Edgar Pacheco
Sales Subdirector of the Commercial Division
Honda de México
View from the Top

Opening Doors to Smart Mobility

Fri, 09/01/2017 - 14:55

Q: How is Honda dealing with the peso depreciation against the dollar and the resulting increase in car prices?

A: Mexico is one of the cheapest places in the world to buy a car, which proves an advantage for the end customer. Margins are narrow in automotive sales in general but the situation is aggravated when cars are imported. Having plenty of choices available in the country is another contributing factor to maintaining stable prices. The introduction of new brands led to a price war because all players want to protect their market share. We have a strategy in place to fight the peso’s depreciation against the dollar but we are developing sustainably and not accelerating ahead of market conditions. The decreasing dollar price is helping all brands level their margins but further price increases are to be expected.

Q: How will Honda’s technology help the company justify these price increases?

A: Since last year we have seen great success with the Civic, which sells in greater quantity than the Accord. The latter has been our flagship product since we came to Mexico but unfortunately, the large sedan segment has been decreasing. The Civic now has new technology and a new engine that is the same as that installed in the CR-V, our best-selling model. This 1.5L turbo engine was unveiled last year and outputs the same horsepower as the previous model using a small engine. This makes the vehicle lighter, eco-friendlier and in line with international EPA standards.

Another advantage of our product line is the inclusion of continuously variable transmissions (CVT). We tested CVTs against traditional configurations and we think it is the best and most intuitive one. Some people complain about the CVT’s responsiveness because many want to hear the gear changes. However, many test drivers loved this characteristic because of its responsiveness and it has been well-received by the market.

Q: How is Honda approaching the environmental element related to its vehicles?

A: In anticipation of 2025 mileage regulations established by the Environmental Protection Agency in the US, we began working with hybrids before they attracted attention in the market. These became more popular due to pressure from environmental policies such as the No Drive Day vehicle restrictions in Mexico City and the State of Mexico, rather than consumer concern for the environment. Some years ago, we marketed two hybrid vehicles that were not as successful as we had hoped. Now the need for environmentally friendly vehicles will inspire new launches.

The purpose of the new Civic launch is to lower the engine grading to comply with EPA standards and to downsize the cubic capacity of new vehicle engines. Honda’s VTEC system improves the volumetric efficiency of an internal combustion engine and helps a 6-cylinder engine work with the same capacity as a 3 or 4-cylinder one.

Q: How is Honda working to improve its internal processes and the customer experience?

A: We tell car owners openly what is damaged or replaced on their cars when they arrive at the dealership. We charge transparently, which also generates customer loyalty. Our quality is rated excellent by customers just as our aftersales services is. Instead of aiming to be the cheapest on the market, we offer customers a level of distinction. One specific worldwide problem with Takata, the provider whose airbags were unsafe for use, affected Honda’s aftersales service. We presented information about the incident to the Federal Attorney’s Office of Consumers (PROFECO) and we organized a recall to replace these faulty components.

Honda's main area of opportunity is in data management. With social media, our data sources have only expanded so we must find a way to include all this information. To change faulty airbags, we have struggled to contact all vehicle owners. We have the original owners’ information for the entire Honda vehicle park but cars change hands over the years and there is no public record that tracks the used-car market.