Empire Rising : Honda

Honda's market share is rising by the day. The phenomenal growth is heading Honda towards market dominance. Time for the market to take notice ?

At the end of the 2007 calendar year – a year of shrinking market share for individual automakers, Honda registered record sales yet again, not only in the U.S. but also in over 85% of the European countries. The highest sales gain came from the Civic and CR-V – highlighting the popularity of Honda’s new models. The Civic is one of Honda’s most successful models and is now a brand name in itself. Today the Civic has become the class leader in every market that it has entered. In 2007, Civic registered a whooping 41% sales gain in Europe. Even its 1.8-litre Indian counterpart is churning out equally good numbers after being voted the ‘Car of the Year’ when it was launched. The CR-V also registered some phenomenal sales in Europe with a 77% and 72% gain over last year for the petrol and diesel variants respectively. The CR-V, even after attracting a 130% import duty outsells everything else in its segment, which is a feat in a cost conscious market like India. Honda is now mulling producing the CR-V in India, and it’s sure to be a runaway success if it’s manufactured here with the famous i-CTDI (to be replaced with the i-DTEC soon). What makes the i-DTEC special is the fact that it’s been declared legal in all the 50 states in the U.S., unlike other diesel engines from even Mercedes-Benz and BMW. This should further boost sales for the company in the International market. If the engine comes to India, it will be Honda’s first diesel variant in the country.

A mention of Toyota is almost indispensable wherever the name Honda appears. Honda and Toyota are two words often associated with the term ‘boring vehicles’ (sarcasm intended). These automobiles are often termed so because their robust and reliable engines go on and on clocking kilometres upon kilometres without any hassle. They don’t give the owner a good enough reason to sell them and upgrade to something else. Hence, Honda and Toyota today have become the most preferred brands across the globe. Both these giants entered the international markets together during the early 1950s. Since then it has been more of a ‘tortoise and rabbit race’ with Toyota being in the lead with its faster development, thanks to its healthy cash reserves. Honda on the other hand has epitomized the fact that ‘the one who keeps moving is the one who goes places’. Though their track record has been overshadowed by Toyota’s fast development, they have been moving positively. Honda has always launched precisely what the customer and the market needs. Hence their brochure has a lesser number of models to showcase instead of having an unnecessarily big product line up that takes a huge toll on investments but doesn’t reflect with equally good individual sales – something Toyota is famous for. Honda has never stressed much on platform sharing either. They believe that platform sharing doesn’t make production cheaper, instead makes products look cheap. The result is an array of reliable and technologically advanced engines across models that different markets around the world demand. Since their entry into our sub-continent about a decade back, Honda’s reliability, quality and design have created benchmarks in our market – all at a competitive price. Further, Honda hasn’t kept the Indian market deprived of any world class technologies either. The fuel efficient yet powerful i-VTEC engines are now at the heart of every Honda available in the country. The soon to be introduced i-DTEC diesel engines will see even healthier sales gain worldwide. With such committed technical innovation, steady and productive development and the reliability to match, Honda sure seems to be heading for greater success. At this rate, it won’t be long before the ‘boring tortoise’ matches pace with the helpless rabbit.

JAGUAR - TATA - LAND ROVER

2008 will go down history books as one of the greatest buy-outs on the Indian automobile front. Over the past few months the financial news has looked quite similar to pages from some automobile magazine with the TATA-FORD deal blazing the headlines. Tata have been nominated favourites for the buy-out of two Ford-owned brands – Jaguar and Land Rover. However, the food for thought now remains, as to what will be the after effects of these acquisitions ? What does it mean for Tata and the Indian Market ? Read on…

