Saturday, June 9, 2007

Why you should *not* buy a Honda car in India

Hi Readers,

Don't get me wrong.
Honda cars are good. In fact, they are excellent. I am a proud owner of a 1 year old Honda City ZX (CVT) myself. And I love my car. The problem, however, is that Honda-Siel Cars India does *not* seem to love me or my car. Here's why.

To cut it short, Honda after sales service in India is horrible. Especially, if you have owned a different company car before, *you'll feel like shit* the way you will be treated when you take your Honda car for servicing in India.

Actually maybe I am over-reacting. All the while I have owned my Honda car (a little over an year) I have always taken my car to the same dealer -- Ring Road Honda (Peera Garhi) -- for six-monthly servicing and for accident insurance claim and repairs. Therefore whatever I write here is greatly influenced by my experiences with Ring Road Honda. Maybe other Honda dealers are better. But something inside me tells me this is not the case. Let me explain why.

As per my knowledge, Honda presently manufactures and sells more than one hundred thousand cars (that's 1,00,000) in India annually. More than three-fourths of its cars are sold in Metros like Delhi, Mumbai, Chennai, Bangalore and Kolkata. Out of the cars that are sold within these metros, more than half of the cars are sold within New Delhi alone. And yet, the number of Honda dealers in New Delhi is just four (actually for quite a few years, there were only three Honda dealers in New Delhi -- the fourth one was added quite recently).

Therefore, going by the numbers, Honda must be selling close to 35,000 cars in Delhi annually. Note that this is just an estimate -- this number might not be entirely accurate. However, if you are a resident of the New Delhi (or NCR) region, you will agree with me that one out of every 7 cars in Delhi is nowadays seems to be a Honda City. In my office in Noida alone, more than 100 employees own a Honda car (we have about 600 employees working in my company).

Now if we take out the newest Honda dealer (Courtesy Honda) out of the picture for a moment (Courtesy Honda are about 4 months old in New Delhi), then approximately 30,000 Honda cars are being sold by three dealers (Ring Road Honda, Prime Honda and South-End Honda) collectively. This averages out to about 10,000 new car sales per dealer per year. This is a *huge* number. In fact this is an *extremely huge* number. Does this number give you an idea of the annual income of each of these dealers? Let us try and figure it out.

Let's assume that each dealer makes a net profit of Rs. 1,00,000 per car at the time of sale. Add to this another Rs. 10,000 per year (in the form of cost of servicing and repairs). This brings us to an unbelievable figure of Rs. 1,100,000,000 (= 1,10,000 x 10,000) per year, which is the income of each of these three dealers from the new cars sold annually. The figure above does not yet include the money these guys are making from the servicing and repairs of the cars they sold the previous year, and the year before that, and the years before that.

So, you would ask, how would the above discussion imply poor after-sales service of Honda cars in India? Here's why:

