Rajesh Goel is a Senior Vice President and Director, Sales and Marketing, Honda Cars India. He has worked for over 25 years within the Honda group, leading diverse & global teams across sales & marketing, purchasing, manufacturing as well as quality.
What is the role of Honda Amaze in your overall product portfolio? What are your expectations from the new Amaze?
Amaze is a very strong pillar of business for Honda Cars India. This is an offering that helps us to connect with people, who are looking for sub-four metre cars. Amaze is our entry-level car. This also helps to connect with the heartland of India, and therefore 68% of our sales have always come from Tier II and Tier III cities.
Interestingly, 40% of the buyers of Amaze are first-time young buyers. Also, we offer CVT and this is not like any other AT or AMT, and despite the power differential, 20% of sales come from CVT variants.
As I said, our target audience mostly are from Tier-II/III cities and in line with that, our communication and positioning is Jeetein Hain Shaan Se.
From this second generation Amaze, we have almost consistently recorded a market share of 20% in the sub-four metre sedan segment. In certain states like Kerala and Gujarat, the Amaze was number one actually. So hopefully, with this new minor model change Amaze before the festive season, the momentum will continue if there are no negatives of the pandemic.
With this new launch and tactical measures taken, we are aiming to grow over double digits this year compared to last year's volumes.
What about the performance of your flagship model Honda City, as sedan sales are declining?
The trend towards SUVs is accelerating. From January of this year to June and July, the contribution of SUV in overall sales is around 30 to 35%, which is an all-time high. Having said that, our understanding of the market for the mid to long-term is that sedans as a percentage of the total market will reduce, while the average growth of the market will continue at 7% in the longer term. The overall numbers will not reduce.
Therefore, as a sedan company, we will continue to keep offering sedans to customers who want the driving experience of a car that is close to the ground.
You discontinued popular products like Civic and CR-V. What is the reason behind it? How do you plan to strengthen the Honda Cars India's product portfolio?
Frankly, no matter how much I dislike this, I'll explain this in three points. The number one point is that Civic and CR-V were discontinued not because of a product line-up issue, but more because we were trying to strengthen our company in line with the fact that we closed the production operation at the Greater Noida plant and consolidated production at the Tapukara plant.
This is a plant, which was originally designed to be a very high-efficiency plant. As a result of which the Civic and CR-V size could not fit there and we had to discontinue these products. And that remains true even today.
In the last one and half years, we have been very media-shy because we were very focused on making our own operations solid, lean, and scalable for the long-term business in India. I'm happy to say that more or less we have been able to do what we set out to do.
We also had a few VRS. I personally believe that we are now headed in the right path. And one of the evidence of that is our capacity utilisation which used to be less than 30% a year ago, is now 70% plus in this fiscal.
And the third thing, Honda is developing a brand new India-focused SUV. When we launch it, it will give us volumes in the SUV space as well.
How do you plan to bounce back? How do you see the next three to five years?
In terms of expanding sales, whatever product interventions are possible for us, we are doing it and preparing for the festive season. In the past one or two months, we have tied up with 16 NBFC banks with multiple offers on auto finance. So, customers from every segment can avail of loans. These are tactical things that we keep doing.
In terms of strategy, as I said, we have worked very hard on making our company operations solid and flexible. But it is not necessary that every company is present in every segment. I have told you that we are entering the SUV space. But other than that, we will start our electrification journey with hybrids. Next year, we will launch a hybrid in the mass segment, and see how the market responds.