Tata Motors is known for its expertise in the commercial segment with an array of trucks, buses and other load-bearing vehicles. It also holds the spot for the second largest medium and heavy bus manufacturer in the world. In 1991, they launched their first passenger vehicle – the Sierra, while the next notable indigenous effort that changed the face of Tata Motors came in 1998 with the Indica. The car became such a run away hit that its success story is now a subject of study in quite a few management schools across Asia. In between though, Tata got into a joint venture with Mercedes Benz and rolled out the E Class models in India. The company has always been a fast learner and is known to gather a lot of know-how from its technical collaborations till date. I reckon that the story won’t be different this time around either. With this buy-out, Tata will definitely have a knowledge boost for their current and future range of automobiles. The company has already tasted foreign waters with the City Rover, which has given Tata the knowledge of foreign markets, their requirements and behaviour. Along with this, Tata will also study as to what factors have affected sales for these two brands till now and will work towards rectifying them before giving these brands a make-over in the International market. From a financial point of view, Tata is the only Indian Automaker to be listed on NYSE. The news of the acquisition had a negative reaction on the stock market with Tata losing its value by close to 9 Rupees at the BSE and Ford losing value by about 15 cents at the NYSE. Sales in the U.S for Jaguar and Land Rover however had mixed reactions with a drop of 24 % and gain of 3.7% respectively for the two British icons. But steps in the right direction should see Tata’s graphs on an upwards scale with respect to sales.

The Land Rover will definitely feel like home to Tata considering the company’s affection for SUVs / MUVs. It’ll not only help Tata enhance their indigenous products from the similar segment, but will also lay a path for building a strong R&D and a stronger road-map for their vehicles in the Indian as well as the International markets. It won’t be long before Tata’s new lessons will reflect in the Sumo and/or even the 207DI. I’m speculating the Range Rover and its variants will come to India with the high end SUV segment gaining some momentum now. At the same time we can’t rule out the possibility of Land Rover’s CRDI engines and related technology filtering down to the smaller Tatas. Proper pricing for the Land Rovers should pit them directly against its former parent BMW’s SUVs on the higher end and current parent Ford’s Endeavour at the entry level, in the local market. Internationally, Land Rover still holds the pride to be one of the few true off-roaders amongst a gallery of soft-roaders. Tata has to make sure that Land Rover lives up to this pride in its future models as well, no matter how many gadgets its vehicles decide to adapt.

Jaguar however will need some serious inputs for the future models considering the ever increasing threat from the Germans. Ford’s financial woes had further weakened the cat’s ability to leap forward. Jaguar should benefit from Tata’s strong financial background as far as research and development is concerned. It still holds a shiny brand image though and a great fan following in Europe. Tata should capitalise on these facts and consider introducing this species of the cat to Indian waters as well. The company will have to face its German rivals here too. But with a sensible pricing and clever marketing and penetration, the Jaguar range could single-handedly hold a candle to the likes of the 5 series and the E-class. It wont be an easy task though as these cars have set up their base quite well, but then again, the battlefield for all these International brands in India is still fresh. The models we think will come to India are –

Though Tata will now own these two brands, getting them down to the country won’t be an easy task. The homologation, the import procedures, the price points for the vehicles and their marketing are hurdles that are imperative. But the primary objective of Tata in this case would be setting up a strong after-sales service, spares backup and customer care to be on par with their International rivals. Tata’s well knit dealer and service network however will work strongly in their favour. Only time will tell what Tata decides for these two brands and which models will come to India or if at all they will. But I can happily conclude that these acquisitions will significantly improve Tata’s technical know-how, their product range and its image as an automobile manufacturer in the global market.

I wish the following models to hit the Indian tarmac (and ground as well) –

Land Rover:

Range Rover -

The Turbocharged Diesel Engine and the Supercharged Petrol Engine options will make this SUV a serious challenger for the European competitors in India, like the X5, M-Class, Q7 and Cayenne. Going by the International pricing of this vehicle, it shouldn’t be hard for Tata to compete with the Germans on the price point too. If Tata can just about pull it off, it can even take on the Japanese competition – The Montero and the Prado.

Discovery –

The powerful Turbo-Diesel V6 and the rugged Land Rover build and styling can mean serious competition for the likes of the X3 and the 3 Lt. variant of the Q7.

Defender –

If Tata can manage to bring this vehicle down to the country and price it at a point lower than 20 lakhs, it can give the Endeavour, Pajero, Tuscon, X-Trail, and Honda’s new CR-V a run for their money.

Jaguar :

XJ -

This model in its 3 Lt. and 2.7 Lt. engine variants will compete with the Audi A6 and the Mercedes Benz E-Class.

XF -

With a variety of engines at its disposal, this car can be a serious contender against the performance crazy 5 series. Given its aggressive styling, it’s a sure seller.

XK -

This car, if priced well, has the ability to give the Mercedes Benz SLK and the Porsche Boxster a run for its money. This is one car that we would definitely like to see on the Indian tarmac.

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