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Honda-Siel drops plans to launch Accord, to continue imports

Honda Siel Cars India Limited has dropped plans to launch its famed luxury car Honda Accord in India and intends to go ahead with imports of Completely Built Units of the car.

The decision to this effect was taken in view of the shrinking demand for mid-size and luxury cars in India, HSCI president and chief executive Teruo Fujisaki said.
The car would be positioned in the upper-end of the premium market.

''We have learnt from the experiences of other players in the segment and the present market situation, sales do not justify the cost of operations. So we've decided against indigenously producing the car here and would initially just import Accord CBUs and market them here,'' he added.

Meanwhile, industry watchers said the decision might have also stemmed out of the realisation that Accord is likely to eat into Honda City sales.

Although the company would wait until import of CBUs is allowed by the government before launching the premium car in the Indian market, HSCI intends to initially cater to the embassies and export houses, which are presently allowed to import cars. According to World Trade Organisation regulations, the Indian government has to allow import of completely built cars by 2002-03.

Meanwhile, Honda is also evaluating the feasibility of launching other car models in the Indian market, including a small car. However, the particular segment, which it intends to address, has not been finalised as yet.

''We are looking at all options and would shortly arrive at a decision on the matter,'' Fujisaki said, adding that the company was closely studying the evolving needs of Indian customers to decide on the future model for India.

''India is a dynamic, evolving market and we have to study the market closely to finalise the model. So at this moment, I would not be able to comment on the model. But Honda has, in its stables, models in every segment and we will find the best product to address the needs of the Indian market.''

Honda Motor Company was founded in 1948 and has made inroads into the Indian market with its generators, scooters, motorcycles and cars through different joint ventures.

On the equity restructuring, within the company, Fujisaki said Honda Motor Company of Japan presently holds 95 per cent stake in the joint venture while the remaining is with Siddharth Shriram-run Siel Limited.

The Japanese auto major, he said, has no plans to convert the venture into a wholly owned subsidiary. ''We share a good relationship and will keep the buyback option open for Siel.'' Siel has the option to buyback 15 per cent of the enhanced equity worth Rs 540 million from HMC during the next two financial years and be able to increase its share percentage to 20 per cent in the total authorised and issued capital of the company.

HSCI was proposed to be a 60-40 joint venture between HMC and Siel Limited.

The joint venture's initial offering for the Indian roads -- City -- was adjudged the best mid-size car in initial quality and most appealing mid-size car for 1998 by J D Power and Associates.

UNI

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