Honda's Sales Threatened by Maruti's SX4

by Ally Wahlberg

Honda City with its high quality Honda mirror is the hottest selling car in the mid-sized car (A3) segment has been overthrown from its top position with the launching of the Maruti’s SX4.

The Maruti so far was the first real challenge for the Honda City in the big car segment. Despite the fact that the Maruti did not announced the retail figures of the SX4 for the first six-week period following its May 7 launch it was still able to dispatch around 3,000 units during the period. The said figure includes the cars displayed in showrooms and those that are used for test drives.

According to the figures provided by the Society of Indian Automobile Manufacturers (SIAM) the company was able to sell 5,008 units in the A3 segment last May. This figure constitutes a astounding growth of over 100 percent as compared with the same month last year. From 14.7 percent in May of last year, the Maruti’s market share in the A3 segment has amazingly doubled to 25.2 percent. On the other hand, during the same period Honda City’s market share has fallen from 22 percent to 14.2 percent.

For the FY 06-07 Honda City has remaind to be the market leader in the A3 segment selling over 40,000 cars followed by Ford India which sold 39,822 cars. However things have started changing in April as Hyundai stole the spotlight with a sale of 3,028 units of its Maruti as compared with Honda’s 2,915 cars.

The in May it happened, Maruti has finally upstaged both the auto majors whereas Honda sold only 2,838 cars a decline of 23 percent as compared with the corresponding period last month.

The other new car in the segment, Mahindra & Mahindra Logan which was introduced in April and begun deliveries in May was able to record 2,787 units for the month snatching a market share of 14 percent in its first month in the A3 segment. As Logan is planning to ramp up production of the model in June, this could add up to the growing challenge in the segment.

Honda has admitted that the new cars have made quite an impact as a matter of fact according to Janeswar Sen, Senior General Manager-Marketing, HSCI, “There is some initial disturbance (in the sales of the City) which was expected. But in the long run, we will aim to maintain our leadership in the segment.”

Despite the initial hindrances that Honda is facing especially with the surfacing of new competitions it is still targeting a sales growth of 5 percent for the City and hopes to sell 42,000 units this year more than the 40,400 units that they have sold before the end of the current financial year. Sen also said that the five-day maintenance shutdown in May has minimized Honda’s numbers.

Maruti’s SX4 top-end variant is priced at 7.24 lakh which is by far cheaper than all the variants of the City except the base model which is priced at 6.77 lakh. Meanwhile Logan’s top-end variant does not even come close to the Rs 7 lakh barrier with the base variant pricing only Rs 4.28 lakh.

As answered to Maruti’s challenge, Honda has circulated a 12-page document among its sales force citing reasons why the City is a better buy than the SX4. The Maruti was not at all alarmed by such move of Honda in fact the former considers it more of an acknowledgment that Honda’s sales did get a substantial damage.

Rajesh Jejurikar, MD, Mahindra Logan said, “Our biggest selling point for Logan is the fuel efficiency of the vehicle, which is better than the competitors (City and SX4). Moreover, we will be ramping up capacity from July, working on one-and-a-half shift basis. The factory will work on full capacity from August onwards.”

About the Author: Ally Wahlberg is a Computer Information Systems specialist. Ally leads an active lifestyle and he is a fan of extreme sports. He is also a car enthusiast and writing about his interests is one of his passions.