Honda introduces first diesel car in India, takes on DZire
The diesel variants will be priced at Rs.5.99-7.60 lakh and the petrol variants at Rs.4.99-7.50 lakh
Honda Amaze comes with a two-year, or 40,000km, warranty and a maintenance package for two years, or 40,000km, whichever is earlier, that costs `9,996 for the petrol version and `15,375 for the diesel one. Photo: Ramesh Pathania/Mint
HONDA introduced its first diesel car, the
Amaze
, in the Indian market on Thursday
to take advantage of the popularity of vehicles that run on the fuel,
which is about 30% cheaper in the country, and shore up flagging sales
in Asia’s third biggest economy.
The Amaze will compete with Maruti Suzuki India Ltd’s DZire and Tata Motors Ltd’s Indigo.
The diesel variant of the model will start selling at Rs.5.99 lakh (ex-showroom price in Delhi) and Honda says it’s the most fuel efficient of the cars in the segment at 25.8km per litre. The car’s petrol variant starts selling at Rs.4.99 lakh and claims to offer 18km per litre.
Maruti Suzuki’s DZire sedan, priced at Rs.4.99 lakh to Rs.7.5 lakh, sells 15,000 units every month.
Another competitor in the segment is Mahindra and Mahindra Ltd’s Verito sedan, based on the Renault Logan. The sub-four metre sedan market accounted for 12% of the total car market in 2012-13.
The lack of a model that runs on the cheaper diesel fuel had hobbled Honda’s sales in the country in recent years with sales declining 8.5% in FY12
and a 3.79% drop in the previous year. Sales, however, rebounded in
FY13. It grew 35% to 73,483 units, even as overall car sales in India
declined 6.69%.
The share of diesel cars sold in India rose from 25% in 2010-11 to 40% in 2012-13 as the fuel is Rs.20 per litre cheaper than petrol, according to Society of Indian Automobile Manufacturers.
Honda
has filled a hole in its portfolio with Amaze, experts said. Interest
in the car appeared to be high with the company’s outlet on Tolstoy Marg
in central Delhi seeing crowds that led to a traffic jam for a while on
Thursday.
The company wants to increase its presence in the Indian market by reaching out to smaller towns.
“So far, Honda has been at a disadvantage in the rapidly dieselized Indian automobile market,” said Hironori Kanayama, president and chief executive of Honda Cars India Ltd.
“With the launch of Amaze, we will strengthen our position in the tier 2
and tier 3 cities. In fact, 63% of the total Amaze customers in its
first year will come from these cities.”
A Delhi-based consultant with an automotive research firm agreed with Kanayama.
“Globally, they are a middle-class brand and the same is happening in India,” said Pradeep Saxena,
executive director, TNS Automotive. “It will give them an entry into
India’s middle class. It could look for a greater loyalty with its
product portfolio spreading from Brio to City.”
Honda may get as many as 75,000 bookings in two months, according to Mahantesh Sabarad, senior vice-president, Fortune Equity Broking.
Sabarad
attributed this to “great fuel efficiency, smoother transmission,
longer service interval and Honda’s” premium image in India.
The pricing could hurt the Honda brand in the country, according to a senior industry executive at a rival company.
“Pricing
a car is a statement of confidence in your own brand and product. One
should wait for the initial euphoria to get over,” this person said,
requesting anonymity.
Saxena
of TNS disagreed. The premium image “does not come with the price but
with the product. No brand has lost its equity by keeping realistic
pricing,” Saxena said.
Honda
may still have to grapple with production issues at its plant in
Greater Noida, which is running at full capacity. Its idle plant in
Tapukara, Rajasthan, will be production-ready by next year.
“We have a monthly capacity of 10,000 units. We do not have contingency plan ready if demand surpasses our expectations,” said Jnaneswar Sen,
senior vice-president (marketing and sales), Honda Cars. “We will have
to wait for the next plant to get ready.” Honda is expected to make
4,000 units of the Amaze per month.
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