Honda City Tag Pegged In Rs 6-8 Lakh Band

Honda Motor's marketing research exercise conducted at Delhi's Tivoli Gardens some weeks ago has thrown up a market price band of Rs 6,00,000 to Rs 8,00,000 for its 'City' car slated for a launch later this year in the country. This would place it in direct competition with the Opel Astra launched from the General Motors stable.

The research team that was sent from the Japanese automobile major's Tokyo headquarters to sketch out the exact marketing strategy for India has also proposed to launch the 1.3 litre City in multiple variants to fit into different levels of the suggested price band. The Tivoli Garden exercise had pitched Honda's Civic and City cars against competition that included Maruti's Esteem, General Motor's Opel Astra, Daewoo's Cielo, Ford Escort and one Toyota model.

 

The variants-option proposed to be adopted by Honda Siel Cars India, the joint venture company set up by Honda with Siddharth Shriram-controlled Siel, will be along the lines of Maruti Udyog's strategy for its Esteem model which are sold in three variants.fg

However, company sources indicate that the differences between the variants of 'Honda City' will be more stark than that offered by Maruti. These variations could also involve the City being available in more than one engine size.

Meanwhile, Honda is also studying the possibility of introducing passenger car models in larger, 1.6 litre-plus, engine capacity sizes in the Indian market, though these studies are currently at a preliminary stage. Honda City is a three box sedan car with petrol fired engine and is slated to hit the Indian roads around November this year. While the City will be offered in both manual and auto-transmission gear versions, there is no plan to introduce a diesel model. The company plans to begin with an indigenisation level of over 50 per cent at the start of production of the City, which will subsequently be increased to 75 per cent in five years.

A modified version of Honda's primary car the 'Civic', the City has been developed especially for the Asian market. It was first launched in Thailand in May last year, and has been picked as the car for seven other Asian markets by Honda.

Honda Siel, which has drawn up an investment plan of Rs 800 crore in five years, will pump in Rs 400 crore up to production start.

It is currently putting up a manufacturing plant on a 150-acre site in Greater Noida, 50 kilometres from Delhi.

The company targets to sell over 5000 cars in the first four months of its launch, against an installed capacity of 40,000 cars, and 20,000 cars in 1998-99.

Honda-Siel plans to pick up a 15 per cent share of the mid-car segment in the 1300 cc to 1500 cc size market which is expected to be around 250,000 by year 2000, according to company estimates. The joint venture has projected a total market size of nearly 800,000 cars by year 2000 in the country, of which 30 per cent will constitute cars in the 1.3 to 1.5 litre category.