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Honda's Mobilio car looks to repeat Indonesia success in India
July 23, 2014 / 7:03 AM / 3 years ago

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

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.

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

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

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