KATHMANDU, Nepal – Last Week in Kathmandu, Honda launched the Amaze, a new entry-level sedan targeted at middle income citizens of India and Nepal. Until recently Honda had focused their models in these countries towards higher income buyers. However, now the Japanese company is hoping to expand into the entry-level market. Shigeru Yamazaki, the director and senior vice-president of sales and marketing at Honda Cars India Limited, was present at last week’s launch of the Amaze.
“Honda is shifting important markets from the United States to Asian and Indian markets,” Yamazaki told Sanjeev Giri of the Kathmandu Post, “We are now shifting our focus on developing countries. So that makes the Nepali market a key.”
Yamazaki emphasized that Honda sees huge potential in the region, citing how the company recently opened a research and development facility in India. Honda’s president has announced the intention to release four new models into the Indian market and potentially into the Nepali market as well, underscoring the potential that the region holds for Honda.
The reason behind Honda’s shift to the developing world comes from the new markets opening up there. According to the U.N. report Poverty reduction in China and India: Policy implications of recent trends, the poverty rate in India has been declining at a rate of almost 1.7% a year since 1988. Those previously in poverty are moving into the middle class, creating new consumers to purchase Honda’s entry-level cars.
According to a Reuters article, GM also recognizes the potential that the developing world has as a market for their products. GM is fervently trying to grab some of the Indonesian market from Toyota, which controls 54% of the market compared to GM’s less than one percent. Despite GM’s lack of success so far in Indonesia, the company knows that emerging markets are becoming major consumers, particularly of automobiles. Emerging markets are currently responsible for half of all automobile consumption, and that figure is expected to rise to two-thirds by 2020.
The story in Indonesia is the same as in India, and in much of the developing world. As citizens in developing countries are empowered to lift themselves out of poverty, they become consumers and start buying more commercial products. This consumption creates industry and jobs in the producing countries.
– Martin Drake