What does it take for a company that has been positioned as a premium car company to come out with a car at Rs. 3.95 lakh?
"That one thing which is driving Honda is more and more happy customers," says Jnaneshwar Sen, Sr. Vice President of Honda Siel Cars India. The one line mantra that Honda is disrupting the present market with its first low-cost car, Brio.
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The Brio comes in four models, each priced differently. The introductory model, at Rs. 3.95 lakh, includes power steering and an air conditioner. The second-tier model, at Rs. 4.35 lakh, includes steering mounted audio controls, front and rear power windows and keyless entry. A third-tier variant goes for Rs. 4.9 lakh and includes ABS and air bags. The top end model, priced at Rs. 5.10 lakh, comes with alloy wheels, front fog lamps and silver inside door handles - a lot of value at the given prices.
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Earlier, Ford had introduced the Figo as a value for money car, but Sen insists that competition isn't what drove Honda to introduce its own lower-cost model.
"All our cars give excellent value for money in that segment, and it is not about price," he said. For Honda, value is not about price, but rather about styling, durability, quality and experience at dealerships, areas in which Honda execs say the company excels.
The market for value cars that make money off volume has been dominated by Maruti Suzuki for over two decades and that company still holds a strong market position. Sen says that with Brio, Honda is getting into the volume game.
But what about margins? Sen is unwilling to talk about margins, but he wastes no time in telling Business Today that profitability depends on manufacturing efficiency and an improved supply chain. A lot of cost saving also comes from the amount of localization that Honda has brought into the Brio, a high 80 per cent which it says will go up over time.
Will Honda be able to disrupt the market which is dominated by Maruti's Swift and Ritz or Hyundai's i10? These are early days, but the gathering at the conference at Delhi's Taj Palace seemed to be happy with the price and many at the conference had already started contemplating buying a Brio.
So far, so good for the Japanese auto maker.