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Old 28th May 2009, 14:39   #241
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It is very strange that with over 70% localization, Honda prices the car at over 8L OTR Bangalore. Add to it the fact that it enjoys a lower excise duty advantage. It only shows that Honda is charging a hefty premium for the car.
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Old 28th May 2009, 15:00   #242
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Originally Posted by narayan View Post
come to think of it
the NHC - IDSI used to sell in the 7-8 lakhs range
this iteration of JAZZ should definetly have the same interior space as the NHC since the platform is the same.
so essentially what you get is the same car minus boot + more power ful engine + safety features .
probably this is what HONDA was thinking while fixing the pricing.
but they need to be cognisant of the competition too

Honda must also realise that the target customer is different from that of City. The Jazz customer will be a price-feature conscious lot.

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Old 28th May 2009, 15:14   #243
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Originally Posted by csnanjappa View Post

Some of your products have been hurt by the price hike?


Some products are not so competitive in the current scenario. Since the localisation of the City and Civic is high, the price of these cars have not been affected. However, we have changed our policy on our sports utility vehicle, CR-V. We will import CR-V on confirmed orders from dealers. We are currently working on a lean inventory. There will be some cut back on CBU imports.
Slightly OT but I think Honda is beginning to relinquish the advantage that it had in the Indian market. If Toyota plays its cards right they could finally trounce their Jap rival in India.

There was a time when I could aspire to own a CR-V when it was about 17L. Lately, I've been thinking of getting a seven-seater type vehicle with a growing family and I therefore I read the Autocar cover story about the Fortuner with interest. They had a comparison with other SUVs in the market and I was shocked to see the CR-V listed for between 23-26L - more than every other car in that range including the X-Trail and Pajero.

If Honda were to mess with prices like this in the US market they would have been wiped out long ago. Only in India can they charge a hefty premium with every new version of a model. In developed markets they have to get better, bigger, offer more features for roughly the same money. The way Honda is going the day may not be far when we in India will be paying Accord money for a new Civic and C-class money for an Accord.

Suddenly Toyota products seem like such value for money. I guess slow and steady does win the race.

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Originally Posted by CBlazer View Post
It is very strange that with over 70% localization, Honda prices the car at over 8L OTR Bangalore. Add to it the fact that it enjoys a lower excise duty advantage. It only shows that Honda is charging a hefty premium for the car.
There are three ways to go for a car company with the savings from the excise cut. 1. Cut the price 2. Offer a lot more features for the money (like the i20) 3. Do nothing because you think you are the cat's whiskers (like the Jazz).
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Old 28th May 2009, 16:14   #244
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Lets suppose Honda prices the Jazz at 7.3Lakhs OTR Mumbai. Was quoted an approx figure of 7 to 7.5 OTR by the dealer. So what you really get for a difference of 2.5Lakh, compared to the City S, is a Honda City feature to feature in addition to a stupid CD player, but without the huge boot. (Not to forget the creamy 1.5 ivtec, the gorgeous looks, and the so called snob value of the sedan).

Honda as we know is charging a premium for the City, but I think if priced at 7L on road Mumbai, it would appeal to a set of niche buyers - those who want to upgrade to a premium Honda hatch and those looking for a 2nd or 3rd car for the family.

Just my 2 cents!
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Old 28th May 2009, 18:58   #245
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Hm.do not know if the case can be made for the Jazz as welll at this price. After all there is a math behind the price for this car, its not a arbitrary pick from Honda. Why would the Jazz be priced at this number? Lets try to look.

1. The Jazz shares the platform with the city and so the component manufacture cost per item (production or procurement) will be the same on the shared parts so that forms the bulk of the basic price.

2. Since the platform is the same the basic platform parts cost (like what it takes to build the chasis for the same wheel base, etc) will be the same. So some cost inline with the city can be added up

3. Same level of localization with the city, again same cost numbers

4. The only difference b/w the city and the Jazz is the mill, the power train and the chasis length, also substantial changes in the drive mechanisms.

So all in all a total difference of approx 20% from the city.

now if we look at the cost of the Jazz as 80% of the city price then it works out to be the same. What about the benefit on the 1.2 mill? Well, the R&D cost of "Indianization" a 1.2 needs to be accounted somewhere, right? Also how much is the Tax sop? is it not already factored in the cost. I guess so.

Now assuming some how (just for the sake of argument) the price is justified. What do you get when you buy a Jazz?

