New Honda City launched at Rs 6.99 lakh starting price; cuts entry-level price by Rs 50,000

NEW DELHI: Japanese car maker Honda on Wednesday launched a new entry-level variant of its flagship sedan City in India, slashing the price by Rs 50,000 compared to that of the existing model.

The company, which is present in India through a joint venture with the Siel Group, had cut the price of the City by up to Rs 66,000 in June also, after implementing various cost reduction measures.

Honda Siel Cars India (HSCI) today launched a refreshed version of the new City at prices ranging from Rs 6.99 lakh to Rs 10.22 lakh (ex-showroom, Delhi). The old City was priced between Rs 7.49 lakh and Rs 9.89 lakh.

"Our target is to offer a product as affordable as possible to customers. So we have launched a new Corporate Edition of the City that do not have some features, and we have cut the prices from the earlier entry-level version," HSCI Director (Marketing) Seki Inaba told reporters here.

The company's R&D division is also working on to increase the localisation of components and implement cost reduction activities, he added.

HSCI will start taking booking orders for the new City immediately and delivery will start from January. The company had introduced the current third generation City in 2008 and has sold 1.36 lakh units so far.

The City sales have been facing stiff resistance from other models in the segment such as Hyundai Verna, Maruti SX4 and Volkswagen Vento. While Verna, SX4 and Vento offer both diesel and petrol options, City comes only in petrol variant.

In August, HSCI had launched a new version of its premium hatchback Jazz, cutting the price by over Rs 1.5 lakh from the existing model as it looked to increase sales in a fiercely competitive compact car market.

Talking about the impact on sourcing of components from Thailand due the flood, Inaba said: "Our production was curtailed due to component shortage. However, we have been successful in ensuring components for the new City."

The production of its hatchbacks Jazz and Brio is likely to be normalised from February next year, he added. "After the impact, we are now seeking alternate locations like China and Japan to source various parts. We are hoping that we will attain normal production level from February," Inaba said.

During 2011, HSCI has lost about half of its production than its initial plans for the year due to tsunami in Japan and flood in Thailand, he said without giving details.

Asked about the impact of depreciating rupee, Inaba said: "We are trying to increase the amount of export of components like body panels from India to reduce the affect... We do not have any plans to raise the prices of our products."