[HammerHead]

IMO the only way forward for Honda in hatch segment is to be realistic and make a VFM hatch in order to have a respectable market share in that segment.

If a German company, VW, can launch a hatch below 4.5 Lakh INR why not Honda? Is Honda a bigger/better a brand then VW?

If other companies like Ford, Fiat can have their top end diesels or top end petrols with bigger engines and similar specs at Jazz's base price why not Honda give us bigget and better engine in Jazz at its current price?

IMO Honda has already started loosing its market share to the competition.
CRV to Fortuner
Accord to Superb
Civic to Altis/Laura
Jazz never really took off after launch!

Lets wait for Polo Sedan to take on Honda City!!! (Toyota has already disappointed us with their entry level sedan)

Wake Up Honda

[supremeBaleno]

Way forward = price the car down to what it really is worth.

They can still price it above the costliest petrol hatch in the market, by 50K or so and it will sell. Not at the astronomical price at which it is tagged today. There is a limit to which you can stretch snob-value, even for a Honda and that is what is proven by the Jazz debacle.

Originally Posted by raul

IMHO while the 1.5 would be nice I doubt it is a deciding factor, maybe for a small segment of the market, definitely the folks here, but not the majority.

True, when the i20-P sells with the same petrol engine as in the i10. Apart from the few thousands on tbhp, not many bother about the engine.

Originally Posted by civic-sense

I don't think that makes economic sense to Honda. First, they have to spend more on the engine, and second they will lose the excise duty savings.

When they never passed on the excise benefit to customers, who cares whether they lose it or not ? And I think we should be bothered about economic sense to the consumer, not to the manufacturer.

Originally Posted by greenhorn

I think it provides too much value to be a honda. I say give it a better engine, limit it to the top end , and make it a CBU. a higher price = more snob value = more sales !

They already have "higher price" and also supposedly "snob value". The "more sales" part is missing though. But then they can market the lack of sales as "exclusivity". Valid, given that you would be lucky if you saw 1 Jazz in a day on the roads.

I guess Jesus would stick to his Accord, given the way the Jazz is overpriced.

[pgsagar]

Premium hatch? What premium hatch? No matter how much the auto-jurnos and a few Honda fans keep hollering about premium hatches, there IS no market for a hatch which costs nearly same as a sedan from the same stable. You have got to be a nut to be buying a hatch if a comparative sedan comes at the same price. some of us may personally like the compactness and convenience of a hatch but the minute we ask them to pay a sedan money, a sedan with it's toting tail appears more appropriate. sedans come above hatches as far as pecking order goes. whether one likes it or not, this is the general perception in india.

and as for the Jazz, already Swift relegated Jazz to a state of non-existence. and whatever life remains there for Jazz, the trio, Figo, Polo and Beat would do the rest. This is an eye-opener for Honda that a hatch market is very price-sensitive and badge aura doesn't matter here.

[sbraj]

Honda says their target for Jazz is being met. And that they will not sell any car at a loss.

In that case, I don't see any price correction happening.

[kiku007]

Originally Posted by sbraj

Honda says their target for Jazz is being met.

. Ya even Skoda met the Fabia's target!

Originally Posted by sbraj

And that they will not sell any car at a loss.

In that case, I don't see any price correction happening.

They are so used to hefty margins and are so image consious that they will never ever drop the Jazz price.

[civic-sense]

Originally Posted by supremeBaleno

When they never passed on the excise benefit to customers, who cares whether they lose it or not ? And I think we should be bothered about economic sense to the consumer, not to the manufacturer.

Originally Posted by sanagg1

@civic-sense
What is your take on the way forward for Honda ? How do you think Honda can do well in future for hatchback segment?

Auto manufacturers can make profits in two ways. By maintaining higher margins (consequently, lower sales) or via higher volumes (with lower margins). Honda, IMO, take the former route, compared to Maruti that takes the latter route. 500 cars per month at 2L margin can get Honda almost the same profit that they can make by selling 2000 cars at 50K margin.

Can't say for sure whether Honda is indeed incurring losses selling the Jazz. Now, if they are indeed incurring losses, they need to either increase the sales without decreasing the margins, or increase the sales many fold by decreasing the price.

Assuming that Jazz is selling at a margin of 2L, at 250 cars per month, ther are making a profit of around 500L per month. Now, if they even have to double that by decreasing the prices (by say 1L), they have to sell 4 times the number they are selling now. ie 1000. I guess that is even reasonable. Now, if they upgrade the engine to 1.5L, their margin will fall to around 50K (cost of the engine and loss of excise duty benefit). Now, even if the sales increase to 1000 cars per month (hardly it will, with the current price tag), their profits will not increase.

Honda has already started giving discounts on the Jazz. They would need to reduce the price futher. I am sure, Honda would tread cautiously, as a sudden reduction in price would show Honda in bad light. Expect variants tagged "E", "S" etc in the near future.

Originally Posted by sbraj

Honda says their target for Jazz is being met. And that they will not sell any car at a loss.

In that case, I don't see any price correction happening.

Originally Posted by kiku007

. Ya even Skoda met the Fabia's target!

They are so used to hefty margins and are so image consious that they will never ever drop the Jazz price.

I should say that perhaps what Honda is saying is true. Since the Jazz is selling at a very high premium, they might be meeting their profit targets. A product need not sell in huge numbers to be termed successful. As long as the profit targets are achieved, it is successful enough.

[amit V8]

the market is filled with brilliant models which are cheap & much more powerful than the jazz. why should people go for it when a couple of Ks' more will give the city??

[supremeBaleno]

Originally Posted by civic-sense

Auto manufacturers can make profits in two ways. By maintaining higher margins (consequently, lower sales) or via higher volumes (with lower margins). Honda, IMO, take the former route

That applies to general selling, and is not restricted to auto-mfrs alone. But then, in the auto-industry an apt example would be the luxury sedans like BMWs / Mercs, that are low-volume and high-margin. Does not really apply to a hatch.

Going by this theory, they can price the ANHC at 15L since it is anyway the segment leader and applying "higher margin with low volume" should still have Honda laughing all the way to the bank, right ? They don't do it, do they ?

Originally Posted by civic-sense

A product need not sell in huge numbers to be termed successful. As long as the profit targets are achieved, it is successful enough.

For targets to be achieved, the primary requirement is that sales should happen. And if sales happen, you would see the product on the streets (when talking about cars).

The ANHC also gets them a huge margin. And we do see so many of them on the streets. Does not apply to the Jazz. Let them first sell the damn car before talking about achieving profit margins.

[vinaydas]

the problem with the jazz is that , it is too closely priced to the city.
hence causing cannibalization.
people obviously(Indians ) will want to get more for what they are paying so prefer the city.
I see Loads and Loads of new city's on Bangalore roads and only a handful of jazz.
Only people who buy the jazz is for that "exclusive" feeling and want something different from that of the average joe.

[malgudi]

Honda may not have directly accepted the Jazz Failure.
Indirectly lets See
1. Honda is offering discounts on the Jazz
- they dont on any of their other models.
2. Honda City Base Variant (E) is relaunched.
- Since Jazz Sales have not taken off, they decided to compensate the profit targets by trying to increase the sales of their bread & butter model.

At the end of day whatever Honda says, I don't buy their take that they launched Jazz to do 250-500 numbers in sales. While the biggest of the competition (Skoda with Fabia, VW with Polo, Fiat with Punto, Hyundai with i20) have priced their cars in 4.5L - 6.5L bracket for petrol & are still earning a healthy profit, why is only Honda not able to price Jazz within the same range. The story of Low profits & will not sell Jazz at a loss sounds all crap. Honda took their premium image too far & the market has aptly provided the thumbs down to Jazz. But Honda is too stingy to accept their failure. While competition has upped their game in the premium hatch segment, Honda does not believe in competition.

The USP of Jazz is fast eroding. Want a Snob value premium hatchback - go to aptly priced Polo. Want a gizmo laden premium hatchback - go to aptly priced i20. In all probability Jazz would "Rest in Peace" & sales would ultimately tickle down towards the magical figure of "Zero" in the next few months.

[theMAG]

Bottomline - in India, you do not sell a 1.2L engine at the price of a higher-segment 1.5L sedan, irrespective of brand name. Honda have learned this the hard way with the Jazz - which is a good thing since this serves as a stark reminder to companies not to become too cocky in the Indian market.

Now, how to increase Jazz sales? No rocket science here. Price correct it by atleast Rs 2.5 lakhs/thereabouts below the City. If this is not an option at all for Honda, pull the Jazz from the Indian market altogether, since very clearly, it wont sell in any other higher segment irrespective of engine/extra features.

[oss]

Originally Posted by malgudi

2. Honda City Base Variant (E) is relaunched.
- Since Jazz Sales have not taken off, they decided to compensate the profit targets by trying to increase the sales of their bread & butter model.

That's news to me. No wonder City sales has gone above the 5000 mark.

Currenlty it's City that is giving the volumes to Honda. With Civic about a yr away to cross the 5 yr mark, wonder how the new model will look like. It's going to be huge challenge for Honda to make the newer model look better than the current Civic.

[raul]

Jazz has a USP and that's tons of interior space that no other hatch has, to build on that it had got good interiors and decent exteriors, a nice peppy 90bhp, Honda reliability and I think everyone who test drives it ends up liking it in some way, its just the price which makes the buying decision difficult.

It appeals to most segments of buyers apart from the pure economy ones and there is every reason for it to exist albeit with a price correction so its not all gloom and doom

This 'premium' business which is built on fragile foundation since these are everyday cars can only be pushed so far, people have to perceive value, and as the competition heats up it will become more and more difficult to sustain unless the car actually has premium features.

I think 7 on road for the 1.2 would be about as much as they should have pushed it, certainly anything more than 7.5 sounds too high, and maybe 50-80 more for the 1.5. Since Honda will most likely not reduce prices, they will introduce the Life or something to make up for volumes. I think Jazz is relatively expensive among hatchbacks in most countries, but it does have more features there too.

.

[civic-sense]

Originally Posted by supremeBaleno

That applies to general selling, and is not restricted to auto-mfrs alone. But then, in the auto-industry an apt example would be the luxury sedans like BMWs / Mercs, that are low-volume and high-margin. Does not really apply to a hatch.

True, it is not restricted to auto-manufacturers alone. But your last statement contradicts it. There is no reason it (premium pricing) should be restricted to luxury sedans alone. Not every auto manufacturer would want to become a volume player like Maruti. I think Honda is doing the right thing in not challenging Maruti/Hyundai/Tata.

Going by this theory, they can price the ANHC at 15L since it is anyway the segment leader and applying "higher margin with low volume" should still have Honda laughing all the way to the bank, right ? They don't do it, do they ?

City is already selling at a high premium. It is another thing that it is selling in high volumes too. Had Honda priced it with a low margin (say 2L cheaper), it would have trounced the Dzire. But it would diminish Honda's brand value, Honda better do not attempt it.

For targets to be achieved, the primary requirement is that sales should happen. And if sales happen, you would see the product on the streets (when talking about cars).
The ANHC also gets them a huge margin. And we do see so many of them on the streets. Does not apply to the Jazz. Let them first sell the damn car before talking about achieving profit margins.

Sales do happen, even though in lesser numbers. As I said in the earlier post, 2L margin X 250 cars is the same as 50K margin X 1000 cars.


I feel that the ANHC is equally "overpriced" as the Jazz (There is 1.5L difference between the Jazz and the City S). But ANHC has the boot advantage that makes buyers pick it compared to the Jazz.

[Nitronium]

What I have read is 5 pages of Jazz bashing. I strongly disagree.

Let me tell you what happened to us.

We had pretty much decided on a City before walking into the showroom. A spin in the Jazz however changed everything.

1) Why did we need an insanely powerful engine when 95% of it's usage was to be in the city?

2) Why settle for the far less roomy interiors when you can have the cavern the Jazz can give you?

3) Why a cumbersome sedan when you can get a compact hatch?

4) Why settle for less fuel economy?

The Jazz somehow made a strong case for itself, and at no point did i feel that it was underpowered. Folks in posts above ranted on about how they wanted a 1.5ltr. Yes, we WISH we had a lot of things. More powerful engines top that list. But the truth is that the Indian Public is NOT very receptive to paying MORE for MORE.

Consider this. Even with a 1.5 engine, not many people would buy the Jazz because it doesn't have a boot. A sedan pretty much means you've made it in life. (humour to be duly noted)

We reckoned the nearest competitors were the i20 and the Punto. We sat inside the showroom car and saw a bit of poorly finished plastic. That decided it. We weren't going to pay for shoddy interiors.
Unfortunate, considering my heart ached for one so badly.

The i20 was a big let down. 7 airbags, check. Nicely coloured seats, check. Everything else, fail. (this was pre CRDI launch). The steering was devoid of life (ala Verna) and the interiors space was rubbish considering the dimensions of the car. (Nicely weighted buttons though). To top things off, a 7+lac Rupee price tag for a top of the line variant.

The Jazz ticked every check box. Sure, 50000/- lesser would have been pleasant. But we had no grouse paying hard earned money for a racy engine, massive interior space and wonderful quality of interiors.


EDIT
P.S. After reading GTO's review, I do believe the only thing premium about the Polo is the badge.

Cheers.