Honda Jazz: Price cuts to revive brand

 Taking an aggressive stance, Honda India slashed price of its Jazz hatchback by Rs 1.6 lakh on Thursday to gain a foothold in the competitive compact car market. The Jazz price cut comes two months after the company had cut the price of its City sedan by Rs 66,000.

The country's most expensive hatchback Jazz was not able to gather substantial volumes since its launch in June 2009 due to its Rs 7 lakh-plus (Delhi, ex-showroom) price tag. Monthly volumes had slipped to 250 units recently against the average 500 units it was doing last year.

The company attributes the new pricing to localisation initiatives and cost-cutting measures and hopes that it will stir up the demand for the car. The new Jazz has safety features like dual airbags and ABS as standard, and is comparable to similar-featured models like Maruti Swift and   Hyundai i20. But lack of a diesel model will limit the demand for the new Jazz.

However, while cheering new buyers, the price cuts have come as a disappointment for existing customers. "It is a let down as we had purchased the Jazz at its previous price, trusting the Hondabrand," said a customer who bought his car a few months back.

The Jazz was not able to make a cut in the market as its price was far from realities. "It is a competitive market and competition is increasing every day," Jnaneswar Sen, senior V-P for Honda Siel Cars, said when asked if competition had forced the company to go in for such a major price cut.

However, the car was already selling at a discount at dealerships. While it was around Rs 50,000 previously, this had gone up to about Rs 1.5 lakh last month as Honda was in the process of clearing inventory. Honda executives said they expect monthly sales volume of the car to cross the 1,000-unit mark with the new pricing.

The company is now gearing up for the launch of the Brio compact, its most ambitious product so far that is likely to be priced around the Rs 4 lakh mark. Seki Inaba, marketing director for the company, said Honda expects volumes to return to healthy levels with the launch of the Brio and due to the recent price cuts.