1. A hatch back that is unlike others in terms of drive experience and interior space. There is no other car that can match this in this segment (not even the sedan's which cost the same)

2. The Honda quality and reliability. It matters once you buy and car and use it. One can not feel the difference on paper or in a discussion on this, but who can dispute the quality of refinement and care-for-detail when you drive a say City and any other sedan in the same space?

3. The acceptability of the car. The car is not just of its features. The overall feeling about the car is not a sum total of the features (just an example on the lighter side: any body here who is married I guess agrees with me that the acceptability or the liking to you wife/GF is not a sum total of the height, weight, skin color, intelligence, cuteness etc of your better half. Its much more than that, and its also subjective). In that sense, even the city despite all the cry for being low of VFM is selling hot. The same applies to the Jazz.

4. The opportunity cost, if not Jazz then what? Do you loose a premium because it was expensive considering the term of ownership one has in mind when buying this?

5. What is you always wanted a City, but not as big as a City but still everything else remained the same? Would the prayers of these guys not be answered?

I am not batting for the Jazz, its a nice car in its own way and well it might not be a student car in India (a lot cars in India which are prized possessions are actually student cars or cheap taxi elsewhere so this not a right comparison) nevertheless the point is will you buy if you have the means to buy it, and if you will not will you feel you missed it?

I am planning for my second car and this is my thought, I want a nice car to drive in the city not a big one, but something that is as good in terms of the drive pleasure that a big sturdy car would offer but made sense for city dynamics.

The swift is old, Tata is out, Fiat the small car is just a super engine in a badly built car, Fabia forget Skoda, I20 all is well except the power (you can feel it on a long stretch), GP well - total feel of the car sturdy but not as smooth as the City (so Jazz I assume), Polo - cabin size and seating no match to the city platform. Ford and GM not at the moment not sure where it will be in a years time, have a left any other competitor?

All in all, I am not bothered about the "who will beat whom" in the sales figures, but what I will be more comfortable in driving. So if you get what you need is money really a problem?

(By the by I have driven the Polo, its bother Golf in Germany and so can say with experience. I own a Indica, Fabia TD 5 times all different variants, I20 TD twice on 2 different crowd combinations and my brother owns a Swift).

IMHO, Honda might not be way off mark with both the product and the price!

Comments welcome (I one stop then anyways )
- Harish.
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Old 28th May 2009, 20:19   #246
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Woop...

Quote:
5. What is you always wanted a City, but not as big as a City but still everything else remained the same? Would the prayers of these guys not be answered?
What is the difference between a 1.5L and 1.2L Engine?
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Old 28th May 2009, 21:16   #247
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Originally Posted by man_and_machine View Post
1. The Jazz shares the platform with the city and so the component manufacture cost per item (production or procurement) will be the same on the shared parts so that forms the bulk of the basic price.

2. Since the platform is the same the basic platform parts cost (like what it takes to build the chasis for the same wheel base, etc) will be the same. So some cost inline with the city can be added up

3. Same level of localization with the city, again same cost numbers

4. The only difference b/w the city and the Jazz is the mill, the power train and the chasis length, also substantial changes in the drive mechanisms.

So all in all a total difference of approx 20% from the city.

now if we look at the cost of the Jazz as 80% of the city price then it works out to be the same. What about the benefit on the 1.2 mill? Well, the R&D cost of "Indianization" a 1.2 needs to be accounted somewhere, right? Also how much is the Tax sop? is it not already factored in the cost. I guess so.

Now assuming some how (just for the sake of argument) the price is justified. What do you get when you buy a Jazz?

1. A hatch back that is unlike others in terms of drive experience and interior space. There is no other car that can match this in this segment (not even the sedan's which cost the same)

2. The Honda quality and reliability. It matters once you buy and car and use it. One can not feel the difference on paper or in a discussion on this, but who can dispute the quality of refinement and care-for-detail when you drive a say City and any other sedan in the same space?

3. The acceptability of the car. The car is not just of its features. The overall feeling about the car is not a sum total of the features (just an example on the lighter side: any body here who is married I guess agrees with me that the acceptability or the liking to you wife/GF is not a sum total of the height, weight, skin color, intelligence, cuteness etc of your better half. Its much more than that, and its also subjective). In that sense, even the city despite all the cry for being low of VFM is selling hot. The same applies to the Jazz.

4. The opportunity cost, if not Jazz then what? Do you loose a premium because it was expensive considering the term of ownership one has in mind when buying this?

