Honda in India: New Challenges

Honda in India: New Challenges
Case Code: BSTR468
Case Length: 14 Pages
Period: 2000 - 2015
Pub Date: 2015
Teaching Note: Not Available		 Price: Rs.300
Organization: Honda Cars India Limited
Industry: Automotive
Countries: India
Themes: Competition, Emerging Markets
Honda in India: New Challenges
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

This case is about the challenges faced by Honda Cars India Limited (Honda India) since 2011 in the highly competitive Indian automobile market. Honda India was one of the first foreign automobile companies to enter the Indian market after the economic reforms introduced in the early 1990s allowed foreign players to start direct operations in the country. Despite the lack of small cars, Honda India quickly established itself as a leader in the mid-size sedan segment. Some of its models like Honda City were highly preferred by the upper middle-class Indian customers. However, Honda India started facing heavy competition from other foreign players in the market like Volkswagen and Hyundai. Its best performing models like Honda City and Honda Civic lost their market leadership status. Lack of diesel powered models at a time when diesel was highly subsidized by the Indian government was one of the main reasons for the declining performance of Honda India. Honda India's negligible presence in the small car segment compounded problems for the company as it could not expand into the small cities and towns with its expensive sedans. In order to meet the new challenges, Honda India initiated a number of steps like introducing diesel powered models, MUVs, and small cars. It also cut the prices of a number of its models to make them more competitive in the market. Honda India's efforts yielded some positive results in the form of increased sales of many of its models. Honda India was looking to further consolidate its position in the market by focusing on customer satisfaction and quality. However, analysts were still cautious about the future prospects of Honda in India.

Issues

This case is designed to enable students to:

  • Understand the challenges faced by companies due to the macro-environmental factors that are beyond their control
  • Appreciate the importance of modifying the strategies of a company depending upon the prevailing market conditions
  • Analyze the strategies that market challengers should follow to capture a higher market share from market leaders
  • Discuss and debate whether the steps taken by Honda India to meet the new challenges helped it in improving its performance in the Indian market
  • Explore the strategies that should be followed by Honda India to consolidate its position in the small car segment of the Indian automobile market

Contents

Keywords

Macro-environmental factors; Deregulation of petrol prices; Declining Indian Rupee; Pricing; Long-term strategy; Vision; Business Strategy; Product Management; Competition; Competitive strategy; Emerging market; India; Indian automobile market; Honda

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