Honda City diesel won't have it easy in a changed Indian market
After several years of speculation and forecasting Honda has finally unveiled their diesel City. Three cheers all around because this is a big occasion. Oh sorry, Honda have an all new generation car but is anyone paying attention to that as much as the engine that lies under its hood. For nearly a decade, the Honda City has been one of the best selling sedans in the country and it's done this solely on the strength of its petrol engine. That the Honda City managed to hold its own in a diesel dominated market for this long as a petrol is testament of just how good the car is. Now with a diesel engine powering the fourth generation Honda City, the competition has a lot to fear.
2014 Honda City
A big question on every investor's lips is if this move for Honda has come in a bit too late. Honestly I couldn't care, it's finally here and that is all that would matter. However, having said that, I must state that the timing for this product couldn't have been worse. The economic downturn and political instability contributing to that downturn has made it an extremely challenging market. I believe that the City will not have an easy time selling itself, especially considering the fact that in its segment it has to compete with not just sedans but SUVs.
Roughly over a decade ago is when the Honda City first hit Indian shores, at that time it had little competition. The high quality levels and the aspirational upmarket position it offered easily found a lot of takers. Now, however, the market is a crowded space, and with several competitors and easy to bite into deals being offered by the competition the City diesel will not be able to rest easy on the strength of its engine alone. This all new generation Honda City will have to pack in lots more.
Initial opinion is divided on what the new Honda City diesel offers, and gauging by the mood at the launch event in New Delhi it seemed to receive a lukewarm response. Social media bandied around a lot of factual information, but for a car that has invoked a lot of passion in the past, there weren't any impassioned eulogies to be read anywhere. I find that strange because cars with a lot of promise usually don't just command social media space, the words are almost poetic. I suppose everyone is still waiting to drive the car to gather their first impressions. However, I must also say that over the last three generations the changes in the car have almost been absolute. This is the first time that the new City seems to carry over a bit of the baggage from the past. There are several areas that feel all too familiar and that is not entirely a good start for a car that signals a generation change.
As for the 1.5-litre diesel powerplant, it has already received its fair share of appreciation since its first application in the Amaze, Honda's first compact sedan for India. In there it has already established class-leading fuel efficiency, performance and drivability. In the City, the same engine should do just as well, there is no reason for it not to. In fact, there is a lot more to look forward to in the new Honda City than just its diesel engine. There is a host of new features, better storage solutions and more space for passengers. So yes, the new City is definitely a step up the evolutionary ladder.
The challenge for Honda then is the price and this is a tricky area where Honda in the past has shown a contradictory stance. The unarguably impressive Jazz started off at an exorbitant price and it simply killed what could have been a highly successful product for Honda. But then Honda showed astute judgement pricing the Amaze at ludicrously affordable prices. Where will the City then find itself? A very enticing price point may see Honda sell in larger numbers but profitability could be affected. Or Honda can position the price in a more premium spot where the margins would be high even though the volumes may be low. I have a feeling Honda might resort to the latter because of the invasion of the SUVs. The initial sales numbers might be high due to popular sentiment, Honda getting in a new City and that too a diesel and all that! However, once the numbers pile up and deliveries take a backseat, consumers will take a look at other options and in this case that could either be the Ecosport or the Terrano / Duster, and even probably the Verna. It's not going to be an easy journey for the Honda City anymore; in fact things will get tougher than the last couple of years where dwindling sales affected the City's popularity. I no longer think this is about the Honda City claiming its place at the top but more of being relevant in a marketplace that is slowly seeing a lack of interest in sedans. Sucks to be the City!
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