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Honda 'New Small' a cut above?


Japanese auto giant Honda today said its proposed hatchback for India is not aimed at the volume-driven small car segment and will be positioned above this category.

The company, which is present in India through a joint venture with the Siel Group, is developing a hatchback for the growing Indian auto market and plans to launch it by 2011.


"Our small car project is very much on schedule. We have not decided the likely price or the engine capacity of the small car, but the small car will be positioned slightly higher than the volume market," Honda Motor Corporation Chief Operating Officer (Asia and Oceania) Fumihiko Ike told reporters here.

Although he did not elaborate on the "volume market", usually cars priced between Rs 2-4 lakh account for most of Indian passenger car sales. Some of the highest selling models in this category include Maruti Suzuki's Alto and WagonR, Hyundai Motor's Santro, General Motors' Spark and Beat and Ford India's Figo (petrol version).

"Everybody is looking at the volume market, while historically our cars have always been positioned slightly higher than the volume segment," Ike said, adding the company will not bring in a sedan version of the upcoming small car.

While showcasing the proposed small car at the Delhi Auto Expo in January this year, Honda Siel Cars India (HSCI) said it would launch the car in the country by 2011 and was looking at a price of less than Rs 5 lakh. The cheapest offering from HSCI's stable in India is its compact car, Jazz, which starts at Rs 7.11 lakh (ex-showroom, Delhi).

Last week, HSCI's newly appointed President and CEO, Takashi Nagai, had said the company would focus on increasing the localisation of components to make the cars, primarily the upcoming small car, more competitive in the Indian market.

The company is aiming for over 80 per cent localisation for its proposed small car. While its Jazz and City have 77 per cent and 76 per cent localisation of components respectively, the Civic has 74 per cent and the Accord 28 per cent local components.

When asked about the company's declining sales, Ike said: "It is a matter of concern no doubt, but we are not a volume player." HSCI had reported 2.13 per cent fall in sales to 3,578 units in April this year. In March also, it saw its sales declining by 19.54 per cent to 5,928 units.

On its diesel engine, Ike said, "Globally we have diesel engines of higher specifications and now we are developing diesel engine with lower specification also, but it is basically for the European market."

He said introduction of a diesel-powered car in India will "depend on the market condition".