 |
| Hironori Kanayama, President |
The plush showroom in Noida
is abuzz. Monthly footfalls have surged from 200 early this year to
about 500. From worrying about poor sales, the dealer is now grappling
with a three-month-long waiting list. Business hours are often extended and not just at the Noida dealership to manage the customer surge.
Source;
http://articles.economictimes.indiatimes.com/2013-06-16/news/39993435_1_amaze-premium-hatchback-jazz-honda-cars-india-ltd
It wasn't always this way for Honda Cars India Ltd (HCIL). A slew of
missteps from mispricing premium hatchback Jazz, to ignoring the
mass market and, subsequently the diesel segment when the price
differential with petrol widened coupled with a few natural
calamities elsewhere like an earthquake in Japan and floods in Thailand
hit HCIL hard. Between fiscal years 2007 and 2013, market share steadily
dropped from a peak of 4.44% to a low of 2.74%. Volkswagen's Vento and
Hyundai's Verna eroded Honda's leadership position in sedans, where the
City once ruled the roost; and models like the Hyundai Elantra and
Toyota Camry began giving Honda's Civic and Accord a run for their money
in the executive sedan and premium sedan segments, respectively.
"Honda was an aspirational brand, rich in features and looks. But it also came across as an overpriced and highly decontented [industry terminology for removal of features] vehicle," says V Ramakrishnan, managing director at Frost & Sullivan India, a consultancy firm. The short point: Honda wasn't getting anything right: neither product, nor price nor positioning.
It required just one launch to turn things around. The Amaze, launched just two months ago, has helped HCIL, according to SIAM, jump one place to No. 5 in May, ending the month with a share of 5.63% of the Indian car market. With total sales of 11,342, HCIL's sales grew 9.8% in May over a year ago in a sluggish market where competitors like Maruti (decline of 13%), Toyota (decline of 35%) felt the brunt.
"This is our counterattack. Amaze is our first weapon. We have many more," says HCIL CEO Hironori Kanayama. Adds Jnaneshwar Sen, senior V-P (sales & marketing): "We have managed to hit the sweet spot."
It may be just one model that has reversed HCIL's fortunes, but to create that winning product called for a complete overhaul of the company's DNA an exercise that began two years ago.
Thinking Frugal
Honda's biggest challenge was to learn new and cheaper ways to develop and produce cars in India. Earlier, Honda developed global models and then tried to localise for each new market. For the Amaze, inputs from India began trickling in right from the beginning of the R&D process.
Between the Brio hatchback launched in 2011 and the Amaze, HCIL worked aggressively to contain costs by developing local vendors without compromising on quality.
From 102 vendors at the pre-Brio stage, HCIL's vendor base has now grown to over 200 (the majority of them non-Japanese), helping Honda achieve 92% localisation. Aditya Auto is one of HCIL's newer vendors, which began working with the carmaker three years ago. HCIL was looking for a cost-efficient way to produce window regulator systems in India that met its quality parameters. It had traditionally used a wire type rope mechanism that was imported from Thailand but was costly. "Honda gave us targets and asked us to give them solutions. We fundamentally changed the design of the window regulator," says Mihir Jayaraman, the vendor's business unit head. In the process, Jayaraman also brought the cost down by 35%. The decade old vendor, which has annual revenues of Rs 250 crore, now also supplies to Honda Thailand.
"Honda was an aspirational brand, rich in features and looks. But it also came across as an overpriced and highly decontented [industry terminology for removal of features] vehicle," says V Ramakrishnan, managing director at Frost & Sullivan India, a consultancy firm. The short point: Honda wasn't getting anything right: neither product, nor price nor positioning.
It required just one launch to turn things around. The Amaze, launched just two months ago, has helped HCIL, according to SIAM, jump one place to No. 5 in May, ending the month with a share of 5.63% of the Indian car market. With total sales of 11,342, HCIL's sales grew 9.8% in May over a year ago in a sluggish market where competitors like Maruti (decline of 13%), Toyota (decline of 35%) felt the brunt.
"This is our counterattack. Amaze is our first weapon. We have many more," says HCIL CEO Hironori Kanayama. Adds Jnaneshwar Sen, senior V-P (sales & marketing): "We have managed to hit the sweet spot."
It may be just one model that has reversed HCIL's fortunes, but to create that winning product called for a complete overhaul of the company's DNA an exercise that began two years ago.
Thinking Frugal
Honda's biggest challenge was to learn new and cheaper ways to develop and produce cars in India. Earlier, Honda developed global models and then tried to localise for each new market. For the Amaze, inputs from India began trickling in right from the beginning of the R&D process.
Between the Brio hatchback launched in 2011 and the Amaze, HCIL worked aggressively to contain costs by developing local vendors without compromising on quality.
From 102 vendors at the pre-Brio stage, HCIL's vendor base has now grown to over 200 (the majority of them non-Japanese), helping Honda achieve 92% localisation. Aditya Auto is one of HCIL's newer vendors, which began working with the carmaker three years ago. HCIL was looking for a cost-efficient way to produce window regulator systems in India that met its quality parameters. It had traditionally used a wire type rope mechanism that was imported from Thailand but was costly. "Honda gave us targets and asked us to give them solutions. We fundamentally changed the design of the window regulator," says Mihir Jayaraman, the vendor's business unit head. In the process, Jayaraman also brought the cost down by 35%. The decade old vendor, which has annual revenues of Rs 250 crore, now also supplies to Honda Thailand.
Source;
http://articles.economictimes.indiatimes.com/2013-06-16/news/39993435_1_amaze-premium-hatchback-jazz-honda-cars-india-ltd
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