Honda Jazz: Price cuts to revive brand

 Takingan aggressive stance, Honda India slashed price of its Jazz hatchback by Rs 1.6lakh on Thursday to gain a foothold in the competitive compact car market. TheJazz price cut comes two months after the company had cut the price of its Citysedan by Rs 66,000.

The country's most expensive hatchback Jazz wasnot able to gather substantial volumes since its launch in June 2009 due to itsRs 7 lakh-plus (Delhi, ex-showroom) price tag. Monthly volumes had slipped to250 units recently against the average 500 units it was doing last year.

Thecompany attributes the new pricing to localisation initiatives and cost-cuttingmeasures and hopes that it will stir up the demand for the car. The new Jazzhas safety features like dual airbags and ABS as standard, and is comparable tosimilar-featured models like Maruti Swift and   Hyundai i20. But lack of a dieselmodel will limit the demand for the new Jazz.

However,while cheering new buyers, the price cuts have come as a disappointment forexisting customers. "It is a let down as we had purchased the Jazz at itsprevious price, trusting the Hondabrand,"said a customer who bought his car a few months back.

The Jazz was not able to make a cut in themarket as its price was far from realities. "It is a competitive marketand competition is increasing every day," Jnaneswar Sen, senior V-P forHonda Siel Cars, said when asked if competition had forced the company to go infor such a major price cut.

However, the car was already selling at adiscount at dealerships. While it was around Rs 50,000 previously, this hadgone up to about Rs 1.5 lakh last month as Honda was in the process of clearinginventory. Honda executives said they expect monthly sales volume of the car tocross the 1,000-unit mark with the new pricing.

The company is now gearing up for the launch ofthe Brio compact, its most ambitious product so far that is likely to be pricedaround the Rs 4 lakh mark. Seki Inaba, marketing director for the company, saidHonda expects volumes to return to healthy levels with the launch of the Brioand due to the recent price cuts.