The year of Honda

The evidence is clear. Honda (PSX:HCAR) is outperforming the other carmakers in terms of growth by a mile—with Suzuki’s decline in sales after the government Rozgar scheme wrapped up and after Corolla’s demand flummoxed. In 10MFY17, sales for HCAR grew by 49 percent year-on-year, compared to a drop of 3 percent for INDU and 14 percent for PSMC, according to data reported by manufacturers association.

If it’s financial year ending March 2017 is considered: sales for Honda city and civic grew by 37 percent year-on-year. Its latest results are testament to its growing demand in the market with a strong revenue path (57%), and a growth of 73 percent in its bottom-line. Margins have remained subdued at 14 percent (down from 15%), due to the likely pressure from the appreciation of yen against dollar.

The company came out with a 10th generation Civic and a mid-cycle makeover of the Accord all within five months of each other. Now City is up for an upgrade. The company also just launched a 7-seater SUV which is a new variety in the category at a lower price-tag catering to a niche market. Nearly 800 more Honda city and civic cars were sold during this outgoing financial year than previous.

At a time when there is so much talk over variety, quality and affordable vehicles, with a potential of at least three new global brands setting a footprint into the country, Honda is at its top game. It has had competition from Corolla as well as used cars imports and has managed to retain its market share.

Lower interest rates that is boosting auto financing coupled with higher disposable incomes and appetite for new cars will continue to push Honda forward. The appetite can be ascertained by the fact that consumers are now paying premium on cars that they can get instantly, or earlier than the usual wait period of 4-6 months. This is especially true for Honda Cars which is now working double shift to produce more cars to cater to the demand.