The Fall of Honda Explained

How Japanese Got So Wrong About INDIA ? The Fall of Honda Explained!

Any car of a certain brand available in India sold more than 9000 units India in August 2022

And the car was manufactured by another brand which is operating in India for the past 27 years sold only 7770 units of all the combined car models of this brand has been sold in India in August 2022. This brand is Honda.

Honda made Indians understand the true meaning of car dynamics. Every car of Honda whether Honda City, Civic, Accord, or CR-V used to be a market leader in its segment.

The whole world is a fan of Honda’s V-TEC Engines and one of the synonyms of Honda is Quality. But today all the models of Honda together cannot reach the monthly sales of one car of another brand which is not even included in the list of the top 10 most-selling cars in India.

The performance of Honda is deteriorating year by year and we can observe that from the past 3 to 4 years they have discontinued the manufacturing of almost every car.

Honda Mobilio was discontinued in the year 2018, Honda Brio was discontinued in the year 2019. And Honda discontinued its Accord, CR-V, and BR-V together in the year 2020.

And by the end of 2022, Honda will discontinue the manufacturing of its Jazz, WRV, and 4th Gen City.Honda has discontinued its various models and also its manufacturing plant based in Greater Noida in the year 2020.

This plant was started in the year 1997 with a capacity of 1 Lakh Cars per year. Apart from this, Honda under its Voluntary Retirement Scheme in India.

Many Senior officials of Honda have left the Company. And more than 1500 employees were forced to resign from Honda due to the closure of this manufacturing plant.

What actually happened to Honda?

Many people believe that Honda is not able to perform well in the Indian market, due to the High Tax Rates in India. And that’s why Honda is not able to earn sufficient money.

But if this was true then how could brands like TATA, Mahindra, and Hyundai do well in India. And why do brands like Volkswagen and Nissan are introducing Revival Products in India.

The second reason behind the poor performance of Honda is the nonavailability of a Compact SUV. And I believe this fact is certainly true.

But this isn’t the whole story Honda has never been able to change according to the needs of the Indian market. Honda introduced Diesel Engines in the Indian market very late, similarly Sub-4-meter cars and Expensive Hatchbacks.

Honda does not have any SUVs for the Indian market either. This problem with Honda is not only limited to India. A similar thing could be observed in other countries as well.

Let’s start from the very beginning, Honda was introduced by Soichiro Honda. Who was a Garage Mechanic, used to tune cars in 1937 so that those cars can be used in Races.

Honda started a piston manufacturing company, manufactured pistons were supplied to Toyota. But wait! we should not go this far in the past to understand the sufferings of Honda.

Right? And by the way, I am going to write a whole story post on Soichiro Honda in the future and believe me, it is one of the most inspiring stories. To read that post, Kindly bookmark this website.

Let’s start with the time, when Honda entered the Indian market and set up a manufacturing plant in India.

Honda entered the Indian market in the year 1995 through a joint venture with USHA International Limited.

When Honda had just entered the Indian market at that time India had an immature Auto market and no other brand could be seen as a competitor.

At that time Honda introduced its Global Car in India which was Honda City. Before launching this car in the Indian market, Honda tuned this car according to the need of the Indian Customers.

Honda City was not a cheap car in spite of being expensive more than 8000 units of Honda City were sold in India in its introductory year.

When Honda entered the Indian market, it does not want to challenge Maruti Suzuki. Honda was trying to leave an impact in the luxury car segment of India.

Honda Accord was launched after Honda City, which targeted the elite population of India and this car became the first choice of the Elite Population of India.

Honda Accord had a massive demand in matured markets like the US and then in the year 2003, Honda CR-V which was an SUV was launched in India and it was a luxury offering at that time.

In the year 2006, a very special car was launched for the JDM Lovers, which was Honda Civic.

Civic captured everyone’s mind after its launch. It was good in looks, it had superb dynamics and its V-TEC Engine was quite exceptional.

Honda had an up-market with its car lineup and Honda was also trying to give an up-market feel through its dealerships, Honda became the first auto brand in the Indian market, which had multi-story outlets.

On the other hand, the dealer outlets of Maruti Suzuki were shabby.

Honda also started providing spare parts and offering after-sales service in its dealerships, which has hardly done by any other brand at that time.

Honda used to believe that, once anybody becomes a Honda Car owner, he/she should not look for any other brand in the future.

Masahiro Takedagawa who was the CEO of Honda India at that time said that the people who are driving the Honda City should only option of Honda Civic as an upgradation. And the people who are driving Honda Civic have the options of Honda Accord and Honda CR-V for upgradation.