  1. Lack of competition: As I said, despite the huge volume of annual sales of Honda cars per year, there's only a handful of Honda dealerships around in each city. If a city like New Delhi, which accounts for the maximum sales of Honda cars annually has only three (actually four) Honda dealerships, imagine what would be the condition of smaller cities and towns in India. The existing dealers own all the service workshops, and they know that the customers are entirely out of choice no matter how badly they are treated. This makes Honda dealerships like Ring Road Honda (Peera Garhi) switch off their air-conditioners and fans in the sweltering heat of Delhi, even when the temperature outside might be exceeding 115 degrees Fahrenheit, just to cut down on their operating costs and maximize their profits. Unbelievable, isn't it?
  2. Lack of motivation: With each of the existing dealers making approximately Rs. 1 billion plus annually from the sales of new cars alone (see my calculations above), these dealers have no motivation to improve customer satisfaction. After all, due to the monopoly factor that I described above, they are going to get only a marginal return on the investment that they put in towards improving customer satisfaction. That's why they prefer to be completely indifferent towards their customers' problems and the inconvenience they have to go through to get their cars serviced.
  3. Lack of fear of law: We all know what a mockery the Indian legal system makes of the entire democratic setup in the country. Justice is a word that is relevant in only poetic context in India, not in real life. Supposing that a dissatisfied customer like me were to sue one of these dealerships for rotten customer care, the court case would drag on for zillions of years, and in the best case scenario, the court might impose a monetary fine on the dealer of a measly amount of something close to Rs. 5,000 as a punishment (if and when the case comes to an end). For a dealership that is making more than Rs. 1 billion in income annually, paying a fine of such a small amount is equivalent of taking a drop of water out of an ocean. The dealers know these facts as well as you and me, and therefore give a damn to what a customer thinks of them.
  4. Lack of fear of action from Honda-Siel Cars India company: Now here's where I feel the Honda company had a role to play, which obviously they are not doing. Theoretically, Honda-Siel Cars India Limited (hereafter referred to as HSCI) has a very nice feedback system in place for its customers to tell the company about their experiences with these dealerships. As a Honda customer, you are entitled to provide feedback on your service experience in a number of ways, including a web-based system. The intent of having a system like this in place is that people like me never have to go out on the web and write blogs like this one. However, the fact is, the company itself does not seem to be serious about taking action against the erring dealerships despite repeated complaints of quite severe nature that are made by the customers on a regular basis. There could be a mix of reasons for the company to behave indifferently towards its existing customers. However, the number one reason, according to me, is that as long as the number of new cars being sold annually remains high, thereby bringing a lot of money for the company, they will never feel motivated to keep their existing customers satisfied. In fact, they seem to love their dealers more than they love their customers. My personal experiences with HSCI is that they *never* respond to the customers directly, even in cases of serious issues. They will read your feedback; then they will (informally) talk to their dealer; then the dealer will offer you a (namesake) apology on phone and that's the end of the matter.
So the question that needs to be answered is, should you go ahead and buy a Honda car if you live in India? The question needs to be answered by you -- based on the two facts that I am going to summarize my article below in:
  1. The Honda cars are excellent.
  2. The Honda after sales service is pathetic.
Now the decision is up to you. You need to decide which factor you want to give more weightage to. To help you decide, I will quickly summarize what I exactly mean by "pathetic after sales service":
  1. Total lack of transparency in car service: You are never quite sure if all the checks were performed on your car as dictated by the technical requirements laid down by the company.
  2. Complete lack of customer care: When you go to get your car serviced, you will be made to sit in a shoddy lobby, even without fans and air-conditioning, no matter how high the outside temperature is.
  3. Extraordinary long time for simple tasks: Due to the overload of customers, each dealership takes their own sweet time to fix even simple problems. The last time I took my car for a simple denting-painting job (which would normally have taken 24 hours to complete), Ring Road Honda gave me my car back after approximately 20 days.
  4. Rampant corruption while handling insurance claims: No matter where which company you buy your car insurance from, the dealerships and the car surveyors act hand-in-hand to screw both you and the insurance provider to make illegal money. Each accident that you are involved in is an opportunity for the dealerships to make more money.
  5. Indifference towards the cars: Last but not the least, the way these dealerships seem to treat your car would make your blood boil. Imagine taking your 1-month old baby to the dealership to get her first free servicing, and getting it back all soiled and dirty -- with black grease marks all over the beige colored velvet upholstery in the interiors. And imagine this happening again and again, each time your car gets serviced.
That's it from my side. I was forced to make this information public, because of complete indifference shown by the dealer (Ring Road Honda, Peera Garhi) and the Honda-Siel Cars India company, even after tens of complaints that I made in written, through e-mails, through the Honda Cars India website, and verbally (on phone).

I hope at least some people who happen to go through this article will benefit somewhat from the information that I have provided here. If you feel like getting in touch with me to talk to me before making a decision, please post a comment on my blog with your e-mail ID or any other way you would like me to contact you.

Also, if you are in the same boat as I am, please do comment (and if possible, Digg) on my Blog. This will help getting our problem some visibility, and as a long thought, it might also help us get together in sufficient numbers and pursue a class-action lawsuit against HSCI for providing and encouraging rotten customer care through their limited, monopolistic dealerships in India.

Yours,
Amit

(The author lives in New Delhi and works as a Computer Scientist with Adobe Systems India)






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41 comments:

Indya said...

Good Article. Linking it on http://www.bestofindya.com.

Vote for this article also on BestOfIndya

msdivy said...

Honda Siel sales:
City: 12*3000 = 36000
Civic: 12*1500 = 18000
Accord: 12* 300 = 3600
CRV: 12*250 = 3000
Total: Approx 60,000 p.a

1. So your ASSUMPTION of 100,000 p.a is wrong.
2. Half of these sales 60,000 in NCR alone is also wrong.

Some dealers are good, some are bad, some are horrible. You can find good dealers by interacting with other car owners via online community like: http://www.team-bhp.com/

Sudhir said...

