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Honda City Cut Sedan Price Up To 66,000

Honda has made its sedan cheaper by 66,000 to recover its market leadership after opponents such as Volkswagen Vento and Maruti Suzuki SX4 raced past it in past few months.

The company accredited the price cut to successful implementation of a variety of cost-reduction trials, an initiative started two years ago. According to a senior Honda officer:

“It all began with market feedback that the prices have gone very high.”

It has been on Tuesday, when Honda Siel Cars brought down its price of the base EMT variant of City to Rs 7.49 lakh (ex showroom Delhi) from Rs 8.15 lakh, while the top variant VAT Exclusive is now Rs 44,000 cheaper at Rs 9, 89,100.

This price cut in City models surely and effectively has reduced its price gap with Honda’s struggling hatchback Jazz. Besides, the entry level City model is now cheaper compared to the top variant of Jazz. This can cause a downfall of sale of Jazz from existing 500 vehicles a month.

Jnaneshwar Sen, Honda Siel Cars Senior Vice President (Sales and Marketing) said:

“In anticipation of bigger volumes resulting in economies of scale from the second half of current year, we have achieved considerable cost reduction and have passed on the benefit to customers.”

Moreover, seeing customers veering towards diesel cars due to rising petrol prices, Honda has started campaigns concentrating on its fuel efficiency. “City is known for fuel-efficiency. We are harping on this fact,” an official said.

Honda’s R&D team, which comprises 20 Indian engineers and 40 Japanese engineers, started working on a project to get economies of scale in 2009 in anticipation of the launch of its entry-level hatchback Brio. The Brio is all set to be launched during the Diwali season; Honda has combined production of common things like components, leading to economies of scale.

The City range of Honda, which forms over 70 % of Honda Siel’s sales, has been sliding in sales in the last three months as customers started preferring diesel rivals like Maruti Suzuki SX4, Volkswagen Vento and the recently re-launched Hyundai Verna.

Honda does not have any diesel engine variant, but it is developing the technology to have such engines in small sizes of 1500cc to be fitted in City, Jazz and its other models.

Thus, the price cut would prove important for Honda to regain its lost sales. Now eyes turn to competitors, waiting for their new strategy to improve sales.

 


June 16th, 2011    No Comments »

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