Honda City’s Dominance Fading in the Midsize Sedan Market

Honda City Faces Decline in Midsize Segment: Factors Behind Its Waning Popularity

  1. Introduction of Honda City: The Honda City, a flagship sedan in Honda’s lineup, has been a significant player in the Indian automobile market since its debut in 1998. Over the years, it has accumulated an impressive cumulative sales figure of 900,000 units.
  2. Sales Decline: Despite its longstanding popularity, the Honda City has recently been experiencing a decline in the midsize segment. According to data from the Society of Indian Automobile Manufacturers, City sales during April-August FY24 plummeted by half, dropping from 15,857 units in the previous year to 7,902 units.
  3. Contrasting Market Trends: Interestingly, this decline comes at a time when the overall midsize sedan segment has seen growth. Sales of midsize sedans increased by 12% from 35,418 units to 39,776 units during the same period. This growth can be attributed to the introduction of new models like the Skoda Slavia, Volkswagen Virtus, and the all-new Hyundai Verna.
  4. Honda’s Efforts: Honda has made efforts to boost City sales, including the launch of a facelifted version in March. However, despite these efforts, sales have remained tepid throughout the year, with numbers as follows: 1,920 units (April), 1,532 (May), 1,478 (June), 1,478 (July), and 1,494 (August).
  5. Factors Behind the Decline: Automotive analysts have pointed to various factors contributing to the City’s decline. These factors include increased competition from other sedans and midsize SUVs, changing consumer preferences, and the introduction of compelling new models by competitors.

The declining sales of the Honda City, a once-popular sedan in the midsize segment, reflect the evolving dynamics of the Indian automobile market and the need for automakers to adapt to changing consumer preferences and fierce competition.

Outdated Design:

The City is perceived as dated compared to sedans like the Verna, Virtus, and Slavia.

Shift Towards SUVs:

Sedan customers are increasingly opting for midsize SUVs like the Hyundai Creta and Kia Seltos.

Honda’s Midsize SUV – Elevate:

Honda introduced the Elevate SUV earlier this year, diverting potential City buyers who were seeking an SUV within a similar price range.

Honda City
Honda’s Midsize SUV – Elevate. Image – The Statesman

In August, the City (1,494 units) fell to fourth place in its segment, trailing behind Verna (2,576 units), Virtus (2,140 units), and Slavia (1,657 units), but it still outperformed the Maruti Suzuki Ciaz (849 units).

Elevate, launched on September 4, is competitively priced between 10.99 lakh and 15.99 lakh (ex-showroom). In contrast, the City starts at 11.49 lakh and offers a strong hybrid variant priced from 18.89 lakh to 20.39 lakh.

Despite the overall growth in midsize sedan sales and a 12% increase this fiscal year, analysts believe that sedans are unlikely to compete with midsize SUVs. Several reasons support this view:