In fifth gear

THE NINTH BRAND DERBY-II/ The new Honda City came up tops in the Brand Derby. Here's why

It's less powerful, doesn't look as stylish and is smaller. But the new Honda City is still the most successful brand relaunch in the ninth Brand Derby "" an overwhelming 94 per cent of the respondents considered it a success and just 3 per cent felt the new City was not successful.

The numbers certainly bear that out: According to the Society of Indian Automobile Manufacturers, while Honda Siel Cars India (HSCI) sold 7,096 units of the old City between April and October 2003, the new City registered sales of 18,290 units in the same period the next year.

Still, the decision to pull the old City off the production line and replace it with what was essentially a stripped-down version came as a surprise. After all, HSCI sold nearly 12,000 units of the old City in January-December 2002 and 10,338 cars in January-October 2003 ("Tale of two Citys", The Strategist, November 11, 2003).

What prompted the decision? Says Rajive Saharia, deputy general manager, marketing, HSCI, "In order to get bigger numbers, we had to look at an all-new car."

The primary reason, however, was to make the Honda City affordable and available to those who were looking to upgrade from the B segment (the City is a C- segment, three-box sedan).

To do that, HSCI paid careful attention to what buyers were seeking and what competition was offering. But first, it noted that its rivals had changed. In 1998, when the first City rolled out, it competed against the Ford Escort, Maruti Esteem and Daewoo's Cielo.

By November 2003, when Honda launched the new City, the market had widened: there were Hyundai Accent, Ford Ikon, Opel Corsa and the new Maruti Esteem to contend with, apart from Fiat Petra, Mitsubishi Lancer and Maruti Baleno. Importantly, the Ikon, Accent and Corsa were all priced lower than the City.

The trick, therefore, was to offer customer value-for-money. The new City did promise that "" it is 40 per cent more fuel efficient than its earlier avatar and is priced significantly lower (Rs 6.5-7.7 lakh from the Rs 6.3-10 lakh bracket earlier).

Of course, there was a downside as well: the new City is considerably underpowered. While the earlier version of the vehicle offered 90-110 bhp (brake horse power), the new Honda City offers only 77 bhp. But HSCI doesn't think power is that important.

Says Saharia: "The earlier Honda City was indeed a more powerful car. But our research revealed that most customers fancied fuel economy way over a powerful car."

The sales graph says the same thing. After the launch, across the country Honda City dealers experienced an average increase of about 114 per cent increase in the Honda City sales on a monthly basis.

Says Mohan Mariwala, of Linkway Honda, a dealership in Mumbai, "While we were selling about 70 units the old Honda City every month, we are now selling about 150 units of the new City."

And conversions from the B-segment are also taking place; according to HSCI, 60 per cent of the new City's sales are to people who already own a B-segment car. Earlier, that figure stood at 45 per cent.

Derby respondents felt the "newness" of the City was the key reason for its success. Besides, they add, the Honda brand is so strong, it sells itself.