Honda Motor Co. Ltd's Indian unit started selling its Brio model on Tuesday, marking the company's entry into the small-car segment that accounts for 70% of the local market, as sales of its more expensive models drop.
The `3.95 lakh exshowroom price of the Brio in Delhi is lower than the Swift, the largest selling model of market leader Maruti Suzuki India Ltd in the same category. The Swift retails at `4.22 lakh in Delhi.
“While customers are happy with our products, they also expect us to be competitive on the pricing front,“ said Seki Inaba, director (marketing), Honda Siel Cars India Ltd. “They would not mind if some of the features have not been added to the car".
To reduce the price, Honda is offering customers the option to buy the base version of Brio without some safety features such as airbags that have been standard in all models of cars that the company has sold so far in India. At least 80% of the car is localized. That is expected to increase to 90% in the next few months. “This has helped us in minimizing costs,“ said Takashi Nagai, president and chief executive of HSCI.
Honda expects the entry into the small-car segment to boost revenue as sales of its more expensive models such as the City and the Accord dropped because of rising interest rates and fuel prices.
“The pricing does seem to suggest that it is no longer a premium product,“ said Mahantesh Sabarad, an analyst at Fortune Equity Brokers India Ltd.
The lack of a diesel version of the Brio may crimp Honda's ability to boost sales beyond a point as the difference between petrol and diesel prices has widened in the past few months.
Diesel sells at `41.29 a litre in Delhi compared with petrol's `66.84 a litre. “The only lacuna is it does not have a diesel version and all its competitors, barring Hyundai's i10, come with a diesel option,“ said Sabarad.
Diesel sells at `41.29 a litre in Delhi compared with petrol's `66.84 a litre. “The only lacuna is it does not have a diesel version and all its competitors, barring Hyundai's i10, come with a diesel option,“ said Sabarad.
Honda's sales in India have declined 13% in the first five month to August this fiscal, Society of Indian Automobile Manufacturers' data show.
The Brio will also compete with Hyundai i10, Maruti Wagon R, General Motors India Pvt.
Ltd's Beat and Toyota Kirloskar Motor India Ltd's Liva, which are priced similarly.
Ltd's Beat and Toyota Kirloskar Motor India Ltd's Liva, which are priced similarly.
On the prospects of a smaller car than the Brio, Nagai said, “Of course, we have to look at the A1 segment. But it all depends on market demand".
(Source-mintlive.com)
(Source-mintlive.com)