Weak consumer sentiment & rising discounts fuel ‘artificial demand’: Honda Cars India President Takuya Tsumura

Consumer sentiment in the local market is weak, discounts are increasing month on month which has generated ‘artificial demand’, Honda Cars India President & CEO Takuya Tsumura told ET.

Tsumura said while the industry had expected slow sales at the start of the fiscal year on account of the general elections, even after the results demand has not revived. Sales have grown marginally over last year, only on back of discounts.

“What is happening compared to last year is that the industry has additional one month stock. More supply (is) happening. So actual demand, is one month lower than last year. Certain OEMs (Original Equipment Manufacturers) are trying to manage that stock level, but the demand is, anyway, not so strong”, Tsumura said on the sidelines of the launch of Honda Amaze priced upwards of Rs 7.99 lakh (ex-showroom).

As per data collated from the VAHAN portal of the Ministry of Road, Transport & Highways (MoRTH) around 313,000 cars, sedans and utility vehicles were sold last month, which is a decline of 13% over 360,000 vehicles sold in November 2023 and of 34% over 473,000 units sold in October 2024.

In addition to pent-up demand fading out, slowing economic activity has made buyers hold off purchases. Tsumura said, “Demand is slowing down, plus huge discount happening in the industry. So artificial demand was created in last 3-4 months.”

To enthuse buyers in the mainstream market, Honda drove in entry-sedan Amaze Wednesday. Market leader Maruti Suzuki too introduced the new DZire last month. As much as 50% of Amaze customers are first-time buyers.Kunal Behl, vice-president (marketing and sales), Honda Cars India, informed, “If you look at the passenger vehicle segment, hatchbacks, lower sedan/ and entry SUVs are all in the same price bracket. And we have over 38 models in this whole price range. Now, in the hatchback segment, degrowth is quite massive, whereas the lower sedan has seen about 2% CAGR last five years. This gives us confidence that Indian consumers are upgrading to a three box sedan car.”Safety is also of prime importance now, Behl said, adding “that is the reason why we believe the segment is very critical. It’s (entry sedan) going to expand in future. In the first eight months of the ongoing financial year, while sales of hatchbacks declined by 22%, those of entry-sedans dipped by about 4%. Behl said, “In the overall market, fresh demand is not there, but the biggest impact has come to the hatchback, whereas the low sedan is still holding it. So we believe the same is bound to grow.”

Overall, Honda Cars is looking at doubling its portfolio by introducing three new models over the next two years. These would include an all new sports utility vehicles and the electric version of midsized sedan Elevate. Honda currently has only one offering in the fast-growing SUV segment – SUV Elevate. Tsumura said, “We want to reinforce our lineup in the future. And of course, we would like to meet the needs of Indian customers.”

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