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Old 14th June 2011, 14:06   #1
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Default Honda India slashes the City's price by Rs. 44,000 - 66,000!

High Points:

- Related Discussion on Honda India (a SWOT analysis) : The Way Forward.

- Honda today announces a new price structure for the City. These prices will be effective from June 14, 2011.

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- The benefit in on-road price will be even greater, as the road tax & insurance will be cheaper too (vis a vis older on-road pricing).

- Obviously, it's competitive pressures & the disadvantage of not having a diesel variant at play here. My take? BRILLIANT move. This is the first time in history that the Honda City has gone through a price cut. I have always insisted that the City is the most all-rounded petrol sedan one can buy in the C segment; the new prices will only expand its appeal. I strongly recommend Honda to cut the price of the Jazz as well. The market doesn't have any problem with the otherwise brilliant hatchback, except for its price. Repositioning is also required with the Civic (or perhaps, price the upcoming new gen Civic more competitively) and the Accord (better equipment + that 2.2L diesel!). Honda has no other choice if it wants to claw back marketshare.

- Interestingly, and defying trends, it's the base variant that has the fattest price cut. A strategy for volumes.

- In a way, Honda has just made official the discounts that its dealers were already offering. In the last quarter, discounts of upto 50K were not uncommon. Question is, will dealers offer a further discount on the new ex-showroom prices?

- Expect all future launches, especially the Brio, to be well-priced. Competition is a wonderful thing!

Here's a post why I think it's brilliant:

Originally Posted by GTO View Post
- Honda has been extremely stubborn about its pricing. If anything, the prices only go up with time (e.g. in the case of the Civic). This is the first time that Honda has cut prices of the City, and I'm sure there was a royal tug of war amongst the decision makers. Brilliant are those who pushed for a price cut within the Honda ranks, and finally got their way. If you know how Japanese companies work, it takes a helluva lot of guts to speak your opinion against traditional thinking.

- By repositioning the City at 50K less, they have effectively left some room for a future diesel variant too. Personally, I would have bought the City even at the older price, and do think that it was well worth the premium. However, and the fact is, that price never left room for a diesel variant. This move has created space for a diesel engine in the future.

- Brilliant because the reaction time was quick. Till just a quarter back, the Honda City was No.1 in its segment. Within 3 months of losing the lead, Honda corrected its pricing. Look around in the market and you'll see that reaction times are longer than 3 months, especially when doing something major that's never been done before (in this case, a pricecut on the City).

- Brilliant because once you swallow a bitter pill, the second and third are easier to gulp down. Wait & watch on the Jazz' repositioning, and that for the next generation Civic.

- Brilliant because they addressed the right problem. IMHO, the City is still the best petrol C segment sedan. In fact, if you look at petrol-only sales, it is still the best selling petrol sedan in the segment. Honda realised that diesel competition, and rising petrol prices, will hurt it badly. Thus, they went ahead and cut the price. On the other hand, look at Fiat. They have a problem on the left hand (image, interiors, after-sales, niggling problems etc. etc.) but get surgery done on the right hand (90 BHP Punto which is still slow, a T-Jet petrol Linea that will never sell etc.). Both of these variants have had ZERO effect on Fiats sales.

Last edited by GTO : 15th June 2011 at 10:36.
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Old 14th June 2011, 14:09   #2
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Default Re: Honda India slashes the City's price by Rs. 44000 - 66000!

Better late than never!

I guess the rising fuel prices along with the onslaught of diesel sedans must be bearing down heavily on Honda's performance.

Lets see whether they do a price correction with the Civic as well or not!
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Old 14th June 2011, 14:10   #3
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Excellent move...Honda has woken up at last.

Now in Oct-Nov, they will add a few new features and increase prce by 45-65k...FAIR DEAL!!

From Honda site:

Honda Siel Cars India Ltd., leading manufacturer of premium cars in India, today announced the new price structure for its volume model Honda City.

The prices, which have been revised after enforcing considerable cost reduction efforts in the supply chain & manufacturing, will be effective from June 14, 2011. This price revision is in line with Honda’s global vision of creating products that maximize the joy of customers, with speed, affordability and low CO2.

Commenting on the new price structure, Mr Jnaneswar Sen, Sr. Vice President – Sales & Marketing, Honda Siel Cars India, said, “Our R&D function in India (HRAP-I) started working on localization and cost down activities for our volume models from year 2009. In anticipation of bigger volumes resulting in economies of scale from the second half of current year, we have achieved considerable cost reduction and are happy to pass on the benefit to the customers with immediate effect. The Honda City would now start from Rs 7.49 lakhs (ex showroom Delhi).”
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Old 14th June 2011, 14:13   #4
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Default Re: Honda India slashes the City's price by Rs. 44,000 - 66,000!

Well, great move for Honda, and guess what?
For the past 2 days even the Fiat India website says this for both the LINEA and the PUNTO, "The Prices are currently under updation. Inconvenience caused is regretted."

