July 11, 2017 7:19 pm JST

Honda suspends Mobilio minivan sales in India amid weak demand

NEW DELHI (NewsRise) -- Honda Motor has temporarily halted sales of its Mobilio minivan in India because of weak demand three years after the model was introduced, even as the Japanese automaker seeks to boost sales in the south Asian country with a range of new models.

In the year ended in March, Honda's total sales in India fell 18% to 157,313 autos, though industry-wide sales rose 9.2% to about 3.05 million units. The decline also led to local rival Tata Motors overtaking Honda to become the fourth-largest passenger vehicle maker in one of the fastest-growing automobile markets in the world. The Japanese automaker, present in the country for more than two decades, is seeking to reboot sales this year with new models such as an upgraded version of the City sedan and the WR-V compact sport-utility vehicle.

"Demand for the Mobilio has tapered down, and that is one reason why we're evaluating whether to discontinue the vehicle or not," Jnaneswar Sen, senior vice president for marketing and sales at Honda Cars India Ltd. told NewsRise.

Sen said the company is weighing the option of whether to introduce in India an upgraded version of the Mobilio that went on sale recently in some Southeast Asian countries. A decision on the future of the vehicle in the Indian market would be taken within two or three months, he said.

Honda started selling the Mobilio in India in July 2014, betting that rising incomes would prompt more Indian families to buy minivans that can seat up to seven people. The vehicle competed with Maruti Suzuki India's Ertiga and Renault's Lodgy models.

About 40,000 units of Mobilio were sold in about three years, Sen said. In comparison, Maruti has sold more than 300,000 units of the Ertiga since it was introduced in 2012.

Sen said Honda has received about 21,000 orders for the WR-V model, which went on sale in March. About 14,000 WR-Vs have been delivered so far, he added. In the quarter ended in June, robust demand for the WR-V and the City sedan helped Honda post a 21% on-year increase in sales to 38,562 units in India, ahead of a 4.4% rise in the overall passenger vehicle market.

The WR-V and the bigger BR-V sport-utility vehicle are part of Honda's strategy to capture a bigger share of India's growing SUV market. Sales of SUVs in India surged 30% last financial year, outperforming a 3.9% rise in car sales.

Yoichiro Ueno, chief executive of Honda Cars India, said sales are expected to accelerate further as vehicle prices have come down due to lower taxes following the implementation of a nationwide goods and services tax from July 1.

Honda has a manufacturing plant each in the northern state of Uttar Pradesh and in the north-western state of Rajasthan. Sen said Honda exported auto parts valued at about 11.4 billion rupees from India in the last financial year to 15 countries in South America, North America, Europe, Southeast Asia and Japan.

--Santanu Choudhury

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