Is the Honda City overpriced? NOPE, I don't think so!

[GTO]

I'm quite intrigued by posts that comment on the ANHC being overpriced. On the one hand, you have some members who feel that the City has an inflated price tag. On the other, it is outselling its direct competitors, including those that come with a diesel engine! Clearly, the Indian market sees tremendous value in the Honda City. Yes, I will agree that the Jazz is overpriced, terribly at that, but in my books, the City is still the definitive all-rounder C segment sedan. And one that offers value. Of course, I'll be the first to say that Honda MUST sell the city with alloy wheels, climate control and a better grade of interior plastics. But by no means is it a car that is "glaringly" overpriced.

Lets talk FACTS here and look at the ANHC objectively. Consider the pricing of the ANHC to its direct competition, the SX4 / Verna / Linea. Any informed car buyer, and ALL Team-BHPians, MUST always choose the variant with ABS & airbags. The safety benefits are invaluable, especially when driving in Indian road conditions.

Prices of first-available variant with ABS & airbags (ex-Delhi):

Honda City : 8,37,000
Maruti SX4 : 714,129
Hyundai Verna : 713,316
Fiat Linea : 723,991

Now, lets look at the equipment list. I've enlisted the typical features that matter:



ANHC : It is the "SMT" variant that comes standard with ABS, Airbags, drivers seat height & stereo.

SX4 : The variant with drivers seat height adjustment, airbags, ABS & stereo etc. is the ZXi.

Verna : The variant with keyless entry and ABS is the 1.6 SX VT. No airbags for the petrols at all! Does Hyundai think that petrol car owners don't value safety?

Linea : Variant with ABS & airbags & stereo is the Emotion PK. It must be added that Fiat rules the list with the goodies. You also have rear foot & knee aircon vents, rear curtain, blue&me etc.

Now, the most obvious equipment that the ANHC lacks are alloy wheels followed by climate control. To me, alloy wheels are more important than climate control. Cost = Rs. 18,000 for a set of 5.

On the other hand, what advantages does the ANHC offer, relative to its competition?

- The most powerful engine: A whopping 25% more power than the least powered competitor (The Linea) and about 15% more than the SX4 & the Verna. In addition, you get technology (iVtec), the BEST 0 - 100 times (10.xx seconds) and highest top speed. The Linea is the poorest performer here with a 0 - 100 time of 17.xx seconds.

- The best fuel efficiency: The ANHC is decided more fuel efficient than any of its 3 chief competitors, and nearly 15% more than the Verna. Of course, it is the lightest amongst competition too.

The lowest cost of ownership: The City's service costs vary between 600 - 1,500 bucks for most services, and go upto 5,000 only for the major services (4 - 5 times over 1 lakh kms). In an ownership of 1,00,000 kms, the City will be the cheapest to own by a mile. This is documented in several threads across the forum, Hondas have the cheapest upkeep.

The best reliability: Honda's reliability is way superior to any of its competitors, only the Verna comes close. The SX4 is built like the Swift (not a good thing) and while reliable overall, isn't quite in the league of a Honda or Toyota. Fiats come with their own share of niggles. My own OHC is now in its 7th year with 70,000 odd kms on the odo, yet visits the service station ONLY once each year for scheduled maintenance. Not a single major component has malfunctioned till date. Zero breakdowns too. Worldwide too, Honda's reliability is matched only by Toyota.

Excellent resale: Only the SX4 can match the Honda City in residual values. The Fiat Linea will tank in the after-market, ask me, I know a thing or two about European petrols which have fuel-efficient diesel siblings. The Verna petrol is a market flop.

It is safe to presume that if you own the car for 50,000 - 1,00,000 kms, the City's initial asking price premium of 1.2 lakh rupees is entirely negated by its reliability, cheap ownership costs, segment-best fuel efficiency and strong resale. Heck, bring the poor resale of some of its competition into the picture, and the ANHC may actually work out cheaper!! Remember, there is more to the cost of car ownership than just the asking price. A 1.2 Lakh premium, that is more than recovered (relative to the Verna & Linea), well worth it IMHO. And then, you have those additional horses to enjoy.

