Honda to Introduce Diesel Variant of Honda City to Stave Off Competition

The Honda City is leader in the mid-size sedan segment; however the company has begun facing stiff competition from other manufacturers which threaten to seize its position. According to reports, in a bid to fend off the competition, Honda is currently in the process of thinking of a diesel engine powered Honda City.

The company reportedly has a single diesel engine in global markets, which was developed for the European market. The 2.2l diesel engine, can however not be used in their Honda City model which requires an engine with a 1.4 to 1.6l capacity. Another fact is that it is fed with diesel with a smaller sulphur mix.

According to reports, the fastest growing segments in the auto market is the mid-sized premium segment in terms of sale, with an increase of 25% per annum on average. Around 140,000 units of the Honda City were sold in the year 2010-11 alone, making the sedan a market leader for a decade now. Last year, the Honda City had a market share of 35%.

According to reports, the Indian arm of the company, HSCI or Honda Siel Cars India also have plans to produce a small passenger car Brio. Having a price under Rs.5 lakhs this will be the first entry of the company in the small car mass market. According to reports, around 65% of the cars sold by the Honda City’s rivals in the mid-size premium segment are diesel variants.

The increasing differences between diesel and petrol prices saw the new entrant in the market, Volkswagen Vento with both diesel and petrol variants race ahead in the market, ahead of the City in just two months. The Volkswagen Vento sold around 3,973 units in March in comparision to Honda City’s 2,773 units.

The HSCI senior VP of marketing and sales, Jnaneswar Sen, reportedly said that they are currently coming up with a diesel engine to power the City. The production of this engine would, however take them around two years. Moreover, he also stated that as the increased dieselization of the auto market took place in just one year due to the price difference between petrol and diesel has increased from the earlier Rs.10 to now Rs.21.

As a result, they had to give priority in their efforts in being a huge brand with higher volumes, which will be generated from their new Brio model. Unlike other manufacturers who import diesel engines, he ruled out the import of diesel engines, saying that they believe in offering the best engines, so importing engines is out of the question. They however plan to be the segment leaders as far as the petrol vehicle market is concerned.

This market is already heating up, and the top manufacturer in the passenger car segment, Maruti Suzuki, reportedly already introduced their SX4 petrol variant, but can sell only around 800 to 2000 units per month. Just last February, the company had thrown in a diesel variant, and has bookings of over 10,000 for it so far. Hyundai Motors, another rival of Honda, recently unveiled their Verna, which has diesel variants with a price range from Rs.8.05 lakh to Rs.10.73 lakhs. The global Ford Fiesta’s diesel and petrol variants will also debut in July.

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