Bringing eco-friendly vehicles in India an issue, says Honda

Bengaluru: Bringing eco-friendly automotive technologies to India in the absence of a clear policy framework is a challenge, according to Japanese auto major Honda.

The company which has announced that by 2030 two-thirds of its production will be non-conventional - either hybrid, plug-in, electric or fuel cell vehicles - said it will sell hybrid in India mostly as a technology demonstrator as the current high taxation has affected volumes severely.

Honda Cars India, the wholly-owned arm of Honda Motor Co, sells Honda Accord hybrid in India through import of completely built unit from Thailand. Sales of the model had suffered after price hike due to increased taxes after GST implementation last year.

"We (Honda) have declared that two-thirds of our production by 2030 will be non-conventional, either hybrid or plug-in or electric or fuel cell. So in line with that we have all the technologies available," Honda Cars India Ltd (HCIL) Senior VP and Director Marketing and Sales Rajesh Goel told PTI here.

He however added: "The issue is that everything entails investments. Unless the policy framework in India is clear for us to be able to decide what and when to get in terms of concrete plans, there is an issue."

Availability of technology is not a problem for the company, he said. "Other than that (policy framework), for us to get a technology here, be it hybrid or electric, is absolutely no problem because we are running similar programmes for other countries. So just to adapt one, in terms of technology we have everything available," Goel added.

Stating that Honda has been a front runner in the world in environmental-friendly technologies, he said,"we were the first company to bring a hybrid to India ten years ago with Civic."

Reiterating the significance of a clear road map, he said, "we have the global commitment of 2030. So including the Indian volume we eventually have to move towards that. Policy framework is very important step for us."

Goel said as long as there is a level playing field despite the lack of a clear policy framework, the company would figure out its game plan. He said there has been an ongoing dialogue between the government and the industry to decide on the road ahead for eco-friendly vehicles.

"I am sure that industry views will be taken and we are participating in those forums," Goel said. Last year, the government had announced intention to have 100 per cent electric vehicles (EVs) for public transport and 40 per cent of personal mobility by 2030 but this year it has ruled out framing an EV policy stating technology should not be trapped by rules and regulations.

When asked about the impact of higher tax under GST on hybrid vehicles on sales of Honda Accord hybrid, Goel said, "we have suffered a dent in volumes as it has a huge impact on price."

Under GST, hybrid vehicles have an overall tax incidence of 43 per cent (28 per cent peak GST rate plus 15 per cent cess). He said price of Honda Accord hybrid had gone up by around Rs 5 lakh. The model is currently priced at Rs 43.21 lakh (ex-showroom Delhi).

"However, as our commitment to these technologies and to the environment and our demonstration to the customer, we would continue to sell Honda Accord hybrid although we may not have volumes," Goel added.

Even though small in number, such cars running on the road is the real proof to policymakers to decide what the way forward should be rather than merely debate, he said.

HCIL is selling the model in India by importing in batches of 30 cars only after getting confirmed orders.

When asked about absolute sales numbers of the model, he said:"We are not even close to three digits (annually). The number has fallen purely because of increased prices... Even for moneyed people that level of jump is difficult to digest."