Lets look at the other factors that make a car:

- Performance : City > SX4 > Verna > Linea

- Fuel efficiency : City > SX4 > Linea > Verna

- Ride quality : Linea > City > Verna > SX4

- Handling : Linea > SX4 > City > Verna

- Interior space : City > Verna > SX4 > Linea

- Looks : Linea > City > SX4 > Verna (purely my opinion)

- Overall Fit / Finish : City > Verna > SX4 > Linea

- Features : Linea > SX4 > City > Verna

- Brand (for those whom it matters to) : City > SX4 > Verna > Linea

NOTE : The City comes with only a 175mm tyre size from the factory (thinner than SX4 & Linea). Upgrade the rubber to 195mm Michelins and it will take the 2nd spot in the handling stakes.

Interior part quality : Neither the City, nor the Linea or the SX4 have anything to write home about. Yet the Citys & Vernas are best screwed together of this bunch.

As you can see, the City excels in most areas, is mid-pack in some, but doesn't have any one serious deficiency. That's what makes it the most all-rounded C segment sedan (petrols) and the best seller from its direct competition.

P.S. Yes, I am a Honda and Toyota fan. Not based on their image or promotions, but on first hand experience with their products. I respect Toyota even more than I do Mercedes Benz (something that changed as my automotive knowledge grew). The reason : organisational philosophy, engineering precision, unmatched reliability & durability, all rounded products and efficiency. To finish first, you have to first finish.

[RacingStripes]

GTO, good analysis. But with the new linea 1.6 MJD and 1.4 T-Jet expected to arrive in the last quarter aof 2009 and 1 quarter of 2010 respectively, it will be the battle of the titans. In fact Linea might just have an edge!

[GTO]

Originally Posted by RacingStripes

GTO, good analysis. But with the new linea 1.6 MJD and 1.4 T-Jet expected to arrive in the last quarter aof 2009 and 1 quarter of 2010 respectively, it will be the battle of the titans. In fact Linea might just have an edge!

The Linea is anyways the best diesel C segment (IMHO). We are discussing petrols here.

[pmbabu]

GTO, thank you very much for providing the most balanced perspective of things that drives the success fo City and how the premium (in price) and value offered match against each other.

3 items that were missing in NHC are now available in ANHC - awesome looks (in my opinion), best power in class and good safety features across all variants.

Among the items that it carries forward (from its old generation NHC) is the interior SPACE. Based on my experience/observation - there is no one who packs better space inside the car better than Honda.

As for FE, well there are hatchbacks that return much less mileage than my NHC

Within the city, at parking speeds, it has got the best (read as light) steering and small turning radius - something that is a whole lot useful within the city where most of the usage is (for average customer).

Of course, the reliability - most of the Honda owners visit service centres for the scheduled service or dent removal and nothing else. There are no things that are falling apart (plastics or mechanicals), no nut/screw/bolt that has gone loose, no handbrake jamming the brakes, no oil leakage, no creaks - I can go on. There are hoards of such stories against competition cars which sell much less in number (compared to City) but report all those problems.

One of the problem spots with City is the low GC - but seems like there are more cars that have this problem now, not just Honda.

Well, yes, I am a NHC owner and a potential future customer of ANHC to upgrade my NHC.

[tanwaramit]

nicely summarized by GTO on Honda and the last line sums it up for Toyota too. I too am a big Toyota fan and want my next gaadi to be a toyota only. But that will come in some time.

Also many of the people here are comparing prices since OHC till ANHC, however note that the features have changed, engine has changed, interiors have changed + yen has appreciated and in our country too prices have increased in these 10 years.

And yes, they do charge a premium for the benefits as outlined by GTO above, however City is decently priced when you compare to Jazz in India.

[RacingStripes]

@GTO,
I meant the 120 bhp T-Jet.

[GTO]

Originally Posted by RacingStripes

@GTO,
I meant the 120 bhp T-Jet.

Lets wait for it to come . Too many ifs & buts. What counts is what is offered today. And if insider sources are to be believed, Fiat is going to focus (rightly so) on the 1.6 diesel.

