Honda Drives into Sub-4lakh Market with Brio

Honda Brio to take on Hyundai i10, Maruti Swift, Toyota Liva in compact segment that accounts for three-fourths of Indian car market

CHANCHAL PAL CHAUHAN NEW DELHI

    Honda has entered the business end of India’s car market with the aggressivelypriced Brio, sending a message that it has the gumption for a fight in the world’s second-fastestgrowing car market.
With a starting price of . 3.95 lakh (ex-showroom Delhi), Brio is Honda’s cheapest offering and is being launched in the middle of a trying period for the Japanese carmaker. “Brio is our answer to the demand of mass car market. It’s our most focused product,” said Takashi Nagai, the president & chief executive of Honda’s Indian unit. Honda Siel, the Indian arm is a joint venture with Siel, a Siddharth Shriram group company.
Honda has been struggling with falling sales, production stoppages caused by a devastating tsunami in Japan in March and the recall earlier this month of more than 70,000 City sedans to replace faulty power window switches. Honda’s forte has been the lowvolume premium end of the Indian car market, where it sells the City, Civic and Accord sedans and the CR-V sports utility vehicle. The dominance of City, Honda’s mainstay, has been undermined by rivals such as Volkswagen’s Vento, forcing Honda to drop prices and raising questions about the company’s ability to compete in India without being present in the compact car segment. Moreover, Honda does not sell diesel-powered cars. It is a vital missing element in India because of the large difference in price between petrol and the subsidised diesel.
Brio, powered by a 1.2-litre petrol engine, gives Honda entry into a segment that represents threefourths of India’s car market and presents an opportunity to turn around the company’s sliding fortunes, said Rakesh Batra, partner and head of the automobile practice at Ernst & Young. “Brio is the most important milestone for Honda in India. The company has enjoyed customers’ confidence for long, but never had the products to play around with volumes.”
A little more than 2.5 million cars were sold in India in the 12 months to March 2011. Honda sold a little less than 60,000 cars. With help from Brio, Honda expects to sell at least 10,000 cars every month, eventually helping it to utilise its idle manufacturing plant in Rajasthan. For the compact car, the aim is to sell 50,000 units annually.
Honda has been unable to fully use its Greater Noida plant which can make 1.2 lakh cars a year, leading to high overhead costs and inventories. Sales fell 13.4% to 19,433 units in the April-August period. But the recent price . 66,000 for the City and . 1.6 lakh for the Jazz premium compact—have provided a boost: sales rose to 6,900 units in August from 2,000 in April.
To keep costs low, Honda has kept a high proportion of local content in the Brio—it is 80% now and should rise to 90% in the coming months.