[vina]

Originally Posted by souravc

Facts Vs your opinion ..
- Inflation at over 9 per cent , food inflation at nearly 8.5 per cent
- Minimum Support Price of Grains hiked which would further put pressure on food inflation
- Petrol accounts for only 12% fuel consumption while diesel 40%
- To add more technicality to the discussion the weightage of diesel in the WPI is more than 4 times that of petrol - thats direct weightage

I guess the government is sufficiently worried about inflation since the RBI has been throttling funds through rate hikes even at the cost of growth so diesel price will continue to treated like a holy cow - any hike postponed till it become absolutely necessary.
So even if the price increases petrol hikes will always outpace diesel till global prices cool down

I know the facts very well. The point is the diesel price hike is absolutely necessary right now.

And yes I agree diesel will still be subsidized (meaning petrol will be more expensive) - I thought I wrote as much earlier.

Originally Posted by souravc

2 years by Honda's own admission

That's what I would have guessed. Thanks.

Originally Posted by souravc

Yes they can source but from whom ? VW, Hyundai, GM can be ruled out - at least not for the City. Fiat is unlikely to sell to Honda , they have limited the number they supply to Suzuki too - lets not overlook the fact that Suzuki and Fiat both had significant GM holdings in each.

why would Fiat not sell to Honda? and what difference would a few thousand engines (Honda's present volume) make anyway?

sourcing the technology is not the same as sourcing the fully made engine. Tata motors licenses MJD but manufactures on its own - Honda can do so too (and given their mastery over technology probably do so much better than Tata).

Also for large engines (for large vehicles) there are more suppliers - Honda already buys Isuzu engines and has been selling diesel vehicles in Europe for quite some time with an engine of their own design.


By the way, AFAIK Fiat-GM was over long time ago. What are you getting at?

Originally Posted by souravc

I wouldn't say that a mere price cut in one product line promises brilliant products in store anyways , its more to maintain its relevance in the Indian market which is one of the fastest growing markets in the world . The coming months would tell whether Honda is as serious about the Indian car market as it is about the bikes market

I agree, I was just mentioning the possibilities that open up once Honda becomes serious.

[Fornax]

Who is gonna bear this deficit?

If its' Honda, then its' astounding to know that they were making such large margins, and still managing to have fanboys! If their margins were not high to begin with, then this price cut should be investigated, as no company is allowed to sell below its' cost. ( Unless ofcourse its' packing off

If its' the point-of-sales, then may only god save Honda.

Now, lastly the most worrisome - is there any assurance from Honda that material/s exposed to radiation are not being dumped upon us under the guise of discount?

[cruiser@0523]

Originally Posted by Fornax

Now, lastly the most worrisome - is there any assurance from Honda that material/s exposed to radiation are not being dumped upon us under the guise of discount?

wow, i hope you are just kidding ? Otherwise you wont just mindlessly go around bashing a brand just because the country of origin has had a nuclear problem ? so even the GTR's Toyotas and even the suzuki's should be full of radiation and we could all be mutated now wouldn't we ?

Back to the topic, Great move, Now Honda just needs a few diesel engines here and there and they would have segment toppers everywhere.

[blackasta]

Originally Posted by Fornax

Who is gonna bear this deficit?

If its' Honda, then its' astounding to know that they were making such large margins, and still managing to have fanboys! If their margins were not high to begin with, then this price cut should be investigated, as no company is allowed to sell below its' cost. ( Unless ofcourse its' packing off

If its' the point-of-sales, then may only god save Honda.

Now, lastly the most worrisome - is there any assurance from Honda that material/s exposed to radiation are not being dumped upon us under the guise of discount?

Excellent argument you got - I believe Honda is playing a very tight line here.

Originally Posted by cruiser@0523

wow, i hope you are just kidding ? Otherwise you wont just mindlessly go around bashing a brand just because the country of origin has had a nuclear problem ? so even the GTR's Toyotas and even the suzuki's should be full of radiation and we could all be mutated now wouldn't we ?

