Honda tried to create the ‘J’ segment with the launch of its premium hatchback — Jazz — but after a rush of enquiries Jazz seems to be losing fizz not only to competition but also to the other Honda brand — City.
Jnaneswar Sen, marketing vice-president of Honda Siel Cars India, said, “From the time we launched Jazz, we have seen City volumes go up. We have observed that when customers walk into dealerships with the intention to purchase Jazz, they land up buying City.”
“As a result, even though we received 50,000 enquiries for Jazz since its launch in June, the conversions have only been around 4,000, whereas in case of City the enquiries and conversions are both on an upswing. In fact, Jazz has helped increase the volumes for City,” he said. City, a saloon, costs Rs 1.25 lakh more than Jazz.
Jazz sales have been declining month on month. In June it were a little above 2,000 units, 1,037 in July, 1,029 in August and just 504 units in September. Hormazd Sorabjee, Editor, Auto Car India, said, “ The problem with Jazz is its exorbitant pricing, due to which it is not only helping the customers go in for City by paying a lakh more but its is also making other cars in its competition like Hyundai i20 and Skoda Fabia look good.
The other thing is the saloon versus the hatchback phenomena, people are seeing more value in City and they wouldn’t mind paying a little extra and get a saloon over a hatchback.”According to Ashish Nigam, analyst, Antique Broking, “The market for premium hatchbacks is still very small in India and the pricing of Jazz plays to its disadvantage.”
Mahantesh Sabarad, senior research analyst, Centrum Broking, said that besides the car being extremely expensive, it is also underpowered with a 1.2 litre engine.
“A typical customer who has a sub Rs 5 lakh hatchback and is looking for an upgrade with Rs 8 lakh budget will naturally go in for a better powered City with a 1.5 litre engine than spending a huge amount to again purchase a hatchback. On the other hand, if we look at City, which is in the Rs 8 lakh plus segment, the only other competition is from Fiat’s Linea. After the initial spurt in Linea sales, there is a slump as it is underpowered with a 1.3/1.4 litre engine, thus boosting City sales again.”
A Honda dealer, who did not wish to be named, said that since the launch of Jazz, they have witnessed a 30% increase in City sales. “People come enquiring for Jazz but ultimately settle down for City, especially after the refreshed version of the same was launched in September. However, in the last few days we are seeing the upgrades from Jazz to City are reducing, maybe people have started to understand what the Jazz category is.”
Honda Siel had been operating on a single shift since last year due to declining sales, and according to Sen, “since September we have resumed operating on double shift as we are facing delivery constraints, which is adding to our backlog. City, which constitutes close to 70% of our total sales volumes, has a backlog of three weeks.”
Currently, the company in a single shift produces 5,000 units monthly. Sen said, “The situation is better now but still very fluid. In June we had reduced production of City in order to meet the demand for Jazz, and in July we have reversed this trend.”
Will the underperformance of Jazz force Honda to fast-track the launch of its small car? According to the company, however, the launch is still 2 years away.
Comments