Honda bets big in compact cars and diesel engines for Indian car market

Honda Motor Co is staying true to developing small compact cars and diesel engines to meet specific Indian auto market demands. Chief Officer (Development Operations), and Honda R&D Co (Automobile R&D Center) Managing Officer, Yasuhisa Arai had this to say. “We are aware of the petrol price increase in India but we consider that as a sign of growth in the Indian market… definitely we are currently developing diesel engine cars.” “(Indian) market is asking for more diesel engine cars and we are fully aware of that.”

Yasuhisa Arai said that in context to the Indian auto market, Honda keeps their focus on the compact car segment in order to boost sales volumes. He added, “We had developed Brio (compact car) for India, since we see limited opportunities for large size vehicles, our emphasis is on small compact cars for India.” “At this point Japan, US, and China are the three biggest markets (for Honda). In my opinion India is the top growth market and I believe India will soon overtake China. Definitely India will be our emphasis.”

On the localization front for car parts, the weakening of rupee against the dollar is playing truant. He went on to say, “We are trying to locally procure parts in India and also assemble there. As of now, 80 per cent of our products are localized. We still want to increase it.” The 2011 Tokyo Motor Show saw Honda showcase their new engine, ‘Earth Dreams Technology’ that boosts fuel efficiency.

Honda is still coping with flooding at their plants in Thailand, which has affected parts supply in a big way. In that regard, Yasuhisa Arai had this to say. “We have started restoration of our plants in Thailand. We will make an announcement of the impact as soon as we are able to make an assessment.” As of now, water at the plants is receding, and the damage would soon be assessed. At present, Honda Siel and Toyota Kirloskar are hunting for component sources as floods in Thailand have affected parts supply. Being a key component supplier in Asia, Thailand’s condition has affected supplies and production at their Indian plants.

The current situation would see Toyota incur an estimated production loss of 800-1,000 vehicles. To compensate, the company is directing spare parts and key engine components meant for plants in Indonesia and Philippines in order to continue with production of the Innova and Fortuner for customers on wait in India. Honda Siel is dealing with an output loss of roughly 60 to 70%, and is looking for alternative sources in Japan and China so they are able to bring production levels back to normalcy. Under-body parts and electronic parts are sourced from Thailand by Honda Siel for the Indian car market. The heavy monsoon has disrupted industrial hubs, especially in northern and central Thailand. It would take quite a few months to restart in full capacity.