My job in for Honda Cars is to define a future product portfolio strategy, says Katsushi Inoue

Katsushi Inoue, the newly appointed president & CEO of Honda Cars India is not new to India. Having visited India over 20 times, he knows this market intimately. Inoue has seen this market changing from being a market which was heavily populated with Maruti 800 and Hyundai Santro in 2003, to a market which has all types of cars including sports cars, resulting in the Indian base graduating to become the 4th largest market today for Honda. He sees a brand like Acura, the premium car brand of Honda making its way into India some day. Inoue who was responsible for defining the 2022 product portfolio for Honda Cars globally, has been entrusted with the responsibility of defining future product roadmap for Honda brands in India.

In one of the very first interviews, after taking charge, Inoue told ET that his primary objective is to achieve the target of selling 3 lakh units, which is still on paper and also start the new factory in Gujarat, which is Honda's 'future dream.' Edited Excerpts.

Honda has had a dream run in India over the last few years. Can this be sustained and what could the challenges to keep it going?

A large population of youth in the country is the biggest sweet spot and opportunity for the future. How well we take care of their needs is the biggest challenge. We need to introduce models, which meet the ever changing needs of today's youth and our upcoming model Jazz aims to serve this need.

We are augmenting our capacity, we are aiming at higher volumes. Generally speaking in the industry, when volumes go up, the quality tends to go down, and that is the last thing we want. Honda is known for its high quality and premium brand image; we want to maintain that even as volumes go up.

While you have got an overwhelming response to the City sedan, the other models in your portfolio, Amaze and Mobilio are slowing down, is that a matter of concern?

As we launch new models, we adjust our capacities accordingly. So you may see in short term that volumes might be declining for some models, as they create space in the factory for the new launch. For us the volumes of Amaze, Mobilio are as per our internal projection. I am fine with that. Our next big focus is Jazz.

What is the mandate given to you by the HQ?

Our target of 3 lakh units per annum is still on paper, my job is to materialise it. And sooner or later, once the 3 lakh capacity is about to be utilised, we have to look at a new facility.

The decision on Gujarat plant is already made…

We have purchased land (in Gujarat). Of course I want the third plant to come up, but we need a demand base first, without that we cannot create a new facility. My job in three years is to draw a future India roadmap and defining future product portfolio strategy is a key part of it.

It has been a great year in terms of volumes, what are your expectations for this year and what about profitability?

We should be able to utilize our complete capacity (of 2,40,000 units) this year. We have grown by 41% in FY-15 and with new models our growth momentum should continue this year too.

As for profits, we recorded profit last year after several years, but I cannot give you the figures. We have just come in to the black. We should be able to register a profit this year too, but it may be a meagre profit, as we are still in investment mode.

We understand that Honda wants India to be a gateway to African continent, based on 4 cars out of Brio based platform, and that you are targeting almost half a million sales by 2019 and India is expected to contribute almost half of that volumes?

We can ask Honda Motor Company to cater to more destinations. Yes India can become a key base to exports to Africa, as our completely built exports are not that big. However we don't have enough capacity to serve the global markets, yet and there is still a big potential in India to grow.

Domestic market will always remain our priority, but once the new plant comes up, we can think about it (exports). However we can export a lot of engine components, that business is really big for us. I want India to be global export base for engine parts and components.

Since you were playing a key part in the future product portfolio strategy for headquarters, what potential does you see of World A Entry Car?

The small car? Globally that study is on. We have no concrete plan about it as yet for India. We are seeing that the volumes in the A segment is falling constantly, Brio will be our entry model in the near future.

Developing new cars and concept is R&D's job, that goes on, I saw the A segment car myself, however if you ask me, If it is needed for India or not, it is still a big question.

What kind of role would Indian R&D will play in future cars?

In October, we will inaugurate the new R&D centre in Greater Noida. For Brio series, India is the most important market. In that sense, we have the biggest demand in India, the key contributor should be India. So the next generation Brio based cars would be tailored for the Indian customers. In that context, we decided to enhance the R&D function in India.

Is it safe to say that the new generation Brio, will be developed in India?

In the next few years, we will release the new Brio series, the development work for the project is on, so we are going to have a bigger R&D function in India. Timing is not clear.

What role do you see India playing for the future?

India already figures in the top 4 markets for the HQ. Our (India's) presence is getting heavier inside Honda. Nowadays everyone is talking about how HQ is keeping a close eye on the Indian market. It is a very important market for the future.

India is bigger than the European market also bigger than some of the African, Middle east and Canadian market. With volumes going up, importance will only grow.