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4Ps
Jazz rocking the blues?
Honda is selling more in India than what it sold last year. And now Honda believes that India – and it’s new Jazz – will be able to take its growth forward dramatically. 4Ps B&M critically questions this ideology through the ‘ice’ of our very own hybrids, Pawan Chabra and Ratan Lal Bhagat
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 No! Perish the thought Bart. The reason we both are called hybrids is not because we run on electric batteries and petrol (we don’t). Coke and burgers are more like it – well, Warren Buffett claims that has been his regular diet for years (he seems none too worse for it, eh). It just appears that the diet seems to be rubbing off on Honda too, what with their sales figures zooming northwards over the last few months in India. Check this out. Honda’s sales in November 2008 was 5090 units, while sales in November 2007 was only 4425 units. When Honda was growing by 15%, industry sales fell a huge 20%. December 2008 stood at 3667 units, up from 3363 units in December 2007; a growth for Honda by 9% while industry sales fell by 7%. January 2009 saw a relative deviance with sales of 5773 units, which was lesser as compared to January 2008 sales of 7767 units. But with 5579 units selling in February 2009, Honda came thundering back as February 2008 sales was only 3774 units!
Sólo para información, it didn’t make sense. Spanish, Japanese, whatever, the figures were confounding. The economy is surely undergoing a slowdown (we have first hand evidence; our friends have stopped loaning us sub-prime money). Damn it, even burgers are costlier. Then how’s Honda selling more now than last year? Especially after the 2008 JD Power Customer Satisfaction Index ranked Honda a lowly 6th, after Maruti, Mitsubishi, Hyundai, Mahindra and Skoda.
‘H’APPY ‘O’WNERS ‘N’EVER ‘D’RIVE ‘A’NYTHING (ELSE)
It is true that technology has been considered a dramatic core competence of Honda over the ages. Somewhere early along the line, they brilliantly converted technology into deliverable customer value and became amongst the top auto sellers of the world. The third world for decades meant only two wheeler sales, given the lack of purchasing power. And with the Hero group ensuring that world class standards were beaten time and again in the motorcycle segment with the Hero Honda JV, Honda’s focus during its 14 years of India existence never really got on to how energetic could the passenger car segment be in India. Their JV with the Bharat Ram Charat Ram convert called Sriram Industrial Enterprises Ltd notwithstanding (Honda-SIEL), cars were sold by Honda in India only for presence and only to have “Success against all odds,” the initial philosophy of the legendary Fujisawa Honda when Honda entered the extremely negative looking United States market with their motorcycles.
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 And that has how it has been for Honda for most of the past few years, that is, until now. The economic slowdown has suddenly brought out the sales orientation of Honda like nobody’s business. An erstwhile lumbering Honda has seen a transformation that, though not incredible, is enough radical to surprise the Wilde out of Oscar. Take their Honda Civic hybrid shock marketing warfare tactic, for example. While the Honda Civic hybrid had just sold around 60 odd units since its launch in June 2008, a smashing limited time Rs.8 lakh discount offer for a week in November 2008 got them up by a smashing 235 units within a week itself. If that seems great, think about the fact that Honda is the only company in the car industry that changes product design not for ergonomics or for design efficiency, but purely to give customers exciting variety – their new Honda City and Accord designs included. Not surprisingly, on the JD Power India Sales Satisfaction Index Study, Honda ranks a close third! That’s a brilliant vindication of the fact that consumers perhaps are going more by the sales effort during these downturn times than by other factors.
Enough said about growth; experts now say that there is a strong belief among the experts that the Honda growth till now was just a small lull before the storm and worst is still to come for the Indian automotive sector. Well, perhaps they’ve not heard of Fujisawa yet. Instead of getting worried, Honda is in fact banking big on emerging markets like India to get out of the deepening global potholes. As the ex-CEO of Honda Motors Corporation, Takeo Fukui once said, “India has less risk than China. India has political transparency and a neutral sentiment towards Japan.” It seems that the company is taking Fukui’s statement very seriously as India is clearly now one of the priority markets on their charts.
HOLD ON, NO DAMN ACCELERATION
It’s not just about the upcoming Honda Jazz launch (more of that later), as apart from taking the Honda Civic Hybrid off the retail showrooms and launching the all new Accord V6, the company has announced some major production cuts to ensure its smooth drive in the country. When questioned by 4Ps B&M, Masahiro Takedagawa, President and CEO, Honda SIEL Cars India Pvt Ltd, shares, “In the past 60 years, we have witnessed a lot of ups and downs in the global market. And we are all geared to strategically outdo the current slump. We are aiming for lean operations and we have already adjusted our productions.” The company has put the opening of its second plant at Tapukara, Rajasthan indefinitely on hold. Even the current facility at Greater Noida will be operating at a single shift till the end of June rather than two shifts and hence will produce only 200 units a day rather than at a full capacity of 385 units a day. And if the speculations are to be believed, then Honda SIEL is also looking at diversifying into the boat manufacturing business with a motive of de-risking its automotive business like its rival Mahindra & Mahindra.
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