Honda's India Unit to Boost Dealerships by 28% to Reverse Flagging Sales
Jnaneswar Sen of marketing at Honda SIEL Cars India
Pankaj Nangia/Bloomberg
Jnaneswar Sen, vice president of marketing at Honda SIEL Cars India.
Jnaneswar Sen, vice president of marketing at Honda SIEL Cars India. Photographer: Pankaj Nangia/Bloomberg
Jnaneswar Sen of Honda SIEL Cars India
Pankaj Nangia/Bloomberg
Jnaneswar Sen, vice president of marketing at Honda SIEL Cars India, speaks during an interview in Noida, India.
Jnaneswar Sen, vice president of marketing at Honda SIEL Cars India, speaks during an interview in Noida, India. Photographer: Pankaj Nangia/Bloomberg
Honda SIEL Cars India production plant
Pankaj Nangia/Bloomberg
The Honda Motor logo is displayed atop the Honda SIEL Cars India production plant in Noida, India.
The Honda Motor logo is displayed atop the Honda SIEL Cars India production plant in Noida, India. Photographer: Pankaj Nangia/Bloomberg
Honda Motor Co. plans to increase car dealerships by 28 percent in India and will boost advertising to reverse flagging sales as it introduces its lowest-priced car next year.
Honda’s local unit will increase outlets to 150 in 90 cities by March 2012 from 117 in 71 cities now, adding about one a month, Jnaneswar Sen, vice president, marketing, said yesterday in an interview in Greater Noida, near New Delhi. Honda Siel Cars India Ltd. plans to offer a car for less than 500,000 rupees ($10,675) in the second half of 2011, according to Sen.
Sales of the Tokyo-based automaker’s cars have declined 4 percent in the four months to July in India, compared with an increase of 35 percent industrywide in Asia’s third-biggest vehicle market. Cars of less than 4 meters in length, most of which are sold at less than 500,000 rupees, accounted for 79 percent of the sales, according to the Society of Indian Automobile Manufacturers.
By opening more dealers the carmaker is “getting closer to the customer” and is increasing advertising catch up with rivals.
Honda’s small car will compete with Maruti Suzuki India Ltd.’s Swift, Volkswagen AG’s Polo, Hyundai Motor Co.’s i20 and Nissan Motor Co.’s Micra, Sen said.
“This is the fastest growing segment,” said Sen. “If you consider the population of the country and the car penetration, the auto industry is barely scratching the surface. There is space for everybody.”
Sales Outlook
India had eight cars per 1,000 people in 2009, compared with 435 in the U.S., 231 in Russia and 24 in China, according consulting firm Ernst & Young said in February.
Car sales growth in India will probably slow by half this year as new emission rules push up vehicle prices and interest rates increase, the industry group said in July, forecasting the pace at about 12 percent. Sales of cars grew 25 percent in the year ended March, according to the group.
Honda plans to initially make the small car at its factory in Greater Noida, said Sen. The plant, which has a capacity to make 100,000 cars a year, produces 61,000 vehicles now, he said.
The company will consider making cars at its second plant in the western Rajasthan state after evaluating demand, said Sen.
Honda Motor is also increasing the production of some parts locally as well as increase the number of component suppliers to 124 by the middle of next year from 105 now as it seeks to lower import costs, Sen said.
To contact the reporter on this story: Subramaniam Sharma in New Delhi at ssharma@bloomberg.net.
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