This means Honda had many cars for the upper middle class and elite population of India. Now even though Honda was performing satisfactorily in the premium car market in India.

But the problem was, at that time the number of people looking for a car around 9-10 Lacs was very less. And that’s why Honda launched its Premium Hatchback, Honda Jazz.

Which was available in many foreign countries with the model name ‘FIT’. Honda launched the base model of this car at a price of INR 7 lacs. And this price was huge for any compact car.

If we compare it with the Maruti Suzuki Swift which used to be the closest offering at that time and then the price of the base model of Swift was only INR 4 Lacs.

Due to its expensive price the sales of Honda Jazz always remained lower and that’s why Honda discontinued the manufacturing of this car after about two years.

Correcting these mistakes Honda launched Brio in the year 2011 and kept the price of its base model even less than INR 4 lacs.

But the Indian people did not like the styling of this car and the interiors, and the boot space was inadequate and that’s why this car was also a flop in India.

After this Honda launched its Amaze in the Year 2013 and it was a hit. This car was very profitable for Honda.

A growth of around 80% was achieved by Honda with the help of this car. Honda did something different with this car that was done by the Competitor of Honda 5-6 years earlier.

It was the first Diesel Engine based Car from Honda. According to Honda Officials, this Diesel Engine was made according to the need of the Indian Market.

Now there certainly was a problem with the diesel engine of Honda. The diesel engines of Honda were totally different from their counter petrol engines.

On one hand, the petrol engines of Honda were market leaders in terms of Refinement.

But on the other hand, Honda’s diesel engines were the noisiest ones in their respective car segments.

This was not the major issue Honda introduced its diesel engines very late in the Indian Market. During the early 2010s there was a huge difference between the prices of Petrol and Diesel.

But during the late 2014s, The Indian Government de-regulated the Price of Diesel.

This increased the price of diesel and now the prices of Petrol and Diesel were almost equal.

Honda also launched its BR-V and Mobilio with diesel engines. But these cars flopped in the Indian market as soon as they were launched.

On one side during the years 2016-17, around 1 Lakh units of cars like Hyundai Creta and Suzuki Breza were being purchased by the people in a year.

On the other side, only 20000 units of BR-V were getting sold and this was the time when car manufacturers were shifting towards petrol engines again.

Because the demand of Diesel Engine based cars started decreasing due to the increased price of diesel but guess what Honda was oversupplying its diesel engine-based cars.

And the dealers were given the task to sell these cars apart from this Honda launched WR-V based on its jazz.

This car was launched as an alternative to a compact SUV but the people had no interest in buying this car too because people in India require a compact SUV rather than its alternative.

After hearing this whole story of Honda one thing becomes crystal clear and that is, Honda has never launched the correct car at the correct time.

And all the cars which have been launched by Honda in India the strategy of Honda for the majority of its cars has proved to be wrong.

While gathering information about Honda I found that these problems with Honda are not only limited to India.

We can refer to the United States for an instance in the American Market, Honda only has one pickup truck to offer which is Ridgeline.

The sales of this truck from Honda are very less and this truck is one of the least-selling pickup trucks in the US.

In spite of the fact that pickup trucks are the most selling vehicles in the US. I have also observed that their Sedan Line-up is huge as compared to their SUV Line-up.

And that’s why we can observe that Honda is only able to sell around 22K Cars per year in Africa and the Middle East, these regions are among the biggest Markets for SUVs.

I have also observed that Honda is also not performing satisfactorily in Europe. But if we talk about India then Honda has hinted many times that they are trying to rectify all their mistakes. But nothing could be observed in reality.

When Honda unveiled its Vezel and people were hopeful for its launch in India but this did not happen. Apart from this, cars based on Honda Amaze were also going to be launched.

Which were seen as competitors to Venue and Nexon but no development could be seen.

Honda did not launch any mass-market product in the Indian market but Honda certainly launched its City EHEV, which cost around INR 20 Lacs. And I doubt how many people would literally purchase this car.

In all this negativity there is one positive statement from Honda, Honda is soon going to launch an SUV based on Honda City.

Which would compete with cars like Hyundai’s Creta, we have to wait for the launch of this car.

Whatever happens next with Honda, we should appreciate Honda once because Honda is the only brand in the whole world which is providing Sedans with good dynamics.

Because there are many brands in the world, which has totally changed the appearance of a car, like Mitsubishi.

For some time this brand was known for its high-performance cars. And today Mitsubishi is limited to SUVs and Vans.

I hope you would have liked reading this post for more upcoming post bookmark our website. And don’t forget to mention in the comment section which global product should Honda launch in India?

Thank You

 

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