Japanese auto giant Honda on Thursday launched a new version of its premium hatchback Jazz in India, slashing the price by over Rs 1.5 lakh from the existing model as it looks to increase sales in a fiercely competitive compact car market.
The company, which is present in India through a joint venture with the Siel Group, launched the new Jazz at prices ranging from Rs 5.50 lakh to Rs 6.06 lakh (ex-showroom, Delhi). The old Jazz was priced between Rs 7.12 lakh and Rs 7.56 lakh.
Honda Siel Cars India (HSCI) senior vice-President (Sales and Marketing) Jnaneswar Sen said the company has been able to cut the prices of the Jazz through various cost efficiency measures to address consumer demands in a very tough market.
"It is a competitive market and competition is increasing day by day," he told reporters here.
Since the launch of the car in 2009, the company has been working on to improve supply chain and manufacturing efficiencies and increase localisation of components to reduce the cost of the vehicle, he added.
"We have set up the engine block and cylinder heads at our Tapukara plant in Rajasthan. The engine for Jazz and the upcoming small car Brio is same, and we are expecting good sales volume for Brio. So, economies of scale has also played a role in passing on the benefit to Jazz customers," Sen said.
The Jazz is powered by a 1.2-litre petrol engine and will give mileage of 16.7 km per litre as per the ARAI conditions. The localisation level of components in the new car stands at about 76%, which is almost the same of the last model, he added.
After a few months of launching the car in Indian market, the sales started falling due to very high price in comparison to products from rivals in the same category.
Sen said HSCI was selling about 500 units of Jazz on an average every month during the last fiscal. It has come down further to 200-250 units after April this year due to supply constraints from Japan following the earthquake and tsunami.
"In the next 3-4 months, supply will continue to be limited and once the supply situation improves, volume of Jazz will go up," he said without sharing any sales target.
The premium hatchback segment is very crowded with many car makers offering some of their best selling models in the space. Yesterday, market leader Maruti Suzuki launched the new version of Swift at an aggressive introductory price from Rs 4.22 lakh to Rs 6.38 lakh for both diesel and petrol options.
Some other models include Hyundai's i20, Toyota's Liva, Ford's Figo, General Motors' Beat and U-VA in the premium hatchback category. The prices of these models vary between Rs 3.55 lakh and Rs 8.16 lakh (ex-showroom, Delhi).
Honda's upcoming small car Brio is expected to further intensify the competition. Brio will hit the roads next month and will be priced below Rs 5 lakh.