The Hindu - Honda Siel Cars India on Tuesday reduced the price of its sedan, Honda City, by up to Rs 66,000.
The new price structure, with cuts ranging from 4-8 per cent, will be effective from June 14, a company release said on Tuesday.
The car will now be available between Rs 7.49 lakh and Rs 9.89 lakh (ex-showroom Delhi), Honda Siel Cars India (HSCI) said in a statement.
Economies of scale
Commenting on the new price structure, Mr Jnaneswar Sen, Senior Vice-President – Sales & Marketing, Honda Siel, said, "In anticipation of bigger volumes resulting in economies of scale from the second half of current year, we have achieved considerable cost reduction and are happy to pass on the benefit to the customers with immediate effect."
The company's R&D division had started working on localisation and cost-reduction activities for its volume models from 2009, he added.
Competition and sops
Honda City has been among the leaders in the petrol mid-size sedan segment. However, the lack of a diesel model and competition from new models such as the Volkswagen Vento, the Hyundai Verna and the SX4 has intensified competition in the segment. This may have prompted Honda to cut prices of its most popular model, sources said.
"This move of Honda is directed to take advantage of Maruti Suzuki not being able to produce the Dzire because of the strike at its Manesar plant. The Dzire at present commands 30 per cent of the market share in the mid-size sedan segment, which is up for grab.
"So it's not just Honda wooing the customers, but Volkswagen too has joined the fray by introducing 7 per cent interest car loans for the Vento as opposed to market rate of 13 per cent," said Mr Basudev Banerjee, a market analyst at Quant Global Research.
"And these sops are not going to end here. I expect more brands in this segment to introduce incentives for the customers, in the form of price slash or lower financing rate or some other tactic. This slash is also to compete with the Volkswagen Vento's competitive price range", he added.
