With new City, Honda hopes to shift gears to upper segment

Mumbai: Fourth largest carmaker Honda India, which has not so successfully played the volume game in recent years, hopes to get back to the premium tag with the new Honda City, that has been its only warhorse since the first launch in January 1998.

The company has a reason to be optimistic as the fourth-generation City, launched only last week, has already notched up over 5,500 bookings as of Friday.

This assumes importance as after being the segment leader from launch since the past few months, the lower priced Ciaz from Maruti Suzuki has overtaken the City to become the segment leader with a slender margin.

"We are so overwhelmed by the response to our new City. We have already received more than 5,500 bookings for the new City. And with this we hope to regain the market leader in the segment as well as to regain our premium player tag," Honda Cars India president and chief executive Yoichiro Ueno told a select group of reporters over the weekend.

"We don't want to be known as a cheap or mass brand. We want our brand to be known as a premium car brand. Our focus will be the upper segment going forward," he said.

"We've decided to maintain our traditional positioning, which is a bit more premium though not luxury. So, we'd like to target customers a bit different from others in terms of products, service, and customer experience," he said.

Ueno also hinted at the premium Civic making a comeback as it looks for a more aggressive play in the premium-end and staying away from mass-market segment dominated by Maruti and Hyundai.

Notably, Honda has reported negative numbers for the last 15 months in a row.

The company will also drive in a new compact sports vehicle WR-V, based on the Jazz platform, Ueno said.

The petrol-only Civic was one of the most-recognisable models for the company, but was moved out from here around 2012 when the market had shifted to diesel.

On the hybrid Accord, he said they are selling around 30 units a year.

He also admitted that the Tokyo management is open to the idea of shipping in its global luxury brand Acura but refused to share details.

Ueno disputed claim that Ciaz is the segment leader, saying, "That company has gained from using regulations to its advantage. The petrol City sells several times more than Ciaz petrol version, while that company is selling more diesel models because of the subsidies, Excise duty benefits as well as the incentives arising from the FAME scheme, while we get none of them. So they can play the price game as well."

The City was averaging at close to 6,000 a month till some months back (last month Ciaz sold 5,360 units), while its second best model and the low-end sedan Amaze averages a little over 4,000 a month, and its small cars Jazz at 2,500 and the Brio at a low 500 a month.

Its MPV model BRV is doing reasonably well with averaging 1,000 units a month, while the first MPV Mobilio is struggling.

Ueno said the City sales declined in the past few months because the company was in a phase out stage as it was preparing the new fourth general version of the City.

Asked on the need to keep investing on a struggling brand from day one, company's senior vice-president for sales and marketing Jnaneswar Sen said they can't just phase out a model so suddenly and without recovering the investment.

"We failed to properly understand the MPV in general and especially large market of white-plate commercial segment. We should have done more market research on this sub-segment but the largest in the category," Sen told PTI.

On February 14, the company launched the upgraded version of its best-selling sedan City with a price tag of Rs 8.5- 13.58 lakh range.

"With the new City, we aim to exceed customer expectations by offering value at a very competitive price. I am confident that with the new City we will regain our leadership position in the segment," Ueno said.

The 1.5-litre petrol engine vehicle is priced at Rs 8.5-13.52 lakh, while the diesel option with a similar engine capacity comes between Rs 10.76 lakh and Rs 13.57. The petrol version of Ciaz, which also claims to be semi-hyrbid, comes at Rs 7.86-9.96 lakh.

The City which was first launched in the county in January 1998, has so far sold 6.5 lakh units. The third generation City launched here in 2014, clocked 2.2 lakh units so far.