Honda Siel is probably the only car manufacturer in India which doesn't readily respond to the needs of the market. The company having some of the best products of the world under its belt is not an aggressive player. Honda has never targeted volumes, they always cater to the niche segment, like the Accord, CR-V and even with their premium mid-size sedan City.
The Honda Jazz was a car with great potential but Honda priced it high resulting to a very small number of Jazz's leaving showrooms. Now, Honda is on full throttle developing its new small car for India, due for 2011 launch. The company has announced that it would not be targeting the volume market (trade talk for 'would come with a higher sticker price') with this small car.
Fumihiko Ike, COO, Honda Motor Corporation (Asia)-
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.
The company also announced that there would not be any sedan version of the new small car. Also the company announced that it is working on small diesel engines, which are mainly for Europe and not for India.
Honda Siel had announced way back in 2009 that India would be the launch pad for Honda's new compact small car, a strategy which catapulted Hyundai to a different league in India. But can Honda emulate the success of Hyundai by building a 'premium' entry-level small car for India?
The legacy left behind by the earlier City, which faced considerably less competition around 10 years back, drove customers into showrooms looking for new Citys. The Civic was undoubtedly a revolutionary product that replicated a space ship's styling and an excellent engine with many never before seen features. The CR-V was the most spacious and affordable SUV when it was launched for the features it was offering. With the arrival of the Captiva and recently Fortuner coupled with the hike in CR-V prices, the customers floated away.
Even when Honda launched the Jazz last year, they were eying their existing customer base to get a strong start, but it never really got going. Honda has to bring in the most stylish or a groundbreaking power-packed product to earn praise. Honda should learn its lesson not only from the Jazz episode, but also the lessons learnt from other product successes.
The compact car market in India is not like swimming across the ocean to reach the finish line. It's like swimming in an ocean filled with sharks and hungry reptiles waiting for their next meal.
Honda showcased its small car concept, the NSC concept at the 2010 Auto Expo which received fantastic response from show-goers. Honda with its latest announcements doesn't seem very enthusiastic about the Indian market. Will a similar product, priced above the competition, work in the second attempt?
Click here for IAB's exclusive Honda Small Car renderings