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ANALYSIS: Honda’s Bold Runabout Vehicle (BR-V) - the Next Big Thing?

By Glenn Brooks | 20 August 2015

BR-V is now just five months away from production

BR-V is now just five months away from production

Underlining Honda's increasingly smart move towards investing where populations and incomes are rising in Asia, the company has just revealed a prototype of a new model, the BR-V.

The little seven-seater will be shown to the public for the first time this weekend at a motor show in Jakarta. Production at Karawang 2, a manufacturing plant some 70km east of the Indonesian capital run by PT Honda Prospect Motor (HPM), is due to commence in January. But that will be only the first part of Honda's strategy for the car. HMIL's Tapukara plant in the Indian state of Rajasthan is another build location. Expect the local market's car to appear at the New Delhi auto expo in the first quarter of next year.

This little crossover shares much with the Brio, Brio Satya, Amaze and Mobilio small cars. Like the last of these, it will offer up to seven seats. A 120hp 1.5-litre four-cylinder petrol engine will be standard in the Thai and Indonesian markets. The torque output is said to be 145Nm, and in Indonesian spec, the BR-V will offer the choice of a CVT or a six-speed manual gearbox.

Like the Brio hatchback, Satya sedan and Mobilio minivan, the BR-V uses a shorter, lower cost version of the third generation Fit/Jazz architecture. This is clever, as it keeps R&D costs low, and ensures a relatively inexpensive adaptation of the existing plants which make GSP/WBC platform models.

What sort of capacity are we talking here? At the moment, the numbers are not enormous, but Honda sees the medium and long term growth potential for the Indian, Thai and Indonesian markets. Karawang 2, for example, was completed in early 2014 and the Brio Satya, Mobilio and other mainstream models are made there. The additional plant lifted Honda's Indonesian production capacity to 180,000 units a year. Prior to this, it was just 65,000 units.

HMIL makes models using the BR-V's architecture at both of its production plants. A third shift was added at Greater Noida in Uttar Pradesh in November 2013, due to the local market success of the Amaze: Indian buyers love both the sedan bodystyle and the economy of its 1.2-litre petrol and 1.5-litre diesel engines. As well as being the first model anywhere to be fitted with the Japanese OEM's 1.5 i-DTEC, this car was also the first vehicle to be manufactured at HMIL's Tapukara plant. The expanded facility, which already manufactured two-wheelers, was inaugurated in February 2014.

Until the introduction of the Mobilio, Honda's Indonesian subsidiary had not been present in the entry level MPV segment. As this is the biggest category in the local market, that mattered but with the recent collapse of that vehicle class, things are changing. The version for India, meanwhile, which is priced and marketed as a rival for Maruti Suzuki's Ertiga, is built alongside the City, CR-V, Amaze and Brio at Greater Noida.

Part of Honda's genius in Asia is how quickly it acts. The Indonesian market was down 18% in the first half of 2015, and fell by 27% in June, and then by 40% in July, but the company was not caught unawares. Even though the Mobilio plunged by 55% to 20,790 sales in H1, the arrival of other new cars was able to offset this. The HR-V is one example, quickly becoming Indonesia's ninth best seller in H1 (16,326 registrations), backed up by the new Jazz in 18th position (8,521). And even with the market losing more than a quarter of its volume in June, Honda nonetheless had two models in the top ten.

In sharp contrast to what's been happening to the Indonesian market, passenger vehicle sales are on the rise in India: by 13% in July to just under 219,000 vehicles. Not all of Honda's locally built models have been hugely successful, but just as has been the case in Indonesia, amongst what is becoming a broad range of small cars, there are some big winners.

Helping the brand to overtake Mahindra and become India's number three with a 8.5% share for the year to the end of July, the new Jazz is off to a strong start, as noted in a recent Analysis piece. It made the top ten in its first month, and is backed up by the City (52,075 sales from 1 Jan-31 Jul), Amaze (39,984), Brio (7,735) and Mobilio (11,576). The City and Mobilio have each suffered double digit falls but having fresh models hitting the market in recent months has been both lucky and a long-planned masterstroke.

So, what does Honda do next in Asia? We already know how successful its planned attack on the Japanese market with a fresh range of Kei-class models has been over the last four years. That, and the introduction of ever more small hybrid cars, has worked wonders at home. The BR-V is clearly going to be the right product for Indonesia, Thailand, India and other regional markets, arriving at a time when ever more buyers are seeking an affordable and good looking crossover.

We haven't yet seen American Honda's second generation Ridgeline but it's interesting that the company is having a second attempt at a medium-sized pick-up. The firm's Thai operations have longed for such a model for many years but unlike the Ridgeline 2, it would need to have a ladder chassis and be RWD/4WD. For the moment, there are no indications that such a vehicle is under development, but the idea of it makes a lot of sense, and not just for Thailand - imagine how well it would do in Argentina, Brazil, Australia, South Africa and Russia.

Back to India, though. In contrast to the firm's unfortunate strategy in Europe, replacing models quickly or even just facelifting them or adding engines which are better suited to buyer preferences, is working. Take the example of the Brio. This little car's performance in the Indian market hasn't lived up to expectations. But Honda sees where it went wrong, and is said to be working on fixing the problems for the replacement model's launch in less than three years' time. The interior is perceived as unimaginative if well built, the boot isn't that roomy, there is no diesel, and the rear styling looks peculiar to many. And yet, it's selling well enough against the Maruti Swift and others in that class. Imagine how successful a truly localised car could be.

With the ongoing rise in popularity of diesel cars, the local division is said to have convinced the parent company in Japan to bring forward development of a 1.1-litre three-cylinder engine based on the existing 1.5-litre four-cylinder unit. Clearly, HMIL has not only Hyundai (market share: 16.7% in July) in its sights, but Maruti too. India's long time number one brand might have more than 50% of the market but Honda sees where both it and the Korean OEM could have a weakness.

In China too, thinking locally is working. The next model for the PRC is the Greiz, a small car based on GAC Honda's City, modified for the Dongfeng Honda JV and due on sale from next month. It will join the increasingly successful XR-V and Vezel twins. Next year, both of the firm's partners will gain a D-SUV, the Crider and Jade will be refreshed as each enters the second half of its lifecycle, and a new five-door hatchback will be launched based on the concept B from last year's Shanghai motor show.

The sort of thinking being employed in Asia is how American Honda went from an importer of Civics and Accords in the 1970s to the manufacturing and sales powerhouse that it is today. Find where the establishment is vulnerable, and launch a quiet, long term attack with cars that are different from the norm - give people what they don't know they want, just as Sony did with the Walkman, and Apple did with the iPod and iPhone. Then, in contrast to what Sony subsequently did, and what was crucial in the exponential rise of Apple, was keep modifying your strategy and keep adding new products.

Honda succeeded against the mighty GM and Ford in the US by offering more advanced technology, highly economical engines and, crucially, cars which looked more attractive and were way more reliable than what people had been used to buying - again, most of those things were how Apple came from nowhere and now dominates the mobile phone business. On that score, the BR-V is a vehicle that could well end up being just as important in the brand's history as the Civic and Accord became in North America from the 1970s until 2014, and the CR-V, now American Honda's best seller, has recently become in the current decade.