Honda plans new car for Indian roads

Fujisaki said no decision had been taken on whether the new model will be in India’s thriving small car segment, which commands a nearly 80 per cent share of the domestic automobile market.

Honda Siel, a joint venture with India’s Siel Ltd, entered the Indian market eight months ago with the mid-sized City model that it sells mostly in emerging economies.

Currently, Honda holds 95 per cent of the equity in the joint venture. Siel holds the rest. Fujisaki said Honda Motors had raced to a nearly 20 per cent market sharein the mid-sized segment competing with global rivals such as General Motors Corp, Daewoo Motors India Ltd and Maruti Udyog Ltd, an equal venture between the Indian government and Suzuki Motor.

Daewoo Motor, a unit of South Korea’s Daewoo Group, is scheduled to launch next month its small model, Matiz, while Hyundai Motor India Ltd, a unit of the South Korean Hyundai group, launched its small 999 cc Santro model earlier this month.

Maruti’s 800 cc small car, established much before others entered India under a seven-year-old economic reform programme, dominates the Indian market with a share of more than 80 per cent. "We would like to have a 30 per cent market share," Fujisaki said but added that Honda’s sales were expected to slump following an economic slowdown this year.

Fujisaki said Honda had cuts its sales forecast in the current 1998/99 (April-March) year to around 13,000 cars from the original 20,000 cars amid the slowdown. "I would say we would break even selling 18,000-20,000 cars per annum,"he said.

Honda Motors had made an initial investment of Rs 450 crore ($106 million) in India. Fujisaki said Honda has decided to invest Rs 180 crore more to meet commitments made to the Indian government and to increase local content in the cars. "We can also reduce our interest burden with the additional investment," he said. Honda proposes to make a total investment of Rs 850 crore in India.