Back to the topic, Great move, Now Honda just needs a few diesel engines here and there and they would have segment toppers everywhere.

Regarding the nuclear contamination - I believe the City has 70% localization, and it would require a sinister plan within Honda SCM to direct only the radiation tainted material (if any at all) to India. I do not think that is a realistic fact - Tom Clancy novel, Yes!

[anu21v]

A desperate but much needed move by Honda-SIEL. I understand even though Honda on its own would have wanted to maintain the brand positioning but in a Joint venture company, it was less sutainable.

Lets not Forget that Honda in India has an Indian partner as well, who would not like to lose money, branding or no branding.

Originally Posted by vina

Why would Fiat not sell to Honda? and what difference would a few thousand engines (Honda's present volume) make anyway?
sourcing the technology is not the same as sourcing the fully made engine. Tata motors licenses MJD but manufactures on its own - Honda can do so too (and given their mastery over technology probably do so much better than Tata).

Agree on your point of technology licensing and manufacturing and Honda's probably much better workmanship, but to be fair why would Fiat not want to use this problem of honda to their own advantage. Afterall by virtue of having this diesel engine in Fiat portfolio they can very well leave Honda India behind in sales Rankings.

Originally Posted by vina

Also for large engines (for large vehicles) there are more suppliers - Honda already buys Isuzu engines and has been selling diesel vehicles in Europe for quite some time with an engine of their own design.

Yes, Let them Try getting one readymade diesel engine from Piaggio, Detroit Diesels, Recordo and several other companies. The problem with Honda mindset is they wont trust on technologies provided by outsiders. This is good long term strategy but when the short term survival is in question, one should better leave the long term strategies aside and focus on surviving first.

Originally Posted by vina

By the way, AFAIK Fiat-GM was over long time ago. What are you getting at?

Well, when Maruti Got the license of manufacturing this engine in my opinion some time in 2003-05 both Suzuki and Fiat were having a major shareholder as GM [Its purely my speculation]. Technology licensing of few products can happen even when they are still under development. Its quite possible that technology transfer to Suzuki from Fiat happened as part of GM's relationship with both companies.

[RS_DEL]

Originally Posted by veyron_head

You have a point there.of a LPG/CNG car in this segment (City's Segment) or above, is n't it?.

Yes your information is correct to the best of my knowledge. CNG option results in a compromise on performance to an extent. The Sx4 from Suzuki has a CNG variant on offer, which though not selling in any great numbers is available.

Originally Posted by souravc

Facts Vs your opinion ..
- Inflation at over 9 per cent , food inflation at nearly 8.5 per cent
cost of growth so diesel price will continue to treated like a holy cow - markets in the world . The coming months would tell whether Honda is as serious about the Indian car market as it is about the bikes market

WRT your remark about Diesel price being treated like a Holy Cow. I hope you will grant should the circumstances so demand, Holy Cows can and do end up in burgers. My point being if and when such a situation arises do be ready to see diesel priced at levels much higher than it is today. The secular trend in energy pricing is northwards. Add to that a recovering economy in the U.S. and I leave the result to your imagination.

Also even if one was to concede the point you are making , there is nothing that constrains the government from enhancing the taxation on Diesel powered personal vehicles read cars, to an extent that the whole exercise of buying a diesel vehicle becomes counter productive. For the government that would be killing a lot of birds with one stone [1] satisfying the misinformed greeny brigade who see red every time they see a diesel powered Beemer, Merc, Q7 or the likes, [2] enhancing revenue and [3] to an extent ameliorating the the fuel pricing subsidy burden.

[Fornax]

Originally Posted by cruiser@0523

wow, i hope you are just kidding ? Otherwise you wont just mindlessly go around bashing a brand just because the country of origin has had a nuclear problem ? so even the GTR's Toyotas and even the suzuki's should be full of radiation and we could all be mutated now wouldn't we ?

