Posted in Marketing & Strategy Articles, Total Reads: 5795
, Published on 24 July 2013
After 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.
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.
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.
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, based on an existing product, they have much higher acceptance rates.
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’.
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.
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.
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.
Existing Compact Sedans like Dzire and Indigo CS have been heavily criticized for looking out of shape and boxy. Forcing the car to fit within the 4m mark, the addition of the small boot makes it look disfigured. Honda paid attention to the customer feedback and had its engineers style the boot such that the car looks like a proper sedan and not a hatchback with an ill-designed boot. Sharp lines flowing from the sides to the boot give it a stylish and cohesive appearance.
Being based on the platform of a compact car or hatchback, this new breed of cars are only ‘sedans’ by their name and not by the space they offer. Accommodating a boot and keeping the length within 4 meters means compromising on the cabin space. As a result, customers feel they don’t enjoy the comfort and space which they should considering that they are buying a ‘sedan’, i.e., big car. Honda succeeded here with clever designing. The front seats are designed to be thinner at the middle thereby providing the rear passengers with a few more inches of comfort. Moreover, efficient utilization of space means that even after being a tad shorter than Dzire and Indigo CS, it is still roomier.
Attention to Detail
Known for their painful attention to detail, Honda engineers have again proved why their products deserve to command a premium. The two tone beige and brown interiors are comfy and luxurious. The center console unlike the traditional waterfall consoles is non-conventional and highly functional. This microscopic attention to detail enabled Honda to find out one tiny feature which all other companies overlooked. Cup holders in the rear armrest. Addition of a tiny yet critical device augments the utility of the whole feature and satiates the buyer’s latent need.
Plethora of USPs
The Amaze has been very smartly packaged to entice the customers and hit the competition where it hurts. Honda introduced India’s first car with a Heat Absorbing Front Windshield. Keeping in mind our country’s hot and humid climate, this vital innovation helps it score some brownie points.
Apart from such innovative features, the Amaze has also been designed keeping in mind its competitors specifications bit by bit.
Next, it brings the segment leader, Maruti Suzuki Swift Dzire into the ring by launching a variant by variant attack. Honda has put every single feature that Dzire has and then some more.
Steering Mounted Stereo Controls
Rear Armrest with Cup Holders
Heat Absorbing Front Windshield
Electrically Foldable ORVMs
Hitting the Sweet Spot
“Par deti kitna hai?” quipped the young man to the rocket scientist. These lovable advertisements by Maruti Suzuki bought to light the most important thing which an Indian consumer looks for in a vehicle, its MILEAGE. And look at the irony now. The company which mocked other car companies for producing less fuel efficient car just got trumped by one of them!
Amaze’s lightweight all aluminum engine coupled with its less kerb weight (only 960 kg) enables it to give a mileage of 25.8 kmpl* as compared to Dzire diesel’s 23.4 kmpl*. Even Tata, otherwise known its vehicles’ high running costs, comes close with 25 kmpl*.
India is such a country where at the end of the day no matter what or how many features a car has; it is evaluted by the mileage it gives. Coupled with bad driving and traffic conditions, this makes it a mean feat for any manufacturers to conquer. And especially Honda which for the first time indigenously developed a diesel engine. The buyers are extremely value conscious and when it comes to buying a car, they make sure that it has the cheapest cost of running.
*All mileage figures are ARAI certified.
Even after being present for over 10 years in India, Honda has a below average distribution network. It is mostly concentrated in big cities and metros. If Honda wants Amaze to drive its volumes, it must penetrate the Tier-II and Tier-III cities like Maruti and Tata have done. Otherwise, despite having a competitive product, the customers will be forced to buy from the competitors as it was not made available to them.
As of now Honda has received around 30,000 confirmed bookings for Amaze but infrastructure limitations permit it to churn out only 6000-7000 units a month. As a result, dealerships are notifying buyers of waiting periods, some even stretching to six months. Such long waiting periods put off people who instead go with competitor’s model. This means unnecessarily losing out sales and market share.
Heating up of the Competition
Any particular segment registering such high volumes is bound to attract other players into it. Mahindra will soon be launching its truncated Verito Vibe. Hyundai and Ford are working on compact sedans based on existing models of i20 and Figo respectively. Volkswagen and Skoda may also bring in shorter version of their popular Vento ad Rapid sedans. Along with this, Honda needs to be vigilant about Maruti Suzuki’s predatory tactics of deep discounts and ‘special edition’ models like the Swift Dzire Regal.
Till now Honda has had a steady presence in India, mostly in the premium segments. This has meant the development of enviable brand equity, which could never translate into healthy volumes leading to a miniscule market share. The previous two offerings, Jazz and Brio, also failed to create much buzz in the market. It was not because of weak product offerings but because they were not in sync with what customers wanted. With the launch of Amaze a lot has changed. It seems that Honda has finally cracked the code for the Indian market. Only time will tell if will be able to carry this modus operandi forward in a market which is extremely volatile, rapidly changing and without much policy stabilization.
This article has been authored by Vatsal Sethi from Keshav Mahavidyalaya
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