“Small car for India not aimed at the mass market” : Honda

Honda’s small car for India is on track and we are very much looking forward to see how Honda adopt their technology to compact cars. Honda’s designs are on the sporty side and appeal to the younger generation and thus this is one car to look forward to. However, Honda have announced that the compact car for India (codenamed 2CV) is not aimed at the volume driven small car market in India. In other words, the car which will debut in 2011 will be priced at a premium, just like arch rivals Toyota announced with their Etios. The small car project is still on track but it is likely to be priced at a premium, maybe from 4.5 –4.75 lakhs for the base model.

“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. The volume market in India are the cars that cost between Rs 2-4 lakh and Honda are unlikely to price their car in that range. “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.

Honda showcased their small car at the Auto Expo earlier this year and it received great response. Honda further added that they were looking at a sub-5 lakh price for their car. The entry point into the Honda brand now is the Jazz, that is priced at a high-ish Rs 7 lakh. The high price meant that the Jazz didn’t sell as much as expected and has settled down to just 200-300 units per month. Honda’s newly appointed President and CEO, Takashi Nagai, said the company would focus on increasing local content in their small car to keep costs down. Honda’s models right now sport local contents of 77%, 76%, 74% and 28% for Jazz, City, Civic and Accord respectively. We expect Honda’s small car to sport at least 80% localisation when it is launched in 2011.

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”. We think Honda has faced enough hardships already and delaying a diesel engine will only hit their sales badly, especially when the diesel Corolla Altis is around the corner. Honda better eat their words, diesel engines rule in India and they better get it into their heads sooner than later.

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