Interview with Jnaneswar Sen, Vice President, Marketing, Honda Siel Cars India Ltd.

Company Description: Honda Siel Cars India Ltd., (HSCI), leading manufacturer of passenger cars in India, was established in December 1995 as a joint venture between Honda Motor Co. Ltd (Japan) and Siel Limited with a commitment to provide Honda’s latest passenger car models and technologies, to the Indian customers.HSCI’s first state-of-the-art manufacturing unit was set up at Greater Noida, U.P in 1997 with an investment of Rs. 450 crore. The total investment made by the company in India till date is Rs. 1620 crore. At present, the company has a capacity of manufacturing 100,000 cars.HSCI’s second manufacturing facility is in Tapukara, Rajasthan. This facility is spread over 600 acres and will have an initial production capacity of 60,000 units per annum, with an investment of about Rs 1,000 crore. The first phase of this facility was inaugurated in September 2008. The company’s product range includes Honda Jazz, Honda City, Honda Civic and Honda Accord which are produced at the Greater Noida facility with an indigenization level of 77%, 76%, 74% and 28% respectively. The CR-V is imported from Japan as Completely Built Units.

What’s been your learning from the Jazz? Are you satisfied with its sales and its acceptance in the market?

As far as the Jazz is concerned there are several facets. As a product it has been very well appreciated. We have around 10,000 customers of the Jazz and they are very happy with the product and the way it has fitted into their lives. In fact that is one of the reasons why it is called ‘Fit’ in some countries because it fits into your life very beautifully. They are also very happy with the space, the safety and the whole premium character of the vehicle. By using the car they realise it is not a normal hatchback even though it is a hatchback. That is one part of it. The other part of it is that there is no other car like this in the market today. Purely from that perspective it is a hatch back in shape even though it is a very large hatchback with entire safety, G-CON body(G Force Control Technology) ABS, airbag, i vtec, magic seats and so many other things. So that is a concept which will take root over a period of time in our country. In many countries it is more expensive where it co-exists with the City. It is more expensive than the City because they are made on the same platform. Yet it does exceedingly well in all the countries. So here we feel that it is taking roots slowly and over a period of time we feel it will be a model to reckon with. Today it is a very strong brand here. But since it’s a new concept people have to get used to the fact that hatch back can also cost that much. So we will be patient and keep building the brand.

So once people start understanding the product do you see a surge in Jazz sales in India?

Yes, it will go up. We are averaging around 500 a month. It’s not that it will suddenly shoot up to 2000 but it will be a slow and steady and gradual increase over a period of time.

Coming to the Brio, how small will this small car be in terms of engine capacities etc? Is the company getting ready for the launch of this small car?

As far as the Brio is concerned it will have a 1.2 litre i vtec petrol engine. It is the same engine that has gone into the Jazz but it has been suitably modified for the Brio. Brio is a model where we feel our volumes will significantly increase. Preparations are going on on all fronts. The first thing that is critical for the Brio is a competitive price. We are going to enter the B+ segment. There are lot of worthy models in that segment and as a result it is a very competitive segment. Thus we have to offer to our customers a very competitive package. One of the big things we are doing is higher localisation. This is happening in two ways. One is that we are expanding our supplier base. We are going to make the critical parts like the engine bloc and cylinder head in our factory in Rajasthan. We are just about completing our plant to make these because the engine is the heart of the car. Honda makes the best engines and these are a bit expensive so we are localising it. Parts like crankshafts and con rods we were making earlier for some of our engines. That is one big area of activity for Honda Siel. 

On the marketing side there are many focus areas. The first thing is network. At this moment we are at 121 dealer facilities in 72 cities. And we plan to take this up to 150 by end of next financial year which means March 2012 over 90 cities. Bulk of our expansion is happening in newer towns. Some of the dealerships that have come up in the last one year are Erode, Salem,  Kottyam etc. Places that dealerships will come are Nellore, Rajahmundry, Ranchi, Ambala, Bhillai, Asansol etc. We also have dealerships coming up in Patna, Gorakhpur, Mandi, Kota etc.

Would you be considering a sedan version of the Brio also?

At this moment we are only focussing on the hatchback. But as you know with any platform it is possible to make other kinds of models also. That’s technically feasible but our plan at this moment is only the hatchback.

Will the Brio be exported too from India?

It will primarily be for exports. We will of course export to our neighbouring countries like Nepal, Bhutan, Bangladesh and Sri Lanka. But again, these are very small new car markets. The numbers would be small as well.

What is your take on hybrids? Would Honda ever bring the Insight hybrid into India?

We were the first to bring the hybrid technology into the country when we launched the Honda Civic hybrid in 2008. Our learning from that was the civic hybrid generated huge interests in the market. There was a huge public awareness about this product and technology and it was a lot due to the interest shown by the media. We learnt that people are willing to try out new technologies. It was fuel efficient, very green and one did not have to compromise on the fun to drive aspect. But they were willing to pay a certain amount of premium. With the civic hybrid since we had to import it from Japan, we had to pay very hefty import duty. The price of the civic hybrid was double of the petrol civic that was locally manufactured here. There have been no changes in taxations since then.  So if we have to import again we would have to again face the issue of high price due to high taxes. That is the reason we have no plans to bring in a hybrid.

A lot of Japanese car companies are keeping their luxury brands at bay in India. That includes the Honda Acura which has not yet been introduced in India? What is the reason for this?

Firstly we have no plans to launch the Acura brand here in India. If you look at the Honda brand in India it is a very premium brand. So in terms of premium-ness the Honda brand is quite aspirational. Honda itself is so strong and yet we are 12 to 13 years old in the country as a car brand. We still have a long way to go as a Honda. So we need to first create Honda as a much bigger entity. As a brand we are very big but in terms of sales  and size of business we have a vast opportunity lying ahead.

Has the BMW X1 launch ruffled the existing players in that segment as it priced rather competitively? So do you plan to bring in your CRV in a CKD route?

No, there are no plans. Our current plans are to increase capacities with the Brio. We currently import the CRV and there are no plans to assemble them here or bring them in a CKD form.

Would the company be leveraging the FTA India has with countries like Thailand?

To some extent we are utilising the FTA but in a very small way. We are utilising the early harvest scheme. The number of components is extremely small.

Can you throw some light on the R&D centre?

Honda R&D was started in June 2009. At this moment the focus is mainly on localisation. Localisation just does not mean finding out another local supplier for a component but it means localisation of raw material like steel. For the Brio we are targeting more than 80 per cent localisation. Over a period of time their scope of work will increase.

Beofre joining Honda Siel you were with Maruti. What has been your experience whilst moving from one Japanese company to another?

I have had a great experience so far.  I feel learning is a continuous process. One learns something or the other from anybody and everybody every day. What matters is absorbing it. So from learning perspective I had a great learning every day.