one Edge Honda and

other multinationals have over Indian

companies because let's face it Tata and

uh MRA have no Global exports at all

they're only domestic companies you know

and uh you'll get then you know let's

say a products which will have a more

Global appeal coming to India so I think

there is hope but you know it's been a

really they've lost a lot in the process

and it'll be very difficult for them to

claw this back and U you know talking to

friends in the industry the other sense

that I'm getting is that more or less

the ecosystem is aligned to this

consolidating phase so to say uh again

it's happening way too often with Honda

brand in India uh that you know from 24

to 26 it's about ensuring that uh the

company is profitable it is about

ensuring that uh the uh the the dealer

ecosystem is making money the dealer

ecosystem is still very very good yeah

yeah absolutely and and again uh you

speak to the dealers there still uh uh

you know uh there's not a crazy pressure

there's no push off metal like you see

with other brands so they understand

their dealer Partners well uh the

consumer have very positive resonance

towards the brand and hopefully with the

exports you know they can uh tide over

these next two years and uh and and

hopefully we'll be ready with bigger

better Honda models for future which is

more which resonates more with the

Indian buyer needs yeah absolutely and I

think you know with that we can wrap it

up you know I mean Honda it's a brand we

we've all known and let's not forget

it's we've known it from two wheelers

Hero Honda I mean you know really it

established the brand it went Mass I

mean it's gone to every corner of the

country even generators a Honda so

really Honda is so much a part of uh you

know uh the DNA of Indian Motoring in so

much sense you know so I think clearly

uh it's it's a brand that still has got

a lot of cache I think uh you know there

is a strong future with the new models

coming out but how fast how quickly they

can do it that all remains to be seen

and with that it's a wrap on uh this uh

edition of deep Drive thanks for tuning

in and don't forget to subscribe to our

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