Lack of SUVs and fierce competition from rivals make driving Honda Cars difficult

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Honda Cars India was an early entrant into the Indian market – back in 1997 – but the company appears to be on an upward slope when it comes to dealing with the competitive landscape of the crowded domestic market and players hits have carved out of their niches. Analysts argue that Honda failed to launch the right products at the right time at the right price.

The company has now decided to phase out three more of its models – Jazz, WR-V and fourth-generation City – by the end of the current financial year, sources say. This comes after two of its top models – Civic and CR-V – were discontinued in December 2020.

The lack of sport utility vehicle (SUV) options in a market where the preference for such models has increased competition and fierce competition from rivals has resulted in Honda consistently losing share in the passenger vehicle (PV) segment ). The company held a 5.44% share of the country’s PV market in FY19. It fell to 3.67% in FY20, 3.02% in FY21 and 2.79% in FY22.

The main reason for the decline is that the company does not have the right product in the right segment at the right time, an industry expert told FE. Honda has no serious competition in the sub-four meter compact SUV segment, which accounted for 21.7% of PV volumes in FY22, and in the midsize SUV segment, which held a share of 17.5% during the same financial year.

However, it is developing a new India-focused SUV, which will be launched in CY23. Additionally, stronger rivals like Tata Motors and Kia India, with their strong SUV portfolio, have eaten away at Honda’s market share. Tata’s share in the PV segment increased from 8.26% in FY21 to 12.16% in FY22, while Kia’s improved to 6.08% in FY22. FY22, compared to 5.74% in FY21.

Although Honda has a strong presence in the sedan segment with models like fifth-generation Amaze and City, the share of the sedan segment itself fell to just 10.2% of the overall PV market during the fiscal year. 22, compared to 14.3% in FY20.

In addition to Jazz, WR-V and fourth-generation City, the company’s product portfolio includes Amaze, fifth-generation City and City e:HEV (hybrid). The automaker now manufactures all vehicles at its Tapukara plant in Rajasthan. In December 2020, it completely halted production at its factory in Greater Noida, Uttar Pradesh.

The supply of components for fourth-generation Jazz, WR-V and City from various warehouses to the Tapukara plant has also slowed down, sources told FE. While components for these models would be supplied almost daily before the pandemic, the frequency has now slowed to once every 10 to 15 days, they said.

When contacted, Honda said: “As a policy, we do not comment on market speculation.” Launched in India in June 2009, Jazz was too expensive and did not attract many buyers. In nearly four years, Honda was only able to sell 23,170 Jazz units and discontinued it in February 2013.

In July 2015, the company relaunched the next-generation Jazz, but it ran into stronger rivals such as Maruti Suzuki Baleno and Hyundai i20, and also failed to attract substantial buyers. Sales of the premium sedan amounted to 5,840 units during FY20, 5,724 units during FY21 and 5,913 units during FY22.

WR-V was launched in March 2017 and was based on the Jazz platform. While Honda pitched it as an alternative to sub-four-meter compact SUVs, customers didn’t buy that argument. Honda sold 11,926 units of WR-V in FY20, 9,538 units in FY21 and 6,086 units in FY22.

Industry experts FE spoke to said Jazz and WR-V are now at the end of their life cycle, and Honda may not be able to recoup the heavy investment in developing their new generations due to their low sales.
Honda launched the fifth generation City in July 2020. However, it did not abandon the fourth generation model and continued to sell both at its showrooms across India.

Customers prefer the fifth generation City over the fourth generation City as the former is a much bigger car and the price difference between the two is around Rs 2 lakh, an expert has said. Also, customers want to buy the latest product and not a model from an older generation, he added.

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