In a freewheeling conversation, Yoichiro Ueno, President and CEO of Honda Cars India, talks to Ishan Raghava about his first impressions of India, the concerns they have regarding the introduction of the GST regime and how he envisions Honda clawing back sales in India.
You’ve been in India for a few months now, what is your impression of the Indian automotive market?
There are a lot of cars sold here. However, compared with the size of the market, the cars on the road are a bit monotonous. What I mean is that the variety amongst mass market cars is not really there. The cars that sell in large volumes are quite limited and similar – and that is partly because of the tax structure in the Indian market. I think the government is trying to promote smaller (read as sub-4m) cars to make them more affordable, and the current level of tax differentiation is so huge that compared to other major markets, customers in India are given limited choices.
You mentioned that, as a manufacturer, you have some concerns about the GST regime. What exactly are those concerns?
I think the biggest concern that we have is that, while the GST rates have not been announced, there is wide-ranging speculation in the market about how it will affect the automotive industry. Some say that car prices will drop. Of course, this won’t apply to all models, but indications are that the price of most models will drop. So, in the meanwhile, we’ll adopt a wait-and-see approach, but the timing of the rate announcement is also not yet clear and the final rate applicable on automobiles is not clear either. So, that makes it difficult for us to plan our production schedule. Some additional clarity on these aspects from the government would be a welcome move for all automotive manufacturers.
You said that, by the end of this year, you expect better sales growth for Honda. Is that based on the festive season or some other factors that will scale up your sales numbers?
Well, it’s a combination of multiple factors really. The growth we expect to see is partly due to the festive season and a growing economy on account of a healthy monsoon, and also, we have some plans to strengthen our product lineup. We expect that combination to enhance our sales numbers in the short term.
Are you also looking at further expansion of your sales outlet network to strengthen your presence and also help your sales numbers?
We are currently already in the process of appointing new dealers, especially in Tier-II and Tier-III cities, to help us grow and develop newer markets. As of now, we have about 309 dealers in 197 cities across India. However, we intend to keep expanding this network and aim to exceed 340 dealers by 31st March, 2017. We started this year with 295 dealers and we’ll end up adding at least 45 more dealers this year. Fourteen of these dealers have already been added and the other thirty-odd dealerships are in various stages of completion.
The Government has announced that, from October 2017, all cars sold in India will have to meet new crash test norms. How do you intend to meet these new safety norms for your product lineup?
As far as safety is concerned, we’ve already announced that we’re going to make airbags standard fitment on all our products – in all variants and trims – by April 2017, so that is one initiative that we’re taking to ensure the safety of our customers. So, airbags will be standard on all our cars, and we’re also adding some additional safety features, especially on the body structure in order to achieve additional safety in our cars.