Honda Cars expects positive growth in 2017-18

Honda Cars India limited (HCIl) is expecting to complete the current financial year ending this month with a "negative growth" over last year, but is hopeful to achieve a positive growth in sales in 2017-18, a company official said on Friday.

"In the last financial year (2015-16), we sold 1.92 lakh units with a growth of about two per cent over the year earlier. This year, we will have a negative growth," the car maker's Senior Vice President (Marketing & Sales) Jnaneswar Sen said here.

The company exports about 5,000 cars a year, he said.

"We had a problem in the initial months of this fiscal as the market moved rapidly towards petrol. We had a lot of diesel stocks. We had to correct that first. Now, we have recovered and in February, we have seen a positive growth. We will achieve a positive growth in the next fiscal," Sen said.

Explaining the possible reasons for drop in sales, the company's President and CEO Yoichiro Ueno said: "Honda City is our main selling car. However, it is in the final year of MMC and we squeezed its supply."

According to official, the car maker has been tapering down supplies of its top selling car so that it can launch the new version of the model.

Its production capacity stands at around 2.4 lakh units from its two plants in Greater Noida in Uttar Pradesh and Tapukara in Rajasthan. "We have room to expand the capacity in Tapukara plant," Ueno said at the launch of Honda WR-V here.

Speaking about its Gujarat plant, the CEO said land acquisition is still going on and the company is "not in a hurry" to commission the plant. "It is a part of the long term preparation and is for fullfilling the long term commitments," he said.

The car maker saw a short term impact of demonetisation.

"Due to demonetisation, we have faced tough customer sentiment in November and December last year. We, however, started to see recovery in January and February. We saw 30 per cent decline in traffic in November and 20 per cent in December," Ueno said, adding that some "postponed demand" due to demonetisation is expected to be added this year.

However, Sen said the car producer would be in the highest bracket of tax rates under the Goods and Services Tax.

"Prices of cars are expected to remain at the same level under the GST as compared to the current prices," he added.