Originally Posted by blackasta

Regarding the nuclear contamination - I believe the City has 70% localization, and it would require a sinister plan within Honda SCM to direct only the radiation tainted material (if any at all) to India. I do not think that is a realistic fact - Tom Clancy novel, Yes!

No I was not kidding! Neither do I think that manufacturers have done enough to provide clarity on this concern.

Back to the topic please.

[Sheel]

Honda has higher prices wrt to competition and guys crib.

Honda reduces its best seller's price by a good margin and few guys crib again.

But why the best seller's price? Why not CR-V, Jazz's prices are being reduced? City is posting good sales why bother? Or were the profit margins a bit too high?

[Ram_NP]

Wow! In less than 24 hours, we have more than 10 pages of posts. That shows the buzz generated by this price cut.

Honda has finally acted to the market situation. Hope with this cut in price, they manage to better their sales figures in coming months.

But being a Honda City owner, I would loved if Honda had gone for a mixed strategy. That is price cut in "E" , "S" variant and added some features like ACC, Bluetooth interface in "V" variant without any price implications in "V" Variant.

This way they would covered both customers looking for lower price band and customers looking for features.

It will be interesting to watch for the sales numbers in coming months.

What next from Honda? Price cut in Jazz!!

[souravc]

Originally Posted by RS_DEL

WRT your remark about Diesel price being treated like a Holy Cow. I hope you will grant should the circumstances so demand, Holy Cows can and do end up in burgers. My point being if and when such a situation arises do be ready to see diesel priced at levels much higher than it is today. The secular trend in energy pricing is northwards. Add to that a recovering economy in the U.S. and I leave the result to your imagination.

Also even if one was to concede the point you are making , there is nothing that constrains the government from enhancing the taxation on Diesel powered personal vehicles read cars, to an extent that the whole exercise of buying a diesel vehicle becomes counter productive. For the government that would be killing a lot of birds with one stone [1] satisfying the misinformed greeny brigade who see red every time they see a diesel powered Beemer, Merc, Q7 or the likes, [2] enhancing revenue and [3] to an extent ameliorating the the fuel pricing subsidy burden.

Agreed and agreed ! There is no doubt that the diesel pricing mechanism in India is fallacious but neutralising the "diesel" advantage in today's circumstance can only be done through the route you mentioned i.e. penal tax/duty on diesel vehicles which would restore the breakeven point to the 5-7 years bracket or a convoluted route where only CVs would be able to get the subsidised diesel ( I heard this from an IOC official)- managing the same would be a nightmare and fraught with corruption

BTW on the diesel pricing, my point is that if the crude prices head northward it will only see the gap between petrol and diesel widening - I see petrol prices , being re-regulated, would increase by a larger quantum than diesel prices due to politics and nothing else . The best chance that petrol has of reducing the gap is the scenario where crude cools off which allows the OMCs to reduce the petrol prices while the diesel prices are maintained at the then current levels

In Honda's context though it seems that at least for this year Honda cars are not going to have a diesel power plant so it would be back to pricing and features for it to corner the petrol sedan segment - IMO it has that punch now to do it

[aaggoswami]

Originally Posted by vina

why would Fiat not sell to Honda? and what difference would a few thousand engines (Honda's present volume) make anyway?

sourcing the technology is not the same as sourcing the fully made engine. Tata motors licenses MJD but manufactures on its own - Honda can do so too (and given their mastery over technology probably do so much better than Tata).

Also for large engines (for large vehicles) there are more suppliers - Honda already buys Isuzu engines and has been selling diesel vehicles in Europe for quite some time with an engine of their own design.

1) Fiat clearly mentioned earlier that the reason why they sold technology was money. Now that they have money, the newer engine tech like Multiair wont be sold. Suzuki paid hefty amount to Fiat for the license. When Tata-Fiat went to Suzuki for engines in India, Suzuki refused to cooperate because Suzuki has paid for that license.