5. What is you always wanted a City, but not as big as a City but still everything else remained the same? Would the prayers of these guys not be answered?
Harish, just a couple of points that to me make the price feel a little exorbitant -
AFAIK the jazz is based on the NHC platform and not the ANHC. I think, and I maybe wrong, the latter is an all new platform. The advantage of sharing a platform is cost savings. So the more you make the cheaper it should be per unit.
Also I thought that the 1.2 vtec engine was developed specially for India but I later discovered they sell it in the UK as well. So the cost is amortized over two markets. I really doubt there is something spectacularly different about the engine they plan to sell here.
Lastly, the issue is not so much the price but what you get for the money. Let's take a car that Honda sold here for 8.5-9l in India - the NHC Vtec+. If they could afford to give alloys, foglamps, excellent interiors, airbags/ABS in that price, why can't they do the same with the ANHC for the money they are asking? And following from that, for the price, why can't the Jazz offer things like fogs and alloys when they get an excise cut to boot? I could understand getting a stripped down feature set if they sold it with a bigger engine and didn't attract the cut.
Mind you, both the Jazz and ANHC are global models so it's not like only India is going to pay for Honda's development costs - but it sure feels that way

Last edited by StarScream : 28th May 2009 at 21:18.
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Old 28th May 2009, 23:19   #248
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Well, India is not the only country where the price of the basic version of Jazz is priced at around 7 Lakhs. The Jazz 1.2 engine in UK Which is the S variant. The price is 9,990 pounds (from the official Honda website). Just simple math, today's ex-rate is 75.82 Rs to a pound. So the cost works out to be 7,57,441.8 which I guess is around what is talked about in India. There is the concept of Purchasing Power Parity which actually makes this equation more better ( I mean the car more cheaper in India).

This S model in the UK also does not come with Front Fog lamps and Alloys So I do not see the pricing in India as a "bleed India concept".

Well, there are some features in the car like side curtains etc, which I am not sure is due to Local regulations (sort of a necessary evil ).

So Jazz India well, does not seem of track .. Your thoughts ??
- Harish.
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Old 29th May 2009, 05:31   #249
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Originally Posted by man_and_machine View Post
There is the concept of Purchasing Power Parity which actually makes this equation more better ( I mean the car more cheaper in India).

Your thoughts ??
Cheaper in India? The Avg salary of the same job profile in UK is about 3-5 times more than what you get in India!

Interestingly the car is targeted at a class of people who's annual salary would be slightly more than the price of the car itself.

UK's Minimum wages are more than that, how does it compare?
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Old 29th May 2009, 09:47   #250
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Originally Posted by wildon View Post
Woop...



What is the difference between a 1.5L and 1.2L Engine?
Old 1.5 used to give 77bhp , the new 1.2in Jazz give 90bhp, i guess the platform is based on the old Honda City ZX
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Old 29th May 2009, 10:11   #251
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Originally Posted by SLK View Post
Cheaper in India? The Avg salary of the same job profile in UK is about 3-5 times more than what you get in India!

Interestingly the car is targeted at a class of people who's annual salary would be slightly more than the price of the car itself.

UK's Minimum wages are more than that, how does it compare?

Wow! Great thought!
totally agree on this point.

One more thought slightly
Why blame HONDA for our miserly salaries!
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Old 29th May 2009, 10:33   #252
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The question is to see if there is a segment (niche or what not) who will buy such a car. I dont think average hatchback buyer would look into buying this at all.
. The same people might not have looked into a i20 or a Fabia or a Punto. (I wouldn't). My wife was interested in getting a auto tranny and I hope they will launch one.
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Old 29th May 2009, 10:33   #253
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MAn, PPP definitely is against the Jazz being priced at 7.5L. 7.5 L is a lot more in India compared to the 9990 GBP in UK. So PPP actually works against Jazz in India.

More over what you have not considered is that the markets are totally different. Indians dont view hatch backs the same way as the Europeans or AMercians do. I mean in India Sedans always carry greater value among consumers while internationally sedans and hatch backs could be priced the same.

I also feel that 7.5L OTR might be an OK price, but 7.5L ex showrrom is a real no for a car that is not - so great looking, feature laden and powerful as we want it be


Quote:
Originally Posted by man_and_machine View Post
Well, India is not the only country where the price of the basic version of Jazz is priced at around 7 Lakhs. The Jazz 1.2 engine in UK Which is the S variant. The price is 9,990 pounds (from the official Honda website). Just simple math, today's ex-rate is 75.82 Rs to a pound. So the cost works out to be 7,57,441.8 which I guess is around what is talked about in India. There is the concept of Purchasing Power Parity which actually makes this equation more better ( I mean the car more cheaper in India).

