Honda expects Tier II and III markets to boost sales of new Honda City 2014

Japanese carmaker Honda Motors received tremendous response for its recently launched mid-range fourth generation sedan Honda City which was launched in December 2013. Though there is a strong demand for this car in urban areas, like most manufacturers Honda also has received a good demand for its cars in Tier II and Tier III towns therefore has increased its dealership in these locations too. After meeting demand of Tier I cities, Honda will extend sales of this model to other cities too through its dealer network. All variants of the Honda City will be available in Tier II and Tier III cities as these markets have matured and people have ample income to purchase both low end and expensive cars.

Honda is also concentrating on expanding its sales to new markets across Asia in neighboring nations like Sri Lanka, Bangladesh, and Nepal etc., and is targeting sales of 6000 units for financial year 2014. Even during the Honda City’s launch in Chennai the firm’s VP and Director of sales mentioned that nearly 58 percent of its total sales volume is likely to be contributed by small towns and cities as these markets are becoming more aware of newly launched products. When the sales records of third generation of Honda City were analyzed, which was discontinued in 2013, it was obvious that nearly half of its volumes were contributed by Tier II, III and IV markets.

But a surprising twist occurred when the Honda Amaze diesel sedan was launched towards end of 2013. The highly fuel efficient car gained instant popularity in Tier I and II cities and was immediately sold out with bookings full for next six months. Presently Honda has 159 sales dealerships spread across 101 cities and towns spread across India. According to company sources Honda is planning to increase the number of sales units to 170 outlets across 107 cities by end of 2014 which will primarily be in Tier II and Tier III markets to make their models readily available to customers in these locations which will help them understand challenges of these markets too.

According to Honda’s head of sales, the firm recognizes six largest cities in India as Tier I and other 20 cities as Tier II and rest of the nation as Tier III markets based on their size and population. Therefore the size of Tier II and III is larger than Tier I which makes it an attractive market for Honda to expand its network of sales and service centers. Honda’s future plan to meet demand from these new locations would be extending capacity of its production unit in Noida to meet demand of soon to be launched products. Also its production facility in Rajasthan will be ready by middle of 2014 which can be utilized to meet both export and domestic demand. Besides sedan models Honda is also planning to launch new hatchback Jazz and SUV version of Brio in 2014 to keep people excited around the brand.  The Honda City 4^th generation model has been launched with base price between INR 7.52 – 11.3 lakhs for petrol model and INR 8.76 – 11.29 for diesel fuel variant.