Now considering that Fiat is relatively stable and has Chrysler which means an opening at US market with its diesels, I dont think that Fiat would be glad to help Honda. Moreover, in India, they have Tata as their partner so IMO, Honda wont get Fiat engines.

2) Yes, Isuzu does sell diesel tech. But again, Isuzu is now under Toyota after a GM ownership. GM did benefit from Duramax, but for India things are a bit different IMO.

Honda India should go to Mitsubishi for diesel engine tech. Mitsubishi recently came up with new diesel engines and Mitsubishi is in need of cash. Go to Mitsubishi, get those diesel units for your cars and see the range of sedans and CRV flying off showroom floors. This is the best option for Honda at this point of time IMO.

[bluevolt]

Originally Posted by Sheel

few guys crib again.

They will continue to do so.

Originally Posted by Sheel

But why the best seller's price? Why not CR-V, Jazz's prices are being reduced? City is posting good sales why bother? Or were the profit margins a bit too high?

I guess they will reduce the price of all models in some time. If they will instantly reduce the price then it will hit company's image. They have planned to reduce the prices but the timing will be different for every other model so that there is not much hype created because of this.

[Bh.P]

Originally Posted by bluevolt

I do not think so. If they really have to clear the stock then they could have provided similar discounts. But this price cut will remain forever. There is no confirmed news about the update and even if it is so then Diwali is still four months away and that is quite a big time.

I agree. I have been trying to figure out if there will be a All "Newer" Honda City, but could find no evidence to indicate that, not even on Team-BHP.
The only news of a new model I found is of a Diesel version expected in 2012, but not sure how reliable this article is.
Upcoming Honda City in India; Find images and details of Honda City Diesel | CarTradeIndia.com

This price change should make things interesting. Most people gave the City a miss, not because of the car being bad, but because of the arrogant pricing. So a job well done by competition.

[GTO]

Originally Posted by download2live

hailing Honda for a "Brilliant" move.

I see that my use of the term "Brilliant" has led to a lot of comments. Let me explain why I think this move is, indeed, Brilliant:

- Honda has been extremely stubborn about its pricing. If anything, the prices only go up with time (e.g. in the case of the Civic). This is the first time that Honda has cut prices of the City, and I'm sure there was a royal tug of war amongst the decision makers. Brilliant are those who pushed for a price cut within the Honda ranks, and finally got their way. If you know how Japanese companies work, it takes a helluva lot of guts to speak your opinion against traditional thinking.

- By repositioning the City at 50K less, they have effectively left some room for a future diesel variant too. Personally, I would have bought the City even at the older price, and do think that it was well worth the premium. However, and the fact is, that price never left room for a diesel variant. This move has created space for a diesel engine in the future.

- Brilliant because the reaction time was quick. Till just a quarter back, the Honda City was No.1 in its segment. Within 3 months of losing the lead, Honda corrected its pricing. Look around in the market and you'll see that reaction times are longer than 3 months, especially when doing something major that's never been done before (in this case, a pricecut on the City).

- Brilliant because once you swallow a bitter pill, the second and third are easier to gulp down. Wait & watch on the Jazz' repositioning, and that for the next generation Civic.

- Brilliant because they addressed the right problem. IMHO, the City is still the best petrol C segment sedan. In fact, if you look at petrol-only sales, it is still the best selling petrol sedan in the segment. Honda realised that diesel competition, and rising petrol prices, will hurt it badly. Thus, they went ahead and cut the price. On the other hand, look at Fiat. They have a problem on the left hand (image, interiors, after-sales, niggling problems etc. etc.) but get surgery done on the right hand (90 BHP Punto which is still slow, a T-Jet petrol Linea that will never sell etc.). Both of these variants have had ZERO effect on Fiats sales.

[SkyWalker]

good move by Honda. The 66K on "E" is a great stroke to bring in volumes.

But its just not enough. This is a tactical move, they would need to think about a strategic positioning to gain back the advantage they lost, and DIESEL have to be the single biggest piece in that plan.