[iTNerd]

Originally Posted by GTO

Prices of first-available variant with ABS & airbags (ex-Delhi):

Honda City : 8,37,000
Maruti SX4 : 714,129
Hyundai Verna : 713,316
Fiat Linea : 723,991

Now, lets look at the equipment list. I've enlisted the typical features that matter:

Yes, your analysis is spot on.

[benbsb29]

GTO, when comparing the C segmenters, why was the Fiesta left out? It may be short of interior space, but the goodies it packs along with the S variant make the others feel overpriced.

[mkc15]

@GTO, neat analysis on the City-09. I'm curious to know your analysis on New Civic pricing as well.

Overall, looks like not many are interested in civic these days!

[vasudeva]

Originally Posted by GTO

I'm quite intrigued by posts that think the ANHC is overpriced. As you can see, the City excels in most areas, is mid-pack in some, but doesn't have any one serious deficiency. That's what makes it the most all-rounded C segment sedan (petrols) and the best seller from its direct competition.

This is all largely true. However, let us consider the fact that the higher the premium of Honda over others, the lower will be the number of people who will see value in paying that premium. For example, if City was priced at the same value as Fiesta, SX4, Verna etc; then perhaps the latter car models would soon be out of production.

City can command a premium because of various factors. However, if the premium is too high and increasing (as it is), then the marginal customers will see no VFM in paying a higher price and the hooked customers will perhaps see a reduced value in paying a premium.

Anyway it will all become clear from Nov 2009 (when the festival season effect plays out).

[pmbabu]

Originally Posted by amit

- The Verna is a good 33,000 LESS then City petrol while the Linea is roughly costing the same. One can say that a person looking at petrol will not look at diesel's but is that how buyer's think? If someone can get a diesel for 30K more and save on fuel efficiency and tanking up everytime he visit's the fuel bunk then he could consider diesel's seriously isnt it?

- Bring diesel savings into the picture and Honda's better resale can be covered by the diesel savings over the years considering that you wouldn't have to spend too much initially to get a diesel. To add to it, with the Linea diesel, you actually get more features then the City.

Amit, if we take Fiesta into comparison too, the Fiesta 1.4 Duratorq ZXI starting from Rs. 7.37 Lakhs (ex-showroom Delhi) is even cheaper. Still City oversells it.

I don't know but I feel there is something more to Petrol vs. Diesel (other than price).

[pmbabu]

Originally Posted by iTNerd

Yes, your analysis is spot on.

I would add "as always" to that sentence!

[vasudeva]

This is a recent article on Honda’s Product plans

It may stretch the model cycles of some of its vehicles by a year as part of a global cost-cutting program. Honda is targeting $4.3 billion in cost reductions for 2009-10 fiscal year, so lengthening some product cycles could ease that pressure. Honda has also dropped plans for a US diesel, preferring to focus on hybrid electric powertrains.

Honda's product plans for the 2010-12 model years.
Electric vehicle: Honda will unveil a battery electric prototype in October at the Tokyo motor show that will evolve into a production electric vehicle. The subcompact vehicle will be on sale by 2015.
Civic: A redesign is due for the 2011 model year, putting the Civic on Honda's standard five-year cycle. The car is based on a global platform, so the redesign will stay on the five-year cycle.
Accord: A midcycle freshening is expected for the 2011 model year, and a redesign is due in 2013. But because the platform is specific to North America, Honda could extend the Accord to a six-year cycle without having an impact on the global platform strategy.
CR-V: The compact crossover is expected to be freshened for the 2011 model year and redesigned in 2013.

[CBlazer]

Originally Posted by vasudeva

This is all largely true. However, let us consider the fact that the higher the premium of Honda over others, the lower will be the number of people who will see value in paying that premium.

I agree. I'm pretty unhappy with the way Honda goes about skimping on features, just because they can command the kind of premium. Forget ACC, alloys or fog lamps. It took them one year to re-launch the City SMT with better quality interiors. I'm sure they didn't need customer feedback to launch a car with good quality interiors in the 8-9L price point.