Honda Cars has finally got it right in India.
The Japanese automaker saw its best year ever in 2013-14 since it began its operations in the country in 1995.
With sales driven by sedans, the company posted its highest ever annual sales of 134,339 units during fiscal 2014 recording 83% growth over the previous fiscal.
Fortunes changed post the launch of Amaze, which not only marked company's foray into the entry-level, sub-4-metre sedan category but also in the diesel segment.
At a time when entire industry was cashing in on the market for diesel cars, Honda's absence in the segment had led to several challenges for the company.
Also, sales of small car Brio did not pick up, while Honda City lost the tag of the best selling sedan in its category.
After having worked on the new diesel engine for three years, Honda introduced its Amaze in April 2013.
And as forecast, customers waiting for a diesel model from the Japanese giant flocked the showrooms, giving tough fight to Maruti Suzuki's one of the best sellers -- Dzire.
"We have seen encouraging results for Honda, despite tough market conditions. Introduction of Amaze gave us an opportunity to enter the segment, while our diesel engine created several new benchmarks in terms of fuel efficiency," said Jnaneswar Sen, senior vice-president, marketing and sales, Honda Cars India.
The momentum continued as Honda launched its much-awaited new City along with a diesel variant in January this year. "City had a very good legacy and we had to exceed ourselves," said Sen.
The company last month dispatched 9,518 units of City.
Sen said, "We witnessed some interesting trends with the launch of City. 50% of the customers who booked City, did not consider any other vehicle and 25% of the total bookings came from customers below 30 years of age group."
According to experts, the Indian subsidiary along with the parent company has been working on various aspects to tap the potential of the Indian market.
"The company has deployed its full resources in the past two years in order to capture the potential of the market, which includes manpower, setting up new plant, launching new and strategic products," said Puneet Gupta, associate director, IHS Automotive Sales Forecasting.
The way ahead
After a strong growth in fiscal 2014, experts said the real test would be this fiscal, when the competition would rise in segments like sub-4-metre sedan. Hyundai Motors India has already launched its Xcent in this segment and Tata Motors will launch Zest this year.
This fiscal will also see Honda entering the multi-purpose vehicle with the launch of Mobilio, while it will bring back its premium hatchback – Jazz.
Even though there are no confirmations from the company on the upcoming products, according to sources, Honda is working to get into segments like small car and compact sports utility vehicle (SUV).
"The company now wants to be a mass volume player, after having focused on the premiumness of the brand in order to maintain margins," said Gupta.
The company estimates to sell 5 lakh units by 2025, which will be largely driven by the locally built entry-level cars.
"However, the company will have to boost its dealer network in order to compete strongly with the likes of Maruti Suzuki and Hyundai," said Gupta. The company is planning to increase its dealer network by 35% this year by reaching out to more Tier 2 & 3 markets. The company currently has 170 facilities in 107 cities in its network.