Can Honda Cars end its one-trick pony ride with the Elevate?

Honda Cars entered the Indian market back in 1995, finding itself in a technologically moribund playground, in a recently liberalised economy. Soon after, its first offering, the Honda City, became a benchmark of efficiency and performance, going on to achieve cult status among the country’s growing cadre of car modifiers.

The original Honda City perfectly encapsulated Honda’s appeal. Unlike Suzuki, the other, most prevalent Japanese manufacturer in the market, Honda was not here to chase entry-level volumes. It had the reliability and robust build quality that Japanese manufacturers were famous for, but with a penchant for performance and speed that was new to the market. Honda was already something that neither Hyundai nor Maruti Suzuki was: aspirational.

Soon after, Mitsubishi Motors rode in on a similar promise, giving us a taste of rally-bred performance with the formidable Lancer. Honda, however, had cut its teeth in tough markets such as the US, and had accrued multiple Formula One Constructors’ titles.

Today, however, it’s a very different story. The brand has discontinued once-popular models such as the Jazz, the WR-V, the Amaze diesel and the current-gen Honda City diesel in order to comply with Real Driving Emission norms, which will come into effect by this April. That will leave the brand with the Amaze and the City. And while the latter is to shortly receive a lifespan-extending facelift, the former has received no major update since 2021, prompting the question: how does Honda Cars find its way out of the quagmire it is currently in? The answer is the Elevate.

The golden era

The first car Honda brought in was a sixth-gen Civic-based Honda City, featuring a 1.3-litre petrol engine. But it was the 1.5-litre VTEC version, followed by the launch of the luxurious Honda Accord, that catapulted Honda into the big league. The year 2003 marked a slight downturn, when Honda, in a bid to create a more affordable mid-size sedan segment, launched the second-gen City, based on the international Honda Jazz. It was built for Indian market requirements but didn’t sit well with the enthusiasts.

Fortunately, by 2006, the Honda Civic was introduced, preceded by the CR-V SUV in 2004. Occupying a more premium segment, the Civic was a beautifully sculpted model, with international good looks, a 1.8-litre VTEC engine and a novel digital speedometer — it was a delicious slice of the future that established Honda as one of the coolest car brands in the country. It also helped that the Civic, while being quick, was also more reliable and easier to maintain than its European arch-rival, the Skoda Octavia.

By 2008, Honda seemed to have perfected the mid-size sedan cocktail with the Gen 3 Honda City. It was what today’s Hondas aren’t: ahead of its time. It offered dual airbags, ABS, EBD, a solid 1.5-litre VTEC engine making116 bhp, and it rightfully sat atop the segment, while the Civic and the CR-V continued to pull in good numbers.

The missteps

Things first started to go awry in 2011, marking a downward spiral for the brand, which it is yet to fully recover from. Competition from brands such as Volkswagen meant that the City — still the flagship product, was no longer the best-selling mid-size sedan in the market. According to a case study published by ICMR India, the brand lost the title of the best-selling mid-size sedan to the Vento within eight months of that car’s launch.

It wasn’t just Vento's arrival that perturbed the City. Honda now had to diversify its portfolio, bereft of prestige models such as the Civic (discontinued in 2012). It had launched the punchy Brio; marrying VTEC performance with compact dimensions and taking on the likes of the Polo, but it wasn’t until 2015 that it hit the mark with the Honda Jazz. That same year, Honda hit its all-time peak of 200,000 units sold.

However, Honda hasn’t been as quick to adapt to the fast-changing preferences of the market. Nor were its vehicles being updated to meet those requirements. It entered the diesel segment famously late, and both the Jazz and its cladded-up “crossover” counterpart the WR-V received the bare minimum updates in their less-than-a-decade-long run.

Slow reaction times meant that Honda now had a perception problem. And adding new models such as the BR-V was no longer enough. Even the City, its only golden goose, hasn’t been given a proper upgrade since 2020 and continues to be sidelined by consumers in favour of new SUVs (both diesel and petrol). Honda Cars India was now hobbled by the one thing its Formula One powertrain cannot be accused of: slow reaction time. Even so, the new Civic, launched in 2019, quickly became the best-selling sedan that year. .

