India: local Honda unit mulling increased localization and surging quality image
According to the new manager of the Japanese automaker’s local Indian division, lifting the level of local content in cars and improving quality of the supply chain has turned into a priority for Honda.
The third largest Japanese automaker has decided to lower expenses by sourcing more components from domestic suppliers and will also work to improve the quality of logistics, manufacturing and dealerships even before introducing new autos, said Katsushi Inoue, chief executive officer of Honda India. “I am going to improve quality further more. However, in this emerging market we need volume as well,” said the top executive, who started working for India’s third-biggest automaker in terms of sales starting April. India is forecasted to become the third largest auto market in the world by 2020 so localizing production even further is key to securing increased profits in the country, with Honda aiming for deliveries of 300,000 units in the fiscal year to end in March 2017.
The average level of locally sourced components for the vehicles produced by Honda in India is of around 90 percent, but Inoue declined to provide specific details about the localization threshold he intends to achieve. He did say the company was always open to deals with local suppliers if they respected Hona’s quality, cost and delivery time standards. During the past fiscal year, Honda massively outgrew the overall market growth of four percent, jumping 41 percent from the previous year to a total of at least 189,000 vehicles, though it still trailed Maruti Suzuki and Hyundai.