Honda makes a mark in crowded small car market


In a country shown to be partial to the Honda City, it is not this flagship sedan being driven out in hordes from the company’s showrooms. Rather, the Japanese automobile major seems to have finally made a mark in the small car segment, with the premium hatchback, Brio.

Last month, Honda Siel Cars India (HSCI) sold 3,590 units of the Brio as compared to 2,092 units of the sedan City. Steady demand for its premium hatchbacks, Brio and Jazz, have in fact enabled Honda to overtake the sales of General Motors, Toyota and Volkswagen in the premium compact segment over the past two months.

In April, Honda sold 4,890 units of the Brio and the Jazz, compared to 4,622 of the Chevrolet Beat and the UVA, 3,397 units of the Volkswagen Polo and 2,157 units of the Toyota Liva. With the two models, HSCI had a 7.3 per cent share in the premium hatchback market in India last month. The numbers, however, pale in comparison to market leader Maruti Suzuki, which, with sales of 26,072 units of the Swift, Ritz and Estilo, has around 30 per cent share in the category.

Jnaneswar Sen, senior vice-president (marketing & sales), HSCI, said, “Since we resumed Brio production from the middle of February 2012, we have sold more than 12,000 Brio and cumulatively over 14,000 units so far since its launch in September 2011. The contribution of Brio to our overall sales volume has been over 44 per cent in the last three months.”

Honda's earlier attempt to make a mark in the small car segment in India, with the Jazz, hadn't met much success. In August last year, it introduced a refreshed version, priced Rs 1.5 lakh cheaper than the earlier one, which was available for Rs 7.12 lakh and Rs 7.56 lakh. The Jazz is available for Rs 5.75 lakh and Rs 6.31 lakh (ex-showroom, Delhi).

After the resumption of normal production this February, sales of small cars at Honda have grown to account for 52 per cent of overall volumes for the auto maker. While sales have mostly been driven by the Brio, the Jazz volumes have also increased, to 1,300 units last month.

The volumes are significant, as Honda cars do not offer diesel options. The Volkswagen Polo, Toyota Liva and General Motors’ Beat all have diesel versions. V G Ramakrishnan, senior director (automotive and transportation – South Asia and Middle East), Frost & Sullivan, said, “The styling of the Brio is fresh. Honda has a strong brand presence in India and with this offering, the company has been able to draw in consumers who wanted to own a Honda product but couldn’t because of the high price points of their offering. Other hatchbacks in the market are selling because of their diesel options; the fact that the Brio is gaining volumes in petrol shows acceptability has been good.”

The cost differential between petrol and diesel is a whopping Rs 25 per litre, up from Rs 10 in April 2010, which has made an increasing number of consumers opt for diesel cars. In models where both are available, as much as 80 per cent of sales come from diesel variants. Industry estimates suggest in the last financial year itself, the sale of diesel vehicles has grown by 35 per cent, to account for 47 per cent share of sales in the overall passenger vehicle market. Petrol car sales during the period have declined by 15 per cent.

The Hyundai i10 comes only in a petrol fuel option, too, but figures among the five most popular vehicles in the Indian market.

Abdul Majeed, partner and leader (automotive practice), Pricewaterhousecoopers (PWC), is more sceptical: “There is often an initial excitement around new products. The Brio was not available right after its launch in September last year and pending demand is flowing in. We have to wait and watch how the product does in the coming months. Honda has also stepped up marketing efforts after the launch of the small car and that has helped.”

The Brio is the second cheapest car available in the premium hatchback market. It is priced upwards of Rs 3.99 lakh (ex-showroom, Delhi). The Ford Figo ( the cheapest offering in the category) is tagged between Rs 3.81 lakh and Rs 5.94 lakh. Sen is confident that the volumes will continue to hold strong in the coming months: “The customer feedback has been very positive for the Brio and we are confident the model will do very well in the market in the coming months.”