This S model in the UK also does not come with Front Fog lamps and Alloys So I do not see the pricing in India as a "bleed India concept".

Well, there are some features in the car like side curtains etc, which I am not sure is due to Local regulations (sort of a necessary evil ).

So Jazz India well, does not seem of track .. Your thoughts ??
- Harish.
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Old 29th May 2009, 10:38   #254
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Originally Posted by schitre05 View Post
One more thought slightly
Why blame HONDA for our miserly salaries!
Because, they make the car here in India. They pay the workers and all their employees as per Indian standards, and then they charge the same amount as they do in UK.

Indirect taxes in India are more, mainly due to double taxations. But the cheap costs compensate for the same.

I don't see the reason for such pricing in India but if I were to speculate . . .

These companies target earning a certain amount of profit, and since there are not too many buyers in India for these cars [read anything over 5-6L] they got to squeeze that profit out of those limited number of cars that they sell.

Last edited by SLK : 29th May 2009 at 10:43.
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Old 29th May 2009, 12:51   #255
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MAn, PPP definitely is against the Jazz being priced at 7.5L. 7.5 L is a lot more in India compared to the 9990 GBP in UK. So PPP actually works against Jazz in India.

More over what you have not considered is that the markets are totally different. Indians dont view hatch backs the same way as the Europeans or AMercians do. I mean in India Sedans always carry greater value among consumers while internationally sedans and hatch backs could be priced the same.

I also feel that 7.5L OTR might be an OK price, but 7.5L ex showrrom is a real no for a car that is not - so great looking, feature laden and powerful as we want it be
Not really. Let check this out.

Lets first do a GBP - INR comparison and later derive the PPP out of it.

My case study is 2 IT guys one in the UK and the other say in Banglaore 3 - 5 years exp.

1. UK : Avg UK salary 36,000 GBP PA
2. BLR: Avg INR 10,00,000 PA

On the currency comparison PM it turns out to be 2,34,00 in UK and ~ 75,000 INR. Meaning on a currency conversion basis PPP of INR to GBP is 1 : 3 (remember this number lets call this NO 1). Now this is not the true picture as we now need to consider what these two do with this money in their respective lands.

Rent for a 1 BHK in UK (taking my cousin's data who is onsite in UK ) 750 GBP = 58,000 INR. Our BLR guy can get a same or may be ever better house at 10,000 INR. So PPP of 1 INR = 5.8 GBP.

This can not be always true as there are other factors that affect the PPP like for instance if you consider the basic cost of a loaf of bread it b/w .3 to .4 GBP (b/w 25 - 30 INR) which in Bangalore would be b/w 10 - 15 INR. So here the PPP would be 1 INR = 2 to 2.5 GBP.

Similarly fuel prices .998 or 1 GBP per litre of Petrol and in BLR 45 INR again PPP of 2.

It does not end here you can compare the purchasing power in many other angles, like cost of electricity, mobile rentals, airline prices etc.

So based on the various different geo - social - political influences you can avg the PPP to be around 2.5 to 3.

Meaning that the 1 GBP = 2.5 ~ 3 on practical cost of living basis. Comparing this with our ( NO 1) (please see above) Bingo! we have currency conversion factor and PPP to be almost the same 3

So the 9,990 GBP in UK and the 7.5 L in India for the Jazz on either PPP basis or the currency conversion basis are the same

But, did I not say that the with the PPP the India consumer benefits, its true, how? well, so far we have assumed the Income of our UK and our BLR friend to be pre tax, the big difference is here. The net take home (either in currency conversion basis or PP basis) is more in BLR than UK as the tax rates in India (~ 35 is 30% lesser then the 50 in UK) thats a HUGE gain. Meaning with our BLR guy at the end of the day has more money to spend (or the net EMI for the Jazz will hurt less post tax) than our UK fellow.

Coming to the other aspects of Hatch back v/s sedans and the way Indians look at it etc. Well, when by Dad had an Ambassador and we first saw the 800 (in the late 80s)the same with the boot and w/o the boot perception was still there! but then see what 800 did to India. it took many years may be, but then change is faster today that it was in the 80s.

So I am not sure if Jazz is really out of race even before it stats to run, I guess it will be a contender to reckon with!

Lets wait and watch

- Harish.
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