Honda says the recent government policies and the success of the Maruti Ciaz has led to the slide in demand of the City sedan. The Honda City accounted for over 40 percent of Honda’s total domestic auto sales in FY16.
Owning a Honda City in India is a matter of prestige. The mid-size sedan is the quintessential ‘lambi gaadi’ for many and has been the bestselling car from Honda in the country for a long time. But it seems like the car has ran into some troubles and the old work-horse of the Japanese major is struggling to maintain its formidable presence in its segment, as the demand for the sedan has been dwindling for some time now.
A quick look at the previous few months’ car sales data would show that the demand for the million rupee sedan from Honda has been consistently going down with the Maruti Ciaz, its chief rival, absorbing most of those lost customers. Honda says that the recent shift of customer’s preference from diesel powered cars to petrol cars has jeopardised their production process. Adjusting the production and component supply chain to meet this change takes a minimum of three-four months.
The problem is further enhanced by the strong market response to the Maruti Ciaz which has a hybrid variant too in order to help it skimp many eco-limitations and taxations along with the Delhi Odd-Even rule from which the Ciaz SHVS is exempted. Honda City averaged monthly sales of 6700 units till January 2016. The average for February-March, however, dived sharply to 5271 units. In contrast, the Ciaz improved its performance to 5321 units for February-March.
The company said, 40 percent of City buyers opted for diesel variants in the October-December period of 2015. But that demand came down by 30 percent to just 28 percent in the January-March quarter of 2016. At the same time, diesel sales account for about 60 percent of the Ciaz’s volumes and that has remained unchanged. Besides Ciaz, other similarly priced vehicles such as the Ford EcoSport and higher variants of premium hatchbacks like the Hyundai i20 have also eaten in the sales of the Honda City.
Honda City Sales Hit Due To Rising Demand For Petrol Cars
– Honda City is feeling the heat due to shift in demand from diesel cars to petrol cars
– These changes have caused teething troubles at the production facility
– The production facility takes about two-three months for adjustment
– The problem is also compounded by the success of the Maruti Ciaz
– The Honda City averaged 5271 units whereas the Maruti Ciaz averaged 5321 units in Feb-March 2016