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Old 4th March 2010, 07:14   #1
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Default Honda JAZZ, FEB-2010 Sales 233. What's the way Forward for HONDA ?

Dear Bhpians

Honda has been ruling the world of "petrol sedans" in India for over a decade.
They have remained undisputed king of p-sedans with various versions of city. We can't be naive to think they do not understand Indian market / psyche etc. etc.
But nevertheless something ( or everything) went miserably wrong with their product planning in case of Jazz. There ought to be more than one reason and each one need to be addressed by the company to remain in business of the most happening car segment -HATCH
My purpose of starting this thread is to gain from collective wisdom of T-Bhp the insight into car business of India, what many internationally reputed brands fail to fathom.
My 2 paisa to begin with
1. Inappropriate Pricing
Possible correction-load with goodies at the current price or bring strip down version.
2. Improper assessment of customer need
Correction ?? new hot hatch(I am not sure of this)

Please contribute here as we have been doing regularly in different threads for this topic.
cheers
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Old 4th March 2010, 07:27   #2
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I think the unanimous opinion here is that the Jazz is priced out of its own market.
honda seems to have gotten a bit complacent with the roaring success of the City (in all its guises) and overlooked the fact that they were entering a new segment.
Yes, the sales figures say that roughly 50% of c segment sedan buyers put their money on the city - but you have to bear in mind that 'in general' sedans are considered premium over even their own hatchback siblings.
With the Jazz, hondawas probably hoping the same magic would apply but the market (with a few exceptions) proved them wrong. The concept of premium hatchbacks still hasn't quite settled into the indian market and these salses numbers show that the honda badge can't command a premium across segments.
Moreover- the hatchback segment is clearly more competitive, whereas the City has limited competition.
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Old 4th March 2010, 07:58   #3
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The most obvious and unanimously agreed reason is - Price. It is not just over priced, it is hugely over priced by atleast 1.5Lakhs.

I think there is a market for premium hatchbacks provided the price and the features match. By premium, it still has to be VFM for what it offers not charge a premium just for marquee.

Jazz at current price would have found more takers if it had offered the same Honda City engine and came with Auto.

Honda City Auto is 10.5 - 11L OTR, while Jazz with same engine and transmission at 8- 8.5L OTR makes wonderful case for people some wanting a premium auto hatch to opt in for Honda Jazz.

Honda plonked a 1.2L engine for reasons of better FE and excise benefits and yet they price it high that it negates the reason for wanting a fuel effecient hatch as one pays a huge premium upfront for this. Why excise benefits were not passed on to customers or does it mean if not were excise benfits Jazz would have been priced even higher.

When Ford, VW and Hyundai can offer VFM products, Honda can/should do, the fact that Honda cars reeks of quality doesnt hold much water here.

The fact that Honda totally ignored the Fusion case, shows how confident they were about 'How anything Honda would sell in India'.

In its current positioning, its meant for wealthy families needing a 2nd or 3rd car for running errands, dropping kids to schools or for wives,elderly at home. If thats the market Honda is looking, then Honda should be ok with the numbers. If they had targetted this at mass market, hoping 1st time buyers would pick this over other
hatches, sorry Honda, we would rather buy an i20 or Punto or Polo.

Last edited by rajivn : 4th March 2010 at 08:15.
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Old 4th March 2010, 08:12   #4
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Quote:
Originally Posted by rajivn View Post
Honda City Auto is 10.5 - 11L OTR, while Jazz with same engine and transmission at 8- 8.5L OTR makes wonderful case for people some wanting a premium auto hatch to opt in for Honda Jazz.

Honda plonked a 1.2L engine for reasons of better FE and excise benefits and yet they price it high that it negates the reason for wanting a fuel effecient hatch as one pays a huge premium upfront for this. Why excise benefits were not passed on to customers or does it mean if not were excise benfits Jazz would have been priced even higher.

When Ford, VW and Hyundai can offer VFM products, Honda can/should do, the fact that Honda cars reeks of quality doesnt hold much water here.


The fact that Honda totally ignored the Fusion case, shows how confident they were about 'How anything Honda would sell in India'.
the city engine + auto option would probably have helped sales. I can see two potential problems though
1. There would be a danger of cannibalisation of the city' sales.
2. Not sure if its is actually that much cheaper for honda to produce the city once the larger engine & transmission is accounted for.

Good point about the fusion example. Another case in point is the fabia. Both these cars also proved that downward price corrections don't really help. Once the perception of an overprices car has been built its very hard to shake off.

Any perception actually. Like the original palio's bad f.e or ford's expensive after sales.
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Old 4th March 2010, 08:58   #5
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Honda should definitely put the 1.5 VTEC into the Jazz and increase the price accordingly. People who are willing to pay for a so-called "premium" hatchback dont want to be stuck with an underpowered car.

There is a huge gap at the top of the "premium" hatch range. None of the new range of hatchbacks produces 100bhp, especially since VW and Fiat both abandoned their turbocharged engines for the Polo and Punto respectively. If the Jazz had 118bhp, there are many who would choose it over cars like the SX4, Verna, Fiesta, Linea, Innova etc.
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Old 4th March 2010, 09:57   #6
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Quote:
Originally Posted by swale84 View Post
the city engine + auto option would probably have helped sales. I can see two potential problems though
1. There would be a danger of cannibalisation of the city' sales.
2. Not sure if its is actually that much cheaper for honda to produce the city once the larger engine & transmission is accounted for.

Good point about the fusion example. Another case in point is the fabia. Both these cars also proved that downward price corrections don't really help. Once the perception of an overprices car has been built its very hard to shake off.

