Policy uncertainty hits auto sector hard

Honda Cars looking for better sales in FY17; Launches BR-V in AP, TS

Hyderabad: Honda Cars India which reported muted sales growth last fiscal maintained on Wednesday that uncertain policy environment prevailing in the country had been hitting automobile industry hard.

“Entire auto industry is facing challenges as there is no clarity in policies. Many ad-hoc decisions are being taken on the issues related to emissions, safety, pollution control, etc. Investments involved in auto industry are huge and the lead time is long.

Basically, what industry requires is logical and transparent policy that is long-term in nature,” Jnaneswar Sen, Sr Vice President (Marketing & Sales), Honda Cars India Limited, told media here after launching Honda BR-V compact sports utility vehicle in Andhra Pradesh and Telangana.

He further said demand for petrol vehicles increased after Supreme Court banned diesel vehicles with 2000 cc or more capacity engines, in Delhi. “More customers are opting for petrol vehicles now as they fear similar ban may be extended to other cities or vehicles with smaller engines. That’s why we have seen spurt in sales of petrol models,” he maintained.

Citing an example, he said diesel variants of Honda City – the automaker’s best seller in the country - accounted for 40 per cent of the model’s total sales during October-December, 2015 period.

“The share of diesel versions of the City sedan suddenly came down to 28 per cent in January-March quarter after the Supreme Court ruling,” he explained, pointing out that it would not be easy for automakers to make adjustments in production quickly.

Replying to a query, he said the company would launch Honda Accord Hybrid later this year, taking the total new launches to three this year. According to him, Honda Cars India is in the processing of expanding production capacity at its Rajasthan plant by 60,000 units, taking the total capacity at the facility to 1.8 lakh vehicles.

With this, the company’s total capacity in India will be three lakh units as its first plant in Greater Noida near New Delhi churns out 1.2 lakh units annually. “Our current capacity at the both plants put together is 2.4 lakh units. We are investing Rs 380 crore on the expansion to increase capacity at Rajasthan plant and production from the expanded facility would commence soon,” Sen said.

On Honda BR-V, he said that the compact SUV would help the Japanese carmaker post double-digit growth in 2016-17. Honda sold 1.92 lakh units in 2015-16, representing two per cent upswing from the year earlier. Available in both diesel and petrol versions, the BR-V is priced from Rs 8.91 lakh to Rs 13.13 lakh (ex showroom, Hyderabad). The automaker has so far received 4,600 bookings for the new compact SUV.