The nadir was Honda shutting down its plant in Greater Noida in 2020, forcing us to bid goodbye to cars like the Civic and the CR-V, two models that continued to represent what Honda was always supposed to be: aspirational, superbly engineered and fun to drive.

The last three years have been extremely tumultuous for Honda Cars, with year-on-year losses, translating to month-on-month losses. Even cars such as the Ciaz, which never held a candle to the City, benefited from Honda’s image problem to surpass the City. The CR-V and the BR-V both weren’t a volume success and the absence of a clear 5-year floor plan (such as Skoda VW’s India 2.0 plan) saw the faith of many true believers start to dwindle.

The long-overdue comeback

In 2022-2023, Honda Cars experienced a 7 per cent increase in annual domestic sales meaning that its cyclical uptick in sales has already begun. With its arsenal comprising exclusively of the City and the lacklustre Amaze, Honda intends to make up for lost time by entering the increasingly popular SUV space, that which it has been conspicuously absent from for too long.

And given how aggressively SUVs have eaten away the sedan market share, only a compact SUV can help Honda claw back some of that lost ground. While the WR-V failed to take on the likes of the Brezza, it’s only an SUV-like the Elevate that could, so to speak, elevate the brand’s image in India.

Although pricing will be key in determining how well the Elevate performs, prima facie, it appears to have what it takes to battle the Creta. For starters it is a shade bigger in length, height, wheelbase and boot space. Until the next-gen Creta arrives, it’s also got the upper-hand in terms of safety features.

While the Elevate misses out on a diesel option, it will soon be equipped with Honda’s hybrid powertrain, which will undoubtedly help it beat the likes of the Grand Vitara whose hybrid isn’t quite as powerful as the V-Tec packing Honda.

The City, while still popular enough to get a facelift, isn’t likely to stave off the competition for much longer. It’s fought a good fight, but it can no longer be Honda’s singular response to the demands of the market, especially since the central government intends to give no quarter to Japanese carmakers championing the cause of hybrid mobility.

But the road to profitability will not be easy for Honda, which has always been a relatively premium brand, and has burnt its fingers trying to be anything else, especially a mass market one. When it had the market largely to itself, in the 2000s, Honda’s success was assured, given the level of quality and efficiency it brought to the market, both in the volumes segment and the more premium end. Until the likes of Volkswagen, Hyundai and later, Kia Motors and MG Motors flooded the market with more aggressively priced, feature-rich products spanning segments. The Elevate appears to be just what people expect from Honda, a well-equipped, well-specced offering, higher on quality than its competitors and  efficient to boot.

Honda Cars India also needs to highlight a clear EV roadmap for India. At the unveil of the Elevate, it announced that it intends to have only BEVs and FCEVs in its portfolio by 2040, a good decade after many international brands have fully electrified their fleet.

Most notably, Honda has announced that it will be launching its first battery EV in the country within the next 3 years. Currently, Honda’s international EV portfolio consists only of the pint-sized e, but that’s one more than the number of Honda EVs India has. While its rivals have already begun launching EV after EV, Honda is still studying the Indian EV market, and reeling from the outrageous hybrid GST structure. The upcoming EV will be based on the Elevate and will be one of the four SUVs launched by the brand till 2030, making the Elevate Honda’s most crucial offering in India, this decade.

Honda’s two-wheeler subsidiary Honda Motorcycles and Scooters India, on the other hand, has stated that it intends to set-up its EV facility at its Naraspura plant in Karnataka with a targeted production capacity of 1 million units to be achieved by 2030.

So, even though strong hybrids account for 8 percent of Honda’s sales in the country, it’s not a volume segment. A clear strategy, a strong SUV line-up led by the Elevate, and a detailed short-term EV plan is what it will take to bring Honda back. The Amaze and the City have been described as two strong pillars for Honda Cars India, but the Elevate - the third pillar may likely prove to be the strongest one yet.