Honda's Mobilio car looks to repeat Indonesia success in India

NEW DELHI/JAKARTA Wed Jul 23, 2014 8:55pm IST

Employees stand beside the Honda Amaze after giving it the final touches near the assembly line of the company's manufacturing plant in Tapukara, in Rajasthan, February 24, 2014.  REUTERS/Anindito Mukherjee/Files

Employees stand beside the Honda Amaze after giving it the final touches near the assembly line of the company's manufacturing plant in Tapukara, in Rajasthan, February 24, 2014.

Credit: Reuters/Anindito Mukherjee/Files

Stocks

   

NEW DELHI/JAKARTA (Reuters) - Honda Motor Co is looking to boost its market share in India with the launch of a seven-seater, multi-purpose vehicle which has been a runaway success for the Japanese carmaker in Indonesia.

Since the launch in January of the Mobilio in Indonesia, Honda's sales and market share in the southeast Asian country have soared, hurting rivals such as Toyota Motor Co and Nissan Motor Co.

Honda has received bookings for 5,800 Mobilio cars in India in a two-week period prior to the launch on Wednesday. Toyota sold 5,377 of its multi-purpose car Innova in June in Asia's third-largest economy.

"The Mobilio has already enjoyed a successful run in Indonesia. I am confident the Mobilio will repeat this success in the Indian market as well," Honda's Managing Officer, Yoshiyuki Matsumoto, said at the launch in the Indian capital.

India and Indonesia have growing middle-income populations and the two Asian countries share a culture of joint families, creating strong demand for cars such as the Mobilio, analysts say.

While Indonesia is an established market for multi-purpose vehicles, which accounted for more than half the 1.23 million cars sold in the country in 2013, in India they make up only a fraction of total passenger car sales.

In India, such vehicles are mainly used by corporates and taxi providers to ferry people, and demand for personal use has been low but is expected to grow at a rapid pace.

Improving road infrastructure which has increased inter-city travel for work and leisure is seen creating demand for cars such as Mobilio, Jnaneswar Sen, senior vice president, marketing and sales at Honda Cars India Ltd, said.

Sales of multi-purpose vehicles in India are likely to nearly double from 2011 to more than one million in 2021, according to IHS Automotive.

Renault SA and Nissan, through its Datsun brand, also plan to launch multi-purpose vehicles in India later this year to tap the growing demand. NEW SEGMENTS

The Indian unit of Honda will account for 25 percent of the Japanese carmaker's Asia Pacific sales target of 1.2 million units by March 2017, and Mobilio will be a key contributor, the carmaker said.

"We have to expand our volumes so our strategy is to enter new segments," said Sen, adding competition in this segment was also comparatively weaker and an early entry would help Honda cement its place.

In India, Mobilio will compete with Maruti Suzuki Ltd's Ertiga, Toyota's Innova and Nissan's Evalia. The ex-showroom price in Delhi of the base variant of the petrol engine car is 649,000 rupees ($10,800), cheaper than its rivals.

In Indonesia, since its launch Honda has sold 46,000 Mobilio that competes with Toyota's Avanza and Daihatsu's Xenia cars.

This has helped the company increase its market share to 12.9 percent at end-June from 8.2 percent a year earlier, PT Honda Prospect Motor Indonesia, Honda's local distributor, said.

Toyota's market share fell to 34.9 percent at end-June from 35.7 percent a year ago, according to industry body Association of Indonesian Automotive Industries, and could force the carmaker to start discounting its cars.

"We believe to retain its market share within the next 12-18 months Astra International (Toyota's local partner) should offer an attractive sales discount to the customers," said Frederick Tanggela, an analyst with Jakarta-based Trimegah Securities.

($1= 60.1800 Indian Rupees)

(Editing by Sumeet Chatterjee and Mark Potter)

Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage