Honda in India: New Challenges




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Introduction

In November 2014, Honda Cars India Limited (Honda India) announced that it was postponing the launch of its new generation Honda Jazz car in India. The announcement was prompted by the company’s lack of surplus manufacturing capacity following the success of its newly launched models, the Honda Amaze and the Honda Mobilio.

From the year 2011, Honda India had been facing tough competition from other automobile manufacturers like Volkswagen (VW) and Hyundai Motor India Limited (Hyundai) due to the lack of smaller cars that were popular in India. The company failed to come out with diesel versions of its cars in India. That meant some of the popular models of Honda India like Honda City, which had been a market leader in its segment for 13 years in a row before 2011, lost their market share.

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Barring the City sedan, Honda India had been experiencing a decline in the sales of all its models in India from 2011. Analysts attributed Honda India’s declining performance to a number of reasons. The most important reason was the deregulation of petrol prices in India in June 2010. This resulted in a big price difference between petrol and diesel due to the subsidy enjoyed by the latter. Also, unlike other automobile companies in India, Honda India imported some of the crucial components used in its cars and this made its products more expensive than those of competitors. .......

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