Can Honda get its mojo back? | Deep Drive Podcast Ep. 18 | Autocar India
Summary
TLDRIn 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
- π Honda has a strong brand legacy and is loved by its customers, often being considered a top choice for driving experience and reliability.
- π 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.
- π οΈ 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.
- ππ 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.
- π‘ 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.
- π Honda's management changes and lack of continuity in strategy have impacted the brand's direction and ability to keep pace with market demands.
- π« 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.
- π 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.
- π 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.
- π€ 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.
- β³ 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
π 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.
π 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.
π οΈ 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.
π 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.
π 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.
π 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.
ποΈ 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.
Mindmap
Keywords
π‘Honda
π‘City
π‘Brio
π‘Elevate
π‘Market Share
π‘Premium Appeal
π‘Value Engineering
π‘NVH
π‘Export Hub
π‘PF2
π‘CAFE Standards
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
Channel because we are out every week on
Saturday at 11:00 and you'll be notified
and you can tune in and again thanks so
much for watching
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