What's up here!!?
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Old 14th June 2011, 14:14   #5
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Default Re: Honda India slashes the City's price by Rs. 44,000 - 66,000!

This is VERY dangerous. Can piss off the far larger number of existing City owners who would already be having resale issues courtesy the petrol price. and now this!!

They were the automotive equivalent of Apple in India. *sigh* no more.

Clearly, they don't have a diesel in their hands and are panicking for volume.

Too little, too late.

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Old 14th June 2011, 14:14   #6
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Default Re: Honda India slashes the City's price by Rs. 44,000 - 66,000!

Now that's some good move by Honda. At least I can say now that Honda is reacting to market conditions. This is a huge price cut IMO and will attract many potential C sedan customers. Now Honda is just one more step away from becoming the market leader once again, once they introduce diesel I am sure no one would even be able to catch up with Honda. I am very curious to see the sales figures of June and July months.

PS -This will definitely hurt the existing City owners like me who bought the car at higher price and will face resale value issues when we will sell the car.

Last edited by bluevolt : 14th June 2011 at 14:17.
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Old 14th June 2011, 14:19   #7
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Default Re: Honda India slashes the City's price by Rs. 44,000 - 66,000!

Are they still giving insurance @Re1??...this will be added bonus
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Old 14th June 2011, 14:24   #8
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Default Re: Honda India slashes the City's price by Rs. 44,000 - 66,000!

I am sceptical. Is it just clearing the decks for a City Mk.IV? Or may be the Rajasthan plant is coming on line, though I doubt this, since the Brio is also coming.
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Old 14th June 2011, 14:25   #9
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Well done indeed!! I am an existing ANHC customer too but I'm not fussed about resale. I think I see myself looking to be a continuing Honda owner if possible and it would greatly matter to me that it's products are sensibly priced.

They must IMO too do the various things that GTO mentioned in his post. Correct Jazz for sure, improve kit levels on the Accord as well as the City if possible.

Clearly they've been forced to react to market dynamics. The sort of volumes that City generates within the Honda portfolio combined with the developments in that segment (new vernacular, new fiesta, vento which has already proved that City dominance is not a given) has clearly woken them up. They could afford to be high handed with the Jazz since they never dominated that segment to start with (although incorrect pricing means lost opportunity) - they can't afford to make that mistake with their key money spinner.

I love competition!! :-)

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Old 14th June 2011, 14:28   #10
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Default Re: Honda India slashes the City's price by Rs. 44,000 - 66,000!

Honda by not having a diesel engine is a big drawback, Indian market and its customer are multi-dimensional and very hard to predict. Whether its Voting for the country or buying a car. Both has the same way of thinking for them. Even this price cut will not help Honda unless they come back with a diesel to compete, and now Indian customers have diesel car on their mind when they go for buying.
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Old 14th June 2011, 14:29   #11
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Default Re: Honda India slashes the City's price by Rs. 44,000 - 66,000!

First thing I did when i read the title was to check the date today. Just wanted to make sure its not April 1st!
But, good move. A price cut is always a good news. But with the rising petrol prices, it is becoming more and more difficult for the common buyer to not go in for a diesel. I know of a few cases where the average daily use is not more than 10 kms and still they have gone for a diesel. I wonder how much improvement will Honda see in its sales after this cut.
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Old 14th June 2011, 14:32   #12
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Default Re: Honda India slashes the City's price by Rs. 44,000 - 66,000!

Whether it will work in Honda's favour or not needs to be seen as I have a strong feeling that people have started / will start preferring the new Hyundai Verna. It's a good thing for people who love Honda that the price cut has been announced.

What is good to see is that they have reacted fast.

Will the guys at Ford revisit the prices again if they have already decided internally since Honda has announced this now.

They would know that if they do not price the New fiesta's pricing properly, it will spell disaster.
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Old 14th June 2011, 14:33   #13
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Default Re: Honda India slashes the City's price by Rs. 44,000 - 66,000!

Good move by Honda! The benefits for Bangalore guys will be even more since all the models are under 10L and they will save quite a bit on the OTR. Lets wait and see how it affects the numbers next month.
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Old 14th June 2011, 14:37   #14
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Default Re: Honda India slashes the City's price by Rs. 44,000 - 66,000!

Will there be any cut in the features or any cost cutting measures along with the price cut? If not then it's really a good move by Honda. City is a lovely car and now even better with almost correct pricing.
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Old 14th June 2011, 14:42   #15
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Default Re: Honda India slashes the City's price by Rs. 44,000 - 66,000!

Great news

Why not do the same for the Jazz?

Obviously one does not do this when not able to meet demand so those believing that the recent drop in city numbers were due to then events in Japan need to rethink. They are not able to sell enough and the drop in pricing is to counter that period.

Better late then never.

We wondered in another thread what Honda could do, now we know. It was always the best solution but it was believed to be one that goes against honda policy, it is good to see that is not the case. There is still hope for Honda if it can bite the bullet in the other product lines as well.

They make very good and reliable products, just price them wrongly.
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