The launch of the low priced car has made Honda to press in for more dealerships by 28% in India from 2011. Before 2012, the number of dealers would be 150, spread over 90 cities from
the current 117 placed in 71 cities. The average increase will be one a month, said its VP for
marketing. The company wants to get closer to the customers through more dealers and intensive ad campaigns he added.
Honda Siel Cars India is launching its low priced edition at Rs5 lakhs during the Q2 of 2011. SIAM indicates that cars at the length of less than 4 metres and at the cost of Rs5 lakhs have the potential of 79% in the net sales. With this launch Honda will pit itself against Polo from VW AG, Hyundai i20, Maruti Swift, Nissan Micra. The industry analysts view this segment as getting rapid increase in proportion to the Indian population, which means the share of the players is not matching the potential. The Indian car market’s share is that during 2009 it was 8 out of every 1000 units against 435 in the US, 24 in China and 231 in Russia, said Ernst & Young.
Honda India has been witnessing a fall in its sale by 4% during July against the 35% hike faced in the whole car market in the Asian region. However, the industry still feels that the growth in the Indian car market may witness a slow pedalling during the year end in the wake of emission norms, price rise of components and interest rates hike. This is quite contrast to the 35% growth found in the FY ended March 2010.
Honda’s compact car will come off its facility in Greater Noida, which is capable of delivering 1 lakh annual units and the current production is 61000 annual units. Depending upon the unexpected demand there will be production from the second plant at Rajasthan. In addition
there will be more localization for components, making the suppliers too increased, from the current 105 to 124. The proposal is for the ensuing FY, 2011-12. This, Honda feels may yield
reduced the import costs, and procuring more benefits.