Batty,

I think the numbers are dodgy - your estimate of each dealer's profit is 110 cr p.a. As you say, the number sounds unbelievable :-)

Just for reference, Maruti's total profit in a year is about 1500 cr p.a. - Honda itself is probably a fraction of that, and I would be surprised if one Honda dealer makes more than 5-10 cr p.a.

On the servicing front, sounds like you've been through a bad experience. My suggestion is to try the pick up and drop service offered by each dealer, and also try a different dealer (you can send the car to any honda dealer irrespective of which one you purchased from). I've been using Prime Honda (Ghaziabad) for all my regular servicing. They pick up the car from home / office at 9 AM and return the car the same afternoon, for an additional pick up and drop charge of Rs 300 or so. well worth it!

Kamath

Vineet said...

Though the profit figures may look astronomical, its quite true that dealers are not bothered about you at all. I myself had bad experience from the dealers while getting my car serviced. And I have never been sure whether things that I have been charged for have ever gone into my car or not.

Abisurd said...

Exact numbers for HSCI car sales in 2006-2007

HSCI, registered an all-time high sales of 61,327 units in the financial year 2006-07. This translates to a phenomenal growth of 43.5% over the last fiscal year where the company sold a total of 42,727 units.

This comes directly from the HSCI Media Center, link is http://www.hondacarindia.com/about/mediaCenter/Profile.html

Again, as msdivy says, 50% of those sales in Delhi is odd. But at the same time, I won't be surprised if that number was 35-40%. Remember, Delhi had more cars on its roads than Bombay, Calcutta and Madras combined even 15 years ago.

Ate said...

agree with the figures being inflted, but am still reconsidering buying a city...which i had almost finalised!

Batty said...

Hey Abe,

You should consider Maruti Suzuki SX4, which is offering many many features over Honda City at a much lower cost. Plus, Maruti Suzuki after sales service is much better than Honda.

SX4 has Dual-Front Airbags, ABS with EBD, Alloy Wheels, Integrated Stereo, Integrated Anti-Theft System, Better Ground Clearance, Wider Tyres, 102 bhp engine (Honda City is just 70 bhp), Integrated Controls on the Steering Wheel (just like Toyota Corolla H4 and H5)... the list goes on and on.

None of the above features are present in Honda City -- even though it is priced much higher than SX4.

angelhound02 said...

I've never heard about this news before.Well, it's good you have posted this one at least those who were in India will have an idea bout Honda's status there...I just hope they won't be doing that for long and that eventually Honda's situation in India will improve. I believe Honda's auto parts are still of the same quality from the exterior to the interior down to their Honda's engine mount...Anyway, thanks for this news and good luck...

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Anonymous said...

guys this man son of a bitch will always have a problem with anything. tell him to go and ask his mother what problem she had giving him birth asshole

Kinshuk said...

My experience with Honda (and Fortune Honda) has been excellent! There are regular service reminders through SMS, no pesky calls, they book services through emails and inform you via sms as soon as the car is ready.
Staff is courteous.
They assist you with insurance claims and minor scratches are repaired free of cost.
The car has a very fresh feeling after each service....all this when there's only 1 service and sales centre in Lucknow (others at least have 2-3 and Maruti countless)!!

Even a pickup n drop facility is provided FOC...I've been using a Honda for a very long time and both in India and UK!

Batty said...

Kinshuk, thanks for your post. I am really delighted to know that your experience with Honda has been excellent in Lucknow.

And nobody can challenge the fact that their cars are real good.

Maybe the problem that I encountered with Honda is valid only for big cities like Delhi, where the customer load exceeds the capacity of their service centers.

Himadri said...

Courtsy Honda Services are bad and Pathetic they took a week for replacing a part in Honda CRV still the work is pending...its so horrible and irritating to have a service like this...

Batty said...

@Himadri and others... I was wondering how long we will go on taking this kind of pathetic service from Honda. If there are enough of us willing, maybe we can explore the legal option as well. I am sure that having a sufficient number of people involved itself is an excellent evidence of the poor quality of after sales service that Honda Cars India is providing.

Please let me know your views... I'll watch out for your responses.

pradeep said...

really they they are thinking us to be fools. lets think to take some active step.

Batty said...

