Despite late return to market, India-focused SUV to improve Honda’s competitive position, says GlobalData

Following the news that Honda Cars India Limited (HCIL) is developing an India-centric SUV;

Bakar Sadik Agwan, Senior Automotive Consulting Analyst at GlobalData, a leading data and analytics company, offers his view:

“With the announcement of an India-focused SUV, Honda Cars India is following the trail of other automakers. Despite the action being ‘late’, the re-entering of Honda in the SUV market is potentially an encouraging expansion that will help the company to improve its competitive position in India. Honda had only one premium SUV earlier in its portfolio – the CR-V, which it discontinued recently over weaker sales.

“The mid-size SUV, codenamed 31XA, will be built on an entirely new platform and will compete with the likes of Hyundai Creta, Kia Seltos, MG Hector and others. The anticipated start of production (SOP) in India is 2023.

“The SUV market in India is soaring high and has been catching the attention of automakers. Now, with the market already overcrowded with compact-SUVs, mid-size SUV is the new battleground. Despite COVID-19, the compact and mid-size SUV segment performed well in India. SUV segment market share in overall sales increased to 29% in 2020 compared to 26% the previous year.

“While entering the high-growth SUV market will be a positive development for Honda in India. It may not be easy to ‘knock down’ competition as all models launched recently compete neck-and-neck on price, technology, features and safety front. The right product in the segment has proved to be a turning point for several OEMs such as market leaders Maruti and Hyundai, and new entrants Kia and MG. And the market presently has been witnessing a slew of new product launches. This year, Hyundai launched Alcazar, Tata brought in its legacy vehicle Safari and the country’s leading SUV maker Mahindra & Mahindra recently launched its XUV700 which is creating a ‘buzz’ in the market over its competitive price and standout tech/features. Honda needs to bring in a strong contender on the Indian road.

“Honda has been present in the Indian market for more than two decades, however, the automaker has been witnessing a steep decline in its market share over the past few years. Its market share in total sales reached 2.9% in 2020 from a record-high 7.2% in 2015. Following the weak sales and under-utilization of its production capacity, Honda had to eventually shut down one of its two production facilities in India. Presently, the company’s production caters to domestic demand that majorly comes from its two best-selling models City and Amaze – constituting more than 85% of its total sales, and the rest is the production for exports. The announced new SUV could help Honda to better utilize its production capacities, catering to both domestic demands as well as exports.”

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