With the launch of Amaze in April 2013, Honda made a debut in the diesel engine space, a strategy that worked wonders as the carmaker was able to plug the diesel engine gap in the Indian market. Now, the Japanese carmaker aims to replicate the diesel success with the newly-launched 4th-generation City as well. It hopes to dent rival Hyundai Motors’ market share, whose Verna is the dominating player in the compact sedan segment. Honda Cars India president & CEO Hironori Kanayama tells Rachit Vats about the company’s expectations from the new City. Edited excerpts:
Honda Cars India achieved a sales jump of over 100% for the April-December 2013 period on a year-on-year basis in the compact sedan segment from the Amaze launch. What was the petrol-diesel sales mix for Amaze?
Amaze turned out to be a revolutionary product for us. Of the total sales volumes, at least 70% sales comes from the diesel-engine variant. While we are expecting a similar sales delivery from the new City as well, a lot depends on the price gap. Our aim is to regain dominance in the premium segment.
Over the last 18-months petrol prices surged 4% while diesel prices surged 30%. Do you see that as a cause of concern? Is the company taking any steps to arrest this?
All we are focusing on now is to meet the market demand in both petrol and diesel variants. Demand does get affected by the emerging price gap between the two fuel. At the moment, we have no programme that can help us adjust production with the change in fuel pricing. The government of India will take the final decision on behalf of the customers. This is a matter of fiscal deficit and a decision scheduled to be taken by the government. We cannot comment on it though we have made investments in the diesel engine space.
Your dealership numbers are still lower than the market leaders. Is the company looking at scaling them up?
We will expand our dealer network to serve more customers and enter newer cities where we have no presence. These include mostly tier-II and tier-III cities. We are looking at opening 170 dealerships by the end of this fiscal and these will serve 107 cities.
Is the company looking at re-negotiating dealer margins to retain dealers and draw more?
Dealers are important partners as they help serve customers on our behalf. We are aiming at a win-win relationship with the dealers. We take such decisions depending upon the market situation, dealers and our profitability. We are not looking at a drastic change in the margin strategy, though it can be reviewed anytime whenever necessary.
By Rachit Vats