@Pradeep, I am not confident of being able to explore any legal options in India... You know the state of our legal system -- It took 13 years of waiting to hear the verdict of the Mumbai Bomb Blasts case -- You can well imagine how much time it would take to settle a case like this. Meanwhile my advice to everyone is: Please make really sure that you are willing to settle for the absolutely pathetic level of customer service from Honda dealerships / workshops if you are buying a Honda car.

Satyendra said...

Specifically, I can tell about Pearl Honda, Gurgaon.

Recently I bought a car from Pearl Honda, Gurgaon.
They dealt with me with dishonesty. Initially I applied for loan, they told if I pay cash, they will stop the loan. they took my cash and took the loan too.

I would ask anybody buying car from them to be little bit careful.

Batty said...

@Satyendra, I would request you to notify Honda 1-on-1 about your bad experience immediately. Their contact information is posted on the Honda India website. Wishing you all the best.

Arunima said...

Well I can tell you about my experience with Honda.

I wonder after such excellent service from fiat & hyundai, why did we even think of an honda.

but -
the service station keeps the cars with them for a week..when 3 days is enough
phugga car - in one year - the windshield cracked mysteriously, when we went over a stone...underneath the car everything was damaged & the service station guys just take forever to repair
the last one was a straw on the camels back...the whole coupling & wiring inside got burnt & one of the battery terminals failed. This they say is because of a bonnet light -which was never switched on btw and which we never even asked a dealer to install!!! i really wonder if its not factory fitted how did it come in the car.
I swear I will pay the 12.5k for repair and take the company to the consumer forum!!!

Batty said...

@Arunima,

Same is the case here. It has been 3 years I purchased my City and I have tried 4 different workshops for getting my car serviced. It is the same story each time. In fact, we even purchased a new City last Sunday and they made a complete mockery of the entire experience.

Apparently, the company never wants to come forward to talk to the customer directly, no matter how severe your complaint might be. Once you log a complaint with Honda 1-on-1, it is between you and the dealership / workshop to settle the case.

Try sending a mail to Customer_Relations@HondaCarIndia.com and tell then your experience.

pressure vessels said...

what a nice blog. Maybe Honda should take a look at this matter. Repair businesses that are accredited by honda should take its toll up!

Barry said...

I have a Honda Accord 2007 and have had a horrible experience owning it so far. Tons of parts have failed within 12-18 months and inspite of having an extended warranty the dealership refused to cover the replacement. Courtesy Honda staff talks very nicely but refuse to do any actual work. They never do the job in one visit, they never return the car when they promise and their service is below par. They do clean the car nicely but I have found essential fluids not refilled or checked after a service. I have not had 1 repair or service in the past year go through without problems. Having owned mutliple cars in US I have to say that Honda is not living up to it's name in India. Never again a Honda for me!

If someone is willing to lead some legal action, count me in. It does not matter that it will take ages to resolve, companies like this, who abuse their consumers need to get a message. If we as consumers do not fight for our rights we will continue to get abused like this. Honda needs to stand up and take responsibility, not just profit from us.

Batty said...

@Barry, I have forwarded your concern to the Customer Relations department of Honda Siel Cars India Ltd. Let's hope they haul up Courtesy Honda for what they've done. Legal options in India are pretty limited, you know. Today I read in a newspaper that a special fast track court set up by the Government of India managed to deliver verdict in a case in a matter of just 2 years. So you can well imagine what legal options people like you and me have.

Jagadesh said...

Honda is a great car to drive, but the problem is with service. I had a flat tire and I took my car to honda dealer for service. They told me that my tube less tire is beyond repair and I need to buy a new tyre. Since the dealer(fortunately) does not sell tyres, I approached a tyre vendor. The tyre vendor inspected the tyre and fixed the hole charging me only Rs150. New tyre would have cost me Rs3400!!
Now the bulb in the roof lamp fused and I need to fix it. The dealer would not sell me a bulb unless I take my car for servicing. Honda India confirmed the same in an Email that they will not sell spare parts.
My car is only two year old and right now it is an isue with a bulb. What next? So think twice before buying a honda car!!

Methew said...

I really appreciate you for all the valuable information that you are providing us through your blog.

Batty said...

Methew, my pleasure. Since Honda Cars India are completely indifferent to existing customers' pains or needs, this is the only way I can hope to bring the severity of the issue to the attention of the company executives.

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