The move is likely to more than double Honda Cars India's overseas volumes from the country.
07 Dec 2023 | 8533 Views | By Ketan Thakkar
After selling cars for over two and half decades in India, Honda Motor Company will be sourcing vehicles “Made in India” into its home market, Japan, for the first time in 2024.
Autocar Professionallearns that Honda Cars India will be exporting a significant 30,000 to 50,000 units in ...
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After selling cars for over two and half decades in India, Honda Motor Company will be sourcing vehicles “Made in India” into its home market, Japan, for the first time in 2024.
Autocar Professional learns that Honda Cars India will be exporting a significant 30,000 to 50,000 units in the next calendar year of its recently launched mid-size SUV Elevate back to Japan, in what is a strong validation of the quality of cars made in India to cater to the evolved markets. The move is likely to more than double Honda Cars India's overseas volumes from the country, say people in the know.
While the company is non-committal on any financial projections – a back of the envelope calculation shows that it could translate into an export turnover of over Rs 5000 crore for the company.
This is the highest export planned by the company in its history of its presence in the country and also the highest volumes back to Japan from India by any car maker yet. Suzuki Motor Corporation too is likely to send vehicles back home.
According to people in the know, a series of initiatives were taken to evolve the systems and processes to meet the quality standards of Japan before the go ahead for the model was received. The vehicle will be exported with a WRV badge.
In an official response, Honda Cars India spokesperson confirmed to Autocar Professional that after its successful debut in India earlier in 2023, Honda Elevate is scheduled for Spring 2024 launch in the Japan market under the brand name WR-V.
“In a first for HCIL, the model will be manufactured in India and exported to Japan. This strategic move is a strong reflection of the manufacturing capabilities of India operations and also solidifies our vision of making the country a key export hub in Honda business. We are sorry, we cannot comment on the export volume as of now,” added the spokesperson.
At the global premier of Elevate SUV - Toshio Kuwahara, President and CEO, Asian Honda Motor and Head of Regional Unit (Asia and Oceania), Honda Motor Company had told Autocar Professional that he is expecting Elevate to contribute to further expansion of export volumes from India.
“India is one of the key global hubs for exports for Honda in the future. India is one of the most important automotive markets for Honda brand's future. That is why the global premiere of the new premium SUV Elevate is staged in the Indian market,” Kuwahara had said in June.
Interestingly while the volumes of the overseas shipments are still low, India will still be the third biggest exporter outside of its home base in Japan, after Thailand and US – underlining Honda Motor’s approach of making locally for local markets.
The export volumes have helped numerous vehicle makers like Nissan, Volkswagen and Ford over the last decade to de-risk their manufacturing operations in India, in the case of a fall in domestic volumes. The facet which was not leveraged well enough by Honda, until 2020-21 – although the company was exporting critical parts exports from the country which offered a significant revenue opportunity but did not fill the manufacturing capacity.
A slowdown in the market and a fall in sales (between 2017-2020), compelled Honda Cars India to restructure its manufacturing footprint from two factories to one in India.
In 2021, the company took the first major decision to export the 5th generation Honda City, to 12 markets, including left-hand drive markets. This move helped Honda to triple its exports from India albeit on a low base.
The company had exported less than 4000 units at the end of FY21. This quadrupled to 18420 in FY22, which was further increased to 22,000 in FY23, which is likely to grow in double digits in FY24 before it doubles in FY25 led by the new Elevate exports.
So far this financial year, the exports for passenger vehicles grew 6% to about 4 lakh units, but this is set to double in the coming four to five years, according to industry sources, and exporting EVs for future may also turn out to be a significant opportunity for the future.
The move will not only help Honda Cars India to utilise the factory well, but also gain from higher margin export business, which can boost its profitability.
To be sure, Honda Cars India has made a remarkable comeback in terms of profitability, even as the volumes have remained modest in the country with a market share of around 2-2.5%.
“With the successful completion of reconstruction in India, we are now on a growth path. Starting with the new Elevate SUV, we will try to recover everything, volumes, market share and profitability. We are also committing to four additional SUVs beyond Elevate by 2030, so stay glued to Honda's progress in India,” said Kuwahara.
Clearly, the role of India as an export hub for Honda is only going to go up even with electric vehicles most likely.