Honda CR-V to cost more

Honda Siel Cars India said it will increase the prices of its sports utility vehicle CR-V by about 30 per cent in May, 2009, besides gradually hiking the rates of other models.

“Devaluation of rupee is impacting our business, because a significant portion of our components are imported from Japan and Thailand. This impact is about 30-35 per cent in case of CR-V,” Honda Siel Cars India (HSCI) President and CEO Masahiro Takedagawa said.

“We will increase the prices of CR-V in May and it will be about 30 per cent, otherwise we will make loss,” he added. CR-V is imported to India as a completely built unit. The company would gradually increase the prices of its other models that are manufactured in India, Takedagawa said.

Asked what could be the quantum of price increase for the models like City, Accord and Civic, he said: “Due to devaluation of rupee, our (CKD) completely knock down units have been impacted by about 9-10 per cent. But the price increase may not be in that level.”

The company, which is present in India through a joint venture with the Siel Group, has indefinitely put on hold opening of its second manufacturing facility in Rajasthan. It has also cut its production by 50 per cent from the beginning of this year.

The sales target for FY09, at 55,000 units is lower than even the 60,000 units Honda Siel sold in the previous fiscal. But this production cutback does not seem to have impacted the launch of the small car ‘Jazz’, which may still be in the market by mid-year. Honda Siel’s hopes may be riding on Jazz for the next few years.

According to vendors, the company’s total production schedule for next fiscal is around 70,000 units. “Trial production for the ‘Jazz’ is slated to begin in April and 23 units would be produced initially. The next month, production would go up to 123 units before expanding exponentially to about 2,000 cars a month from June,” said a key supplier to Honda Siel. From all available indications, the company may be looking at sales of 22,000-23,000 units of Jazz, 3,000 units of Accord, 5,000 units of Civic and 40,000 units of its flagship City in 2009-10.

But Takedagawa said Jazz sales would be 15,000 units in the first 12 months after launch. The 1.2-litre Jazz will be produced at its Greater Noida facility and will be the smallest car in Honda’s global product portfolio.