perspective
september 2013
BACK IN BLACK
HOW HONDA ‘AMAZE’D THE CAR MARKET By Vatsal Sethi Keshav Mahavidyalaya
based on an existing product, they have much higher acceptance rates.
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Utility Perception of the Consumer/Status Symbol The addition of a small boot makes the consumer perceive it to be a “3-box car” at the price of a hatchback. In India, the value of a car and its owner is judged by its size. Hence, these compact sedans behold the value of a ‘status symbol’.
fter spending almost two years in red, Amaze was like a knight in shining armor for Honda. Over 30,000 bookings and a sale of 6023 units two months into its launch, has brought it back to its profitable ways. Apart from that, and most importantly, the Amaze is proving to be a game changer for Honda, which until now found difficult to find its feet in the bottom end of the market. This has been Honda’s most successful launch in India so far and has the potential to take it all the way to the top.
Diesel Engine Option Lack of diesel variants has proved to be Honda’s Achilles heel in India so far. Generous price disparity between petrol and diesel prompted consumers to go for diesel cars due to their lower cost of running. Hence, it was imperative for Honda to develop a diesel engine for India, to capture diesel buyers and deploy in future models too.
Rationale for Launching Amaze: Growth in the Segment The compact sedan segment is the fastest growing segment in the market right now. Maruti Suzuki Dzire has been clocking average monthly sales in excess of 15,000 units and became the top selling car in May, outselling its sibling Alto by a margin of 854 units.
Therefore, it was decided to enter the compact sedan market with Amaze, a mass market product which would meet its twin objectives: bringing in volumes and augmenting overall market share.
Less Taxes Cars less than 4m in length with engines size less than 1.2 litre for petrol and 1.5 litre for diesel , attract a lower excise duty of 12% as compared to traditional sedans which are taxed anywhere between 24%-27%. In actual terms, this is translated into a cost saving of Rs.50,000 to Rs. 60,000.
What makes the Amaze tick? Relying on heavy market research and consumer feedback, Honda made sure to take its time in analyzing the competition and understanding consumer behavior before launching the product. This made it possible for it to find loopholes in its rivals’ offerings and incorporate those findings in product development.
Cost Savings They are usually based on the platform of an existing compact car which substantially reduces the R & D and production costs due to synergy of operations. Moreover,
MARKATHON
Design Existing Compact Sedans like Dzire and Indigo CS have
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IIM Shillong