Honda Cars India explores new markets for exports

Honda Cars India today launched its third-generation Jazz compact hatchback that makes its re-entry into the B-plus segment in India. The previous Jazz, which had a localisation level of 72 percent, did not really take off in the Indian market mainly because it was overpriced.

This time around, the carmaker has managed its aggressive pricing – from Rs 5.31 lakh-Rs 7.29 lakh for petrol and Rs 6.49 lakh-Rs 8.59 lakh for the diesel (ex-showroom Delhi) – mainly because it has been able to substantially increase localisation level to a high 95 percent.

Due to the company’s greater focus on R&D in India, a number of components like suspension parts, engine parts and frame parts have been further localised in the new Jazz in sync with its suppliers, according to Katsushi Inoue, president and CEO, Honda Cars India. 

The new Jazz comes with a segment-first CVT (Continuous Variable Transmission) with paddle shift technology for the petrol variant with the CVT being imported from Indonesia. The company, however, does not have any plans to localise the CVT anytime soon. It is also not looking to fit the car with an automated manual transmission (AMT). Honda officials say the CVT is more fuel efficient and a lot more more advanced than AMT, delivering better mileage and offering excellent driveability.

Also read: Honda launches highly localised Jazz at Rs 5.31 lakh

Globally, the Jazz has sold 5.5 million units since 2001, of which only 23,000 units of the second-generation model were sold in India between June 2009 and February 2013. Honda did not launch the first generation model in India.

“We understand that ‘Make in India’ is an important policy and we will produce in India and export to other countries. This is already underway but we will increase it along with the export of components,” says Inoue.

The company has announced plans to increase exports of both vehicles and components from India. At present, Honda Cars India exports its cars mainly to South Africa and Nepal but going forward is looking to grow its presence further in the neighbouring markets. While the current focus for the Jazz is mainly the domestic market, HCIL is studying other markets as well but has not frozen on them yet.

Meanwhile, the company’s components business is growing briskly with shipments of parts to countries like the US and Brazil, to Europe (primarily the UK) and some South East Asian markets. These parts include body panels and engine parts including transmission cases, cylinder blocks, engine blocks and crankshafts made at the Tapukara plant. This year’s target for parts exports is believed to be around Rs 1,500 crore compared to around Rs 1,000 crore in FY2014-15.

In 2014-15, HCIL sold 189,062 cars in the domestic market notching a growth of 41 percent while  exports contributed 8,398 units with a 66.17 percent growth. A similar export figure is being looked at during this financial year as well. In April-May 2015, it has despatched 1,493 units abroad.  

In terms of domestic sales, a target of 300,000 vehicles is on the radar with the production capacity in the existing plant at Tapukara being ramped up. An investment of Rs 380 crore till end-FY’16 will increase capacity by 60,000 units at the Tapukara, Rajasthan, plant enabling a total manufacturing capacity of 300,000 units per annum cumulatively from both the Tapukara and Greater Noida plants.

Since 2013, Honda Cars India has invested Rs 3,000 crore in its car business. This encompasses the expansion of the Tapukara plant, expansion of the engine components business and on new models and technologies.