Any perception actually. Like the original palio's bad f.e or ford's expensive after sales.
I agree about the price correction not working. It will not only make the initial customers fell they were cheated, the now ones will wait for the prices to drop further, like in mobile phones. If Honda is unhappy with the sales they should stop production and launch a made for India hatch around the 5-7lac mark for real world acceptance or just leave the hatch market for those who understand it better.
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Old 4th March 2010, 10:19   #7
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Pricing is the key.
When have honda competitively priced their products? Didnt they do the same with city?.

I would or any one would prefer to choose a sedan over hatch if available in the same price.

What is the use of pricing the Jazz at 8L range when Fully loaded punto i20 petrol are available in 6-7L category.

It is a shame on honda to think that people will buy anything with their badge.

When the same jazz is available abroad at much lower price why should they hike the price despite the localisation of spares here.

Mind you Spares are also out of the roof priced!!
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Old 4th March 2010, 10:22   #8
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in addition to the points above , i personally think its the styling thats affecting sales . Just like the Fusion , the Jazz is not your typical Hatchback design. Good engine , good brand image , amazing space and practicality, decent A.S.S costs, premium tag compared to other players ...... these points apply to both models , yet they cant change our India buyer and his neighbours saying " It doesn't look like a car " .
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Old 4th March 2010, 10:25   #9
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I think the Jazz was launched keeping a completely different category of people as customers.
Second, there is some strategy, which many don't understand, including me, when a manufacturer is happy when he gets a targetted number on the sales chart.

IMO, not all cars need be fire setters, some are dampners and others are just bad positioning. But, with the Jazz, the latter seems more true. A discount or anniversary celebration announcement might clear the air.
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Old 4th March 2010, 10:36   #10
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premium hatchback? what is so 'premium' with jazz? Magic seats?
Honda got what they asked for - exclusivity. Seldom do I see a Jazz on road here.
I agree its a great driveable car, but that alone does not justify commanding a price so high. Cut prices by 1.5 - 2 lakhs, and then see the 'magic' of Jazz.
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Old 4th March 2010, 11:23   #11
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if you even just for the sake of hatchbacks compare the strategy utilized for polo and Honda jazz. you can clearly see what has gone wrong with jazz.

1) Honda never thought to pass the duty benefits of the 1.2 ltr engine.

2) they have only one variant which comes with airbags and abs standard. look at volkswagen polo. trendline, comfortline and highline. they have different variants at different prices. some with and some without safety features. this affects pricing.

3) at the end of the day. the honda city new or the old was based on the jazz. the chasis and the frame after all is from the same platform for both cars. this adds to the cost. honda cannot reduce it even if it wanted to.

4) there is hardly localization of parts. most of the honda parts which are vital for running are imported from japan. so addition of cost again hurts the pricing.

5) yen - rupee has become more volatile and yen has appreciated more than they can chew on. so a deliberate high pricing is done to cover extra rise in the yen etc.

6) from the start they knew about the product pricing, so they kept it low profile and even said that it would sell in low numbers and it was just a niche market which wanted such hatches.
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Old 4th March 2010, 11:40   #12
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Quote:
Originally Posted by theEnd View Post
Honda should definitely put the 1.5 VTEC into the Jazz and increase the price accordingly. People who are willing to pay for a so-called "premium" hatchback dont want to be stuck with an underpowered car.

There is a huge gap at the top of the "premium" hatch range. None of the new range of hatchbacks produces 100bhp, especially since VW and Fiat both abandoned their turbocharged engines for the Polo and Punto respectively. If the Jazz had 118bhp, there are many who would choose it over cars like the SX4, Verna, Fiesta, Linea, Innova etc.
I don't think the 1.5 Vtec will help improve Jazz sales. Although the auto box with the paddle shifters would have been ideal. I have heard more than 5 people say they were very impressed with the Jazz and would have bought it if it came with an auto box.
Most buyers of premium hatches are from the cities, living in appartments where parking space also comes at a premium. This segement is only going to grow in only one direction (UP) !

Quote:
Originally Posted by Caramelo View Post
they have only one variant which comes with airbags and abs standard. look at volkswagen polo. trendline, comfortline and highline. they have different variants at different prices. some with and some without safety features. this affects pricing.
Honda has said all their vehicles will come with safety as standard. There will be no model without ABS, Airbags & G-CON as standard fitment.

Last edited by fiat_tarun : 4th March 2010 at 11:42.
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Old 4th March 2010, 12:40   #13
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From what i can see Honda is having a hard time and is now solely relying on the Honda City for its profitability.

All other models are in trouble: Jazz is a flop, Civic is now No 3 in its segment (500+ against 863 for corrolla and 762 for cruze) , even Accord (200+) and CRV (125+) are languishing.

They may have their back against the wall but the way i see it.. the have the plenty options ahead of them, Which are:

1. Revise pricing of the Jazz
2. Introduce the CDTi range of diesel engines for Civic and above Models

3. Swarm the market with small cars (like its planned India small car as well as 'Life' or 'Zest')






3. Introduce body derivates of the civic and accord (coupe, stationwagon, crossover)
4. Introduce new mid range models like the Freed and Odyssey




5. Import higher models like CRZ, Pilot, Insight, Elysion, Legend or even the Acura Series as CBU

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Old 4th March 2010, 13:31   #14
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<<Mind you Spares are also out of the roof priced!!>>

The cost of exhaust pipes come around 20k.
Honda cannot ride the same way as they do now. To compete successfully in India they have to do a study on product pricing and rollout cars with diesel motors.
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Old 4th March 2010, 16:16   #15
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May be Honda can add a small boot to the Jazz and improve their sales. I don't think people would mind, even if the boot is dis-proportioned.
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