[ampere]

Originally Posted by RavenAvi

A-ha. NOW this furore-creating price cut suddenly starts to make sense.
1.5L iVTEC with 118 BHP? Weehaw! Driving enthusiasts, take note.
I think this will enter the previous price band of the Jazz, at maybe lower rates than the older prices (starting at around 6.9L maybe).
Since the ASM mentioned that the Jazz will come with only 2 variants from now, I suspect the facelifted Jazzes will be a base 1.5 model and a Select 1.5 model.
And it should come after the launch of the Brio, so expecting around November-December. Maybe it will be a twin launch with the facelifted City.

And what about the 1.2 iVTEC which powers the current Jazz, you ask...

That question is the answer in itself. I think Honda is planning to keep the 1.2 iVTEC as exclusive to the Brio.
As regards the queries as to how they could offer the Jazz with the same features at this new price, my telephonic talk with the ASM yesterday revealed that after the Tsunami disaster which hit Japan,
Honda started producing (and possibly sourcing) a lot of imported parts for its various models in India itself. It has been doing so for the past 2 months-odd.
That helped in lowering the costs involved, and now Honda will also start exporting cars from India to the world.

We had that discussion on 1.5L Jazz for quite long and last I heard was Honda had stalled/stopped that plan. Not sure about this Honda FB page update.

Whatever said and done, I am not sure if 1.5L will be standard for all variants. 1.2 will continue to share duty with Brio and Jazz (may be with different tuning).

[biyer]

Originally Posted by biyer

I made this analysis about 6 months back in another Honda Jazz thread. I seem to have predicted this move somewhat early, just that did not "expect" it to happen all this quick! :-(

---------------------------------------------
Feb 2011:

To date, I think honda has made about 21,000 Honda Jazz(see narration below). I am trying to figure how much of that is unsold and the size of the problem Honda has in its hands. My GUESS is that Honda has about 15000 Jazz cars lying in their parking lots- manufactured & un-sold.

And now thats what, a 1000 crore(at Rs.7 lacs invoice value) problem? Considering the backlog, is it safe to assume now in Feb 2011, they would have COMPLETELY stopped production of Jazz until stocks are sold? It seems difficult to believe that if I want a 2011 model today, I cant get it. So I am guessing some sort of intelligent production plan for 2011 might be underway but what about all those unsold cars?

Any ideas how we can go about crunching these numbers from publically available sales figures with more authority? Can anyone point to sales figures for Jazz in one place:

1. 2nd half of 2009
2. Full year of 2010
3. Jan 2011


Narration for 21000 cars made so far:
--------------------------
Assuming production launch around July 2009, Honda Jazz has been in manufacture for about 19 months. I have seen figures ranging from either 1000 cars/month to 1666 cars/month ( from comments about 20k cars/year target). I am quite sure they would have ramped down the production or completely halted it for the last 6 of those 19 months. Lets assume an average of 1333 cars producded for the first 13 months and a 50% production of 666 cars for the last 6 months.
--------------------------
I have mined Honda's website for Jazz sales figures for the past 20 months(2009: 7 months; 2010: 12 months, 2011: 1 month).

Based on that analysis, I can conclude that Honda has officially sold a total of 11,857 Jazz cars for the past 20 months.

Assumption1: Previously I speculated that Honda has manufactured about 21000 Jazz cars. I stand by this but its speculation never the less. In fact I am confident that this figure can only turn out to be higher in truth -- in fact as high as double the current number -- and not lower due to assembly line economics. (Honda has previosuly stated that about 2000 cars/month production capacity has been established. To run the assembly lines at less than 2000 cars/month load would result in other losess)

Impact: Note that, the sales figures quoted above is Honda-Dealer sales. We dont know the off-take of dealers stock by customers. Assuming they have sold bulk of their 11,857 cars, that leaves about 9143 cars(21000 - 11857) manufactured and unsold by Honda.

Assumption2: If you want to speculate, I would add another 2500 cars on top of 9143 Honda stock, as unsold dealer stock. Thats a speculative total of about 11643 Jazz cars lying with dealer + honda stock yard.

Conclusion: There really aren't any, actually. Just some more guesess from my side. Never the less, here it is for what it is worth:

1. There are anywhere between 9143 to 11643 Honda Jazz cars lying unsold with dealer + honda, assuming a total production of 21000 cars so far.

2. This unsold figure can turn out to be three times higher(30643), if Honda in fact produced Jazz 40,000 cars instead of 21,000 as per their monthly target of 2000 cars/month up untill Jan 2011. But I discount this higher figure based on common sense that with an average monthly sales figure about 457 cars, it would be insane for any company to produce 40,000 cars in 20 months!

3. So I would stick by the range suggested earlier of 9143 to 11643 unsold cars as on date. Even with this lower figure, its unclear to me how Honda plans to liquidate these stocks with an average sales figure of 457 cars/month. I cant believe the dealers would now all of a sudden be willing to invoice 2000 Jazz cars/month. All things being equal(no price cuts, no dealer incentives etc.), at this rate, it would take another 25 months to liquidate the current level of stocks. Not being an automobile industry guy, I dont know how big this problem(stock build-up vs off-take) is and how commonly it occurs in the industry but it seems clear its a non-trivial problem with a price tag of about 640 to 815 crores of un-sold inventory with a cash-flow pipeline of 25 months. The interest cost alone to service that 850 crores investment would so huge that would rule out any further discounted sales.

Given the size of them problem is it then possible:

1. That Honda would dismantle the built Jazz cars to utilize the shared components into Honda city to recover costs faster?

2. Slash the prize of the Jazz drastically?

3. Export Jazz 1.2 from India?

4. Take the hit, absorb the inventory and bring in a 1.5Ivtec at the same cost for the all-new Jazz?
----------------------------------------

------------------------------------------------
Adi, according to me Honda has made peace with Jazz sales long while back. Now they only expect it to perform on-par with Civic sales -- as another niche car. Ofcourse this means loss and change of plans, because as per their original planning(production, supply chain, marketing etc.) they expected it to be a mass market prodct but never the less I would like to believe they now have a revised strategy. They better have!

Adi, if you study the sales numbers carefully:

Jun-09 2032; Jul-09 1037; Aug-09 1029; Sep-09 504; Oct-09 830; Nov-09 546; Dec-09 269; Jan-10 490 ; Feb-10 233 ;Mar-10 571; Apr-10 338; May-10 205; Jun-10 507; Jul-10 514; Aug-10 593; Sep-10 649; Oct-10 332 ; Nov-10 330; Dec-10 269 ;Jan-11 579;

...you would realise that the time frame to intervene and course-correct was Dec 2009 for Jazz to return 2000 cars/month target. Now they are too deep into this mode that I can only conclude they have absorbed the loss and devised a new long-term strategy for Honda car India in which Jazz is a niche 500 cars/month product. They may even have a long term plan of bumping it upto 750-1000 cars with a new engine, newer features and similar pricing in 2012 but no quick-fixes to the leaky bucket. I am unwilling to believe Honda hasn't encountered this situation before WW and doesnt have a play book when one of your supposedly stellar product under-performs in a newer market. So I wont say they have "given up hope" as a blanket statement on Jazz. What they have given up hope is in selling 2000 jazz cars/month. That much is evident. Why, isnt there life beyond mass-market? Isnt that what Brio is supposed to be? Companies make these type of adjustments all the time in other industries!

On spares and service, it would be doomsday for Honda if it abandons its loyal & premium customers. Personally I would bet against them fooling around with spares as it would affect their long term plan and reputation in India. I believe they are counting on it a lot. This is from their 2010 annual report:

"The formation of Honda Motor India for strengthening and integrating spare parts operations of Honda companies in India was an outcome of Takedagawa’s strong guidance, based on the belief that customer should be provided with swift delivery of spare parts for enhanced customer satisfaction"

As for my production numbers, they are quite solid Adi. My "21000 cars produced untill Jan 2011" figure is based on a progressively ramped down production model ( average of 1333 cars producded for the first 13 months and a 50% production of 666 cars for the last 6 months). It surely may have some variation but its unlikely to be huge. With a stated production capacity of 100,000 units/year in Noida(Rs.450 crores investment-- and recovered long time back) and additional 60,000 units/year in the new Tapukara facility(Rs.1000 crore investment-- none of which would be recovered as yet), Honda cannot afford to knock out an existing model from its assembly line! I dont think they can stop production of Jazz cars because there is a larger picture of a production capacity vs available models. If they pull out now or ramp down now, what will they fill it up with? There are costs associated with NOT running your plant. Their early plans for Jazz with localiztion of 78% would have involved volume commitments to suppliers and investors. For them to bring it to grinding halt may have implications which are far worse than building few 1000 jazz cars and NOT selling them. This is precisely the recession cycle that led to the collapse of GM in US. They produced cars because not producing them turned out more expensive!
--------------------------------

Can somebody confirm if this is a bonafide document? This document purports to be the Indian Jazz product and brand management presentation, presumably presented by senior Honda India senior executives. There are some really surprising claims in there. Not sure what to make of it.

I have to add a couple of links for you to see the documents. Please remove if inappropriate

http://docs.docstoc.com/orig/1051572...77692fb87.pptx

New Honda Jazz Product And Brand Management Presentation Document Watch And Download 2011-12 - ExattoSoft.com

I cant believe they made this flippant remark in an official presentation:

" Rs. 6,98,000 (A few thousand rupees more is justified isn't it?)"!

Seems wierd!

And in the financial projections segment they mention:

"Honda is investing $ 50,00,000 on production of Honda jazz in India so to reduce its cost of production"

-- What is that? Only 5 Mill USD investment??

And theyr proceed to say the following:

" For the next model Honda will invest about double of its previous investment i.e. $ 95,00,000

-Honda expects to get the invested money in first 8 months and the next 6 months will be in profit money

-If invested money is not recovered in those 8 months Honda will reduce the price slightly to attract more customers

-To constantly increase the number of customers, prices of hybrid models will not be increased drastically

-Honda will reinvest the 65% profit money back in market"

Conclusions:


1. So presuming they have not broken even in first 8 months, there is no 14-month upgrade cycle in play.

2. They certainly have not price corrected as mentioned above inspite of 19 months of under-performance.

3. With around 11857 vehicles sold so far @ presumably Rs.7 lacs per unit, thats about Rs.829 crores or about 180 Million USD. At about 35% profit margin that would leave about 63 million USD on table.

4. Even with such poor sales of Jazz, Honda India has long back recovered its initial $5 Mill USD + presumably another $9.5 Mill USD long back.

5. Thus Honda jazz is making a killing for Honda India, despite its apparent poor sales.

[Reality]

Originally Posted by adimicra

What the hell is going on?
Why is there no official communication from Honda?
I called up two showrooms - one of them was sure of the price cut.
The other one said there is a price cut but they don't have the exact prices.

Honda seems to have goofed it up big time.

It is high time there is some official communication from Honda.

GTO,Sid: do you guys have any concrete info? Is this just a price revision?
Will the Jazz be discontinued? Is a facelift expected shortly?

@selfdrive: forget about compensating the existing owners. I am sure they won't do anything like that. You are right, for my next upgrade, I will think a hundred times before putting my money on a Honda.

yep just spoke to arya honda mumbai and there is a price drop.
now the mid variant is priced between 6.5 and 6.7 on road bbay. with the fully loaded around 40k more. It should have been launched at these prices in the first place!

[Warhound]

Originally Posted by SunilM

It might not be fair to say it is a 1.75L reduction. 60-75L discounts were always on, a person I know managed to get 1.20L discount from a dealer in Ahmedabad after huge rounds of bargain. 1L discount was pretty common if you could "talk". So net-net, I would say it is more of a 75k additional discount. Not sure if that will make you feel better, but sad to hear that from you.

1.75 is manufacturers discount. Im sure you might be able to haggle more from a dealer.

[selfdrive]

Can somebody please share the FB page for Honda where this has been updated?

Crystal Honda said they should have confirmed details by later today. The lady was poilte and said that she didnt have any news yet from the biggies there and kindly offered to call me back with an update.

@adimicra: I agree that it might be too much to expect this in India. However, I think I expect it because it is Honda and I hope they care a little for existing owners. If it was Hyundai/ Maruti I would not have any expectations. But then their cars are priced sanely from day one!

[Abhi_Automobile]

Originally Posted by adimicra

I don't want to curse Honda.
People like me were foolish enough to buy the car....I thought it might be marginally overpriced after all the discounts I managed but this is beyond my wildest dreams. It is at par or may be cheaper than the I20/Polo. Forget it, the plain jane Liva top-end costs almost the same. I am sure it will set the sales charts of fire.

But Honda has done their reputation no good IMO.
I guess you always take a risk when you buy a low-selling model in the market.
Look at Fabia - Skoda reduced the prices no doubt, but they cut the features as well. SO, at least, the previous owners can feel somewhat satisfied considering they have some extra features at a higher price.
Look at Honda, they just reduce 1.75L without any cut in the features - that is a whooping 20% + reduction in the price.
My next car won't be a Honda for sure.

I feel for you my friend. Honda has, in one shot, broken the hearts of many of its 'loyal' customers. But it was a business decision. They had to do it. Basically, they had only two choices:

1. Let the product die. Nobody would have ever bought it at that price. Take losses for launching flop product.

2. Eat the humble pie and slash the prices. Make profits and watch the car fly off the shelf.

I still remember on another forum, when I said that the Jazz is costlier by at least 1.5 lacs and you defended Honda through thick and thin. Honda has agreed with our analysis (t-bhp members). Losing such loyal base is bad for Honda. But from a business stand point, they will increase their customer bases multiple times coz they will sell the cars multiple more times.

But, what the hell. You still have fantastic car. Enjoy it. This is my pick for the petrol hatch segment now.

[Aragorn]

While all looks hunky-dory, my gut feel is that the 1.2 iVTEC will not last long in the Jazz. The 1.5 engine from the City will become the de-facto engine, with the price cut being a stop-gap arrangement till the Brio arrives.

As someone has already pointed out, the 1.2 will be exclusive to the Brio, with the Jazz being the 'premium' hatch in the Honda portfolio. What is good though is that this 1.5 L might be available for the price of the old 1.2 price!

Hot-hatch after a long time? I geuinely hope so!

[adimicra]

Originally Posted by Abhi_Automobile

I feel for you my friend. Honda has, in one shot, broken the hearts of many of its 'loyal' customers. But it was a business decision. They had to do it. Basically, they had only two choices:

1. Let the product die. Nobody would have ever bought it at that price. Take losses for launching flop product.

2. Eat the humble pie and slash the prices. Make profits and watch the car fly off the shelf.

I still remember on another forum, when I said that the Jazz is costlier by at least 1.5 lacs and you defended Honda through thick and thin. Honda has agreed with our analysis (t-bhp members). Losing such loyal base is bad for Honda. But from a business stand point, they will increase their customer bases multiple times coz they will sell the cars multiple more times.

But, what the hell. You still have fantastic car. Enjoy it. This is my pick for the petrol hatch segment now.

Hey Abhi,
Thanks mate...I knew Jazz was overpriced at the quote price. But discounts were already there to the tune of 75 to 85K, when I bought. At that price, it seemed reasonable to me. (may be 20K or so more overpriced), but mine, like other Jazz owners, was a decision from the heart and not from the head.

But I could never imagine that they can reduce the prices by 1L more.

From a business point of view, it might make sense in the short term, but am not so sure in the long run.
When they launch their next car, will people buy it? They know that Honda can reduce prices by ~25% if the car doesn't sell well. Unless Honda prices their next launch extremely competitively (read undercut some of the rivals), I don't think many people will be in a hurry to put their money on a Honda.

For me, well, I had almost decided that Civic will be my next upgrade. But after all this pricing fiasco, I am not so sure.

[ani_meher]

Wow. Each car I tested had some drawbacks, some had poor quality, some bad ***, some bad rep, some poor mileage. Honda Jazz had only one: too costly. Now that this hurdle is taken care of, this is THE car to buy.

I just hope the mini xylo makes its way fast, because now for me it is a tough battle between mini xylo or Jazz to be the first car!

I feel bad about existing owners though. Such a slash will definitely mean atleast 1L fall in resale value, if not more. To think of it, I tested Jazz 2 weeks ago, and didn't book it because of out of budget cost and waiting for mini xylo. Thank God for that!

[kiku007]

Originally Posted by adimicra

Hey Abhi,
Thanks mate...I knew Jazz was overpriced at the quote price. But discounts were already there to the tune of 75 to 85K, when I bought. At that price, it seemed reasonable to me. (may be 20K or so more overpriced), but mine, like other Jazz owners, was a decision from the heart and not from the head.

But I could never imagine that they can reduce the prices by 1L more.

From a business point of view, it might make sense in the short term, but am not so sure in the long run.
When they launch their next car, will people buy it? They know that Honda can reduce prices by ~25% if the car doesn't sell well. Unless Honda prices their next launch extremely competitively (read undercut some of the rivals), I don't think many people will be in a hurry to put their money on a Honda.

I agree that you feel cheated with the price revision (And that too from Honda and not Ford or GM!!).

You are saying that it was a decision from the heart and not from the head. So you bought the car for whatever price you thought it was worth it at that point in time. Nothing can take that away.

The price revision should be a rude shock;but think about it. It's much better than shocks some other cars might give like part failures, niggling issues etc. You can't put a price to that. So stop browsing thing thread and enjoy your car

Suddenly a lot of people out there would be looking for Jazz ownership reviews.

[dre@ms]

It's a tremendous news. If this is gonna be true, I am shelving my decision to purchase Polo and book the Jazz.

Anyways, had sent an email to Sundaram motors. Fingers crossed.

[W.A.G.7]

Originally Posted by adimicra

I don't want to curse Honda. But Honda has done their reputation no good IMO.

Originally Posted by snorting bull

Boy, I am hugely disappointed. I have started to hate Honda.

Originally Posted by selfdrive

Well in this case, they have devalued their own product by reducing the resale value for existing 1.2 mill owners. Bad for existing owners, great for prospective buyers! Did Honda bungle this up or have the dealers woken up late today?

Originally Posted by Abhi_Automobile

I feel for you my friend. Honda has, in one shot, broken the hearts of many of its 'loyal' customers. But it was a business decision. They had to do it.

Exactly the same thoughts everywhere. When me and my father were discussing this price cut yesterday night, he felt it was a big dent in the credibility of Honda. He said that in a way it is a sort of self confession that Jazz was overpriced from day 1 and they (Honda) have been cheating Indian customers. Being a Honda loyalist, he himself was surprised at the way the prices were slashed.

I think the everyone was expecting the price cut, no one was surprised about that. What everyone was surprised about is the amount of price cut (~1.7L). No one in their wildest imagination ever thought that they would reduce the price by this much amount. The max price cut expected was 60K ~ 80K

[selfdrive]

Originally Posted by adimicra

For me, well, I had almost decided that Civic will be my next upgrade. But after all this pricing fiasco, I am not so sure.

Spookily enough, this is exactly what I told the lady at the Honda dealership I just called. With Honda implementing such a drastic change in their pricing strategy, I am skeptical of how existing owners matter to them, or if at all

Originally Posted by ani_meher

I feel bad about existing owners though. Such a slash will definitely mean atleast 1L fall in resale value, if not more. To think of it, I tested Jazz 2 weeks ago, and didn't book it because of out of budget cost and waiting for mini xylo. Thank God for that!

I am glad for you. At the same time, it may be better for you to book one now. It may be possible that the 1.2 mill is phased out altogether and then only the 1.5 one will be sold. I dont expect the 1.5 to be sold at these prices. Which in itself will affect the 1.5 sales, as people will expect a lower price. But thats another story for another day

Edit: no offence meant to existing Xylo owners, but IMHO the Jazz and Xylo fall in different brackets in terms of what they offer.

Originally Posted by W.A.G.7

I think the everyone was expecting the price cut, no one was surprised about that. What everyone was surprised about is the amount of price cut (~1.7L). No one in their wildest imagination ever thought that they would reduce the price by this much amount. The max price cut expected was 60K ~ 80K

+1 there. In most of our discussions, we were expecting that the price cuts would only "officalise" the discounts that were already on offer. With this price cut (and that of the City), Honda has just hit the axe at its exclusivity. This may translate into better sales but the brand value has definitely taken a hit. Again, maybe good for the company but bad for the existing owners (if not compensated some other way).
What next - the Civic? the Accord? the CRV?

[iSpoke]

We are about to move to Page 9, within 15 hours of time, mostly night hours!
I'm damn sure, this much of excitement and stir would not have happened even when Honda launched Jazz in India.

Dear Honda, please login to Team-BHP and see, how much people care and share about you guys. May be it will be helpful to decide pricing for Brio!

[KumaravelS]

Originally Posted by RavenAvi

Yes it's true, and I have confirmed it from my local Honda dealer.

Base model - (Previous Price) 7,45,000 <---> (Revised Price) 5,87,500

Select model - (Previous Price) 7,56,500 <---> (Revised Price) 5,99,000

X model - (Previous Price) 7,88,500 <---> (Revised Price) 6,31,000


All prices ex-showroom, in CG. No official announcement has been done by Honda regarding this price cut as of yet.

The Select's price comes to 6.7L OTR, and it's a steal now!

I believe this is clearance of stock and stop.
Remember, for Civic Hybrid, they reduced from 21 L to 13.65 L (Showroom price). Then stopped the model after clearing the stock in 2008.