Honda does the Jazz...again. New Small Car to be Priced at Premium

ukamath · 3rd June 2010, 10:45

Honda Siel plans to place its small car above the volume market despite poor sales

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Honda also said that the introduction of a diesel-powered car in India will "depend on the market condition". Looks like Honda is just not getting the pulse of the Indian market and does not want to be a mass market player in India like elsewhere in the world and is happy being at a niche player - going to miss out on some serious sales figures I guess.

A Hindustan Times news article today (June 3, 2010)
Honda's small car to miss Indian 'volume market'- Hindustan Times

Honda's small car to miss Indian 'volume market'

Japanese auto giant Honda today said its proposed hatchback for India is not aimed at the volume-driven small car segment and will be positioned above this category. The company, which is present in India through a joint venture with the Siel Group, is developing a hatchback for the growing Indian auto market and plans to launch it by 2011.
"Our small car project is very much on schedule. We have not decided the likely price or the engine capacity of the small car, but the small car will be positioned slightly higher than the volume market," Honda Motor Corporation Chief Operating Officer (Asia and Oceania) Fumihiko Ike told reporters in Rajasthan.
Although he did not elaborate on the "volume market", usually cars priced between Rs 2-4 lakh account for most of Indian passenger car sales. Some of the highest selling models in this category include Maruti Suzuki's Alto and WagonR, Hyundai Motor's Santro, General Motors' Spark and Beat and Ford India's Figo (petrol version).
"Everybody is looking at the volume market, while historically our cars have always been positioned slightly higher than the volume segment," Ike said, adding the company will not bring in a sedan version of the upcoming small car.
While showcasing the proposed small car at the Delhi Auto Expo in January this year, Honda Siel Cars India (HSCI) said it would launch the car in the country by 2011 and was looking at a price of less than Rs 5 lakh. The cheapest offering from HSCI's stable in India is its compact car, Jazz, which starts at Rs 7.11 lakh (ex-showroom, Delhi).
Last week, HSCI's newly appointed President and CEO, Takashi Nagai, had said the company would focus on increasing the localisation of components to make the cars, primarily the upcoming small car, more competitive in the Indian market.
The company is aiming for over 80 per cent localisation for its proposed small car. While its Jazz and City have 77 per cent and 76 per cent localisation of components respectively, the Civic has 74 per cent and the Accord 28 per cent local components.
When asked about the company's declining sales, Ike said: "It is a matter of concern no doubt, but we are not a volume player." HSCI had reported 2.13 per cent fall in sales to 3,578 units in April this year. In March also, it saw its sales declining by 19.54 per cent to 5,928 units.
On its diesel engine, Ike said, "Globally we have diesel engines of higher specifications and now we are developing diesel engine with lower specification also, but it is basically for the European market."
He said introduction of a diesel-powered car in India will "depend on the market condition".

designersf · 3rd June 2010, 15:45

This time they might get away with it. A price of 5 lakhs isnt that much more than competing hatchbacks while the Jazz is in a different segment altogether. You can get a very good sedan for the price of the Jazz while that will not be the matter with the 2CV to some extent at least.

sgiitk · 3rd June 2010, 15:54

I think until their rajasthan Plant comes fully on steam, they are not after volumes.

kadanaJ · 3rd June 2010, 16:04

I guess giving the Honda name a better brand image is more important for them than volume sales.

reppy · 3rd June 2010, 16:30

Quote:

Originally Posted by kadanaJ

I guess giving the Honda name a better brand image is more important for them than volume sales.

Huh? What brand image? They're LOSING sales year-on-year!

jacksons · 3rd June 2010, 16:43

In my opinion their small car will be priced like this.
Base model: No PS, No AC, No PW But airbags and ABS price 4.99L
Top Model with PS, AC, PW plus Abs and airbags price 5.99L

ukamath · 3rd June 2010, 16:48

For any player to make money and have some decent market share in India, a presence in the "affordable, mass market" segment is essential and crucial. You can have all the "nice and cool" cars in the top end - the niche market which gives the companies decent profits, and a premium image, but at the cost of volumes. Since approximately 70% of the volumes lie in the B segment, a presence here is absolutely critical for the number game - volumes, sales and profits.

Ford and GM realized it after almost a decade of operations in India. Allan Mullally personally came down to launch the Figo in India, because of the importance of the car to Ford's numbers and today it speaks for itself -Ford's sales have jumped 273% in May 10, compared to May 09. GM still has a respectable 61% increase. Sales in their home markets have all but dried up and to keep the money flowing, every manufacturer is looking at India and China.

The Honda's / Toyota's / GM's / Ford's / Nissan's all have their work cut out for them because of their existing presence in the premium market. Their brands have certain value and attributes which helps them when they are going downmarket - read B Segment. The Jazz / City / Civic / Accord and CR-V all have placed Honda at the top of the premium heap - Now they should play the volume game and give the premium Honda experience to the mass market, just as the way they do in other countries. I am sure people will pay a slight premium, for a car from Honda (with decent equipment as standard) - But they shouldn't price it in a completely different territory and make it the Jazz 2. A Honest price with decent equipments can easily give Honda 3 digit growth - They don't even have to try - The cars will sell on their own.

narayan · 3rd June 2010, 16:50

another thread to start some bashing . i think we have this set of car makers who we love bashing. lets try to keep the thread clean and at the discussion.

when we all can see what can be done in the volume car market, it will be an extremely juvenile thought process to assume Honda does not understand that.

so let them come out with details of their small car and we can then discuss the merits/demerits at that time. i dont see any substantial info posted here that is not known already.

out of here before i get branded !

McLaren Rulez · 3rd June 2010, 17:03

Quote:

Originally Posted by jacksons

In my opinion their small car will be priced like this.
Base model: No PS, No AC, No PW But airbags and ABS price 4.99L
Top Model with PS, AC, PW plus Abs and airbags price 5.99L

At least you get safety in all the models irrespective of comfort.

Mafia · 3rd June 2010, 17:10

Quote:

Originally Posted by jacksons

In my opinion their small car will be priced like this.
Base model: No PS, No AC, No PW But airbags and ABS price 4.99L
Top Model with PS, AC, PW plus Abs and airbags price 5.99L

I agree! The way Honda prices its cars, the only way they can keep the price below 5L ex-show room would be without even the basic features. An I am sure the sales figures will resemble that of the Fiat 500

the fully loaded IMO will be 30-40k lesser thank the Jazz!
Progressively regressive! Honda will be reduced to a scooter manufacturer in 5 years time! just kidding!

jacksons · 3rd June 2010, 17:14

Quote:

Originally Posted by McLaren Rulez

At least you get safety in all the models irrespective of comfort.

Yes safety is high in their priorities, comfort is not. They will keep adding Alloy, Fog Lamps, ICE etc on every anniversary one by one so can jack up the prices as well, smart nah

.

nandans2005 · 3rd June 2010, 17:14

Quote:

Originally Posted by reppy

Huh? What brand image? They're LOSING sales year-on-year!

Come over to Bangalore to check the no of ANHCs they have sold. You will change your opinion.

Once i was waiting for my friend on a very busy road in a locality called the whitefield. I managed to count 23 ANHCs pass by in 20 minutes. Mind you, its only the ANHCs .I didnt bother to count the ZXs even though quite a few passed by.

poloman · 3rd June 2010, 17:19

Nandan, Bangalore is a 'City' City. I used to wonder whether a significant % of sales of Honda is from Bangalore.Move over to Kerala or TN or interior KA. You won't see many.

crazyro · 3rd June 2010, 17:28

Quote:

Originally Posted by narayan

another thread to start some bashing . i think we have this set of car makers who we love bashing. lets try to keep the thread clean and at the discussion.

when we all can see what can be done in the volume car market, it will be an extremely juvenile thought process to assume Honda does not understand that.

so let them come out with details of their small car and we can then discuss the merits/demerits at that time. i dont see any substantial info posted here that is not known already.

out of here before i get branded !

I Completely agree Narayan. Lately this forum has become a platform for HONDA bashing. What is more disappointing is to see comments like "I wish HONDA sales decline further" etc etc. Every company has its own strategy. They dont force you to buy their vehicles. I wish people do more constructive criticism than outright bashing. Cannot ignore the fact that they make fantastic cars.

Daewood · 3rd June 2010, 17:32

Quote:

Originally Posted by poloman

Nandan, Bangalore is a 'City' City. I used to wonder whether a significant % of sales of Honda is from Bangalore.Move over to Kerala or TN or interior KA. You won't see many.

Not much info about TN as a whole but Chennai is 'Fiesta City'.
guess there are more fiestas in chennai than the combined number of all other C-seg cars.

City might come a distant second.

3rd June 2010, 10:45	#1
ukamath BHPian Join Date: Apr 2009 Location: Bangalore Posts: 63 Thanked: 23 Times View My Garage	Honda does the Jazz...again. New Small Car to be Priced at Premium Honda Siel plans to place its small car above the volume market despite poor sales - Honda also said that the introduction of a diesel-powered car in India will "depend on the market condition". Looks like Honda is just not getting the pulse of the Indian market and does not want to be a mass market player in India like elsewhere in the world and is happy being at a niche player - going to miss out on some serious sales figures I guess. A Hindustan Times news article today (June 3, 2010) Honda's small car to miss Indian 'volume market'- Hindustan Times Honda's small car to miss Indian 'volume market' Japanese auto giant Honda today said its proposed hatchback for India is not aimed at the volume-driven small car segment and will be positioned above this category. The company, which is present in India through a joint venture with the Siel Group, is developing a hatchback for the growing Indian auto market and plans to launch it by 2011. "Our small car project is very much on schedule. We have not decided the likely price or the engine capacity of the small car, but the small car will be positioned slightly higher than the volume market," Honda Motor Corporation Chief Operating Officer (Asia and Oceania) Fumihiko Ike told reporters in Rajasthan. Although he did not elaborate on the "volume market", usually cars priced between Rs 2-4 lakh account for most of Indian passenger car sales. Some of the highest selling models in this category include Maruti Suzuki's Alto and WagonR, Hyundai Motor's Santro, General Motors' Spark and Beat and Ford India's Figo (petrol version). "Everybody is looking at the volume market, while historically our cars have always been positioned slightly higher than the volume segment," Ike said, adding the company will not bring in a sedan version of the upcoming small car. While showcasing the proposed small car at the Delhi Auto Expo in January this year, Honda Siel Cars India (HSCI) said it would launch the car in the country by 2011 and was looking at a price of less than Rs 5 lakh. The cheapest offering from HSCI's stable in India is its compact car, Jazz, which starts at Rs 7.11 lakh (ex-showroom, Delhi). Last week, HSCI's newly appointed President and CEO, Takashi Nagai, had said the company would focus on increasing the localisation of components to make the cars, primarily the upcoming small car, more competitive in the Indian market. The company is aiming for over 80 per cent localisation for its proposed small car. While its Jazz and City have 77 per cent and 76 per cent localisation of components respectively, the Civic has 74 per cent and the Accord 28 per cent local components. When asked about the company's declining sales, Ike said: "It is a matter of concern no doubt, but we are not a volume player." HSCI had reported 2.13 per cent fall in sales to 3,578 units in April this year. In March also, it saw its sales declining by 19.54 per cent to 5,928 units. On its diesel engine, Ike said, "Globally we have diesel engines of higher specifications and now we are developing diesel engine with lower specification also, but it is basically for the European market." He said introduction of a diesel-powered car in India will "depend on the market condition".
	() Thanks

3rd June 2010, 15:45	#2
designersf BHPian Join Date: Aug 2007 Location: Ann Arbor Posts: 603 Thanked: 80 Times	This time they might get away with it. A price of 5 lakhs isnt that much more than competing hatchbacks while the Jazz is in a different segment altogether. You can get a very good sedan for the price of the Jazz while that will not be the matter with the 2CV to some extent at least.
	() Thanks

3rd June 2010, 15:54	#3
sgiitk BANNED Join Date: Dec 2007 Location: Gurugram Posts: 7,969 Thanked: 4,787 Times	I think until their rajasthan Plant comes fully on steam, they are not after volumes.
	() Thanks

3rd June 2010, 16:04	#4
kadanaJ BHPian Join Date: Apr 2010 Location: Mumbai Posts: 585 Thanked: 958 Times	I guess giving the Honda name a better brand image is more important for them than volume sales.
	() Thanks

3rd June 2010, 16:43	#6
jacksons BANNED Join Date: Oct 2009 Location: New Delhi Posts: 362 Thanked: 67 Times	In my opinion their small car will be priced like this. Base model: No PS, No AC, No PW But airbags and ABS price 4.99L Top Model with PS, AC, PW plus Abs and airbags price 5.99L
	() Thanks

3rd June 2010, 16:48	#7
ukamath BHPian Join Date: Apr 2009 Location: Bangalore Posts: 63 Thanked: 23 Times View My Garage	For any player to make money and have some decent market share in India, a presence in the "affordable, mass market" segment is essential and crucial. You can have all the "nice and cool" cars in the top end - the niche market which gives the companies decent profits, and a premium image, but at the cost of volumes. Since approximately 70% of the volumes lie in the B segment, a presence here is absolutely critical for the number game - volumes, sales and profits. Ford and GM realized it after almost a decade of operations in India. Allan Mullally personally came down to launch the Figo in India, because of the importance of the car to Ford's numbers and today it speaks for itself -Ford's sales have jumped 273% in May 10, compared to May 09. GM still has a respectable 61% increase. Sales in their home markets have all but dried up and to keep the money flowing, every manufacturer is looking at India and China. The Honda's / Toyota's / GM's / Ford's / Nissan's all have their work cut out for them because of their existing presence in the premium market. Their brands have certain value and attributes which helps them when they are going downmarket - read B Segment. The Jazz / City / Civic / Accord and CR-V all have placed Honda at the top of the premium heap - Now they should play the volume game and give the premium Honda experience to the mass market, just as the way they do in other countries. I am sure people will pay a slight premium, for a car from Honda (with decent equipment as standard) - But they shouldn't price it in a completely different territory and make it the Jazz 2. A Honest price with decent equipments can easily give Honda 3 digit growth - They don't even have to try - The cars will sell on their own.
	() Thanks

3rd June 2010, 16:50	#8
narayan Senior - BHPian Join Date: Aug 2006 Location: Singapore Posts: 3,114 Thanked: 2,372 Times View My Garage	another thread to start some bashing . i think we have this set of car makers who we love bashing. lets try to keep the thread clean and at the discussion. when we all can see what can be done in the volume car market, it will be an extremely juvenile thought process to assume Honda does not understand that. so let them come out with details of their small car and we can then discuss the merits/demerits at that time. i dont see any substantial info posted here that is not known already. out of here before i get branded !
	() Thanks

3rd June 2010, 17:19	#13
poloman Senior - BHPian Join Date: Mar 2010 Location: Bangalore Posts: 1,311 Thanked: 5,240 Times	Nandan, Bangalore is a 'City' City. I used to wonder whether a significant % of sales of Honda is from Bangalore.Move over to Kerala or TN or interior KA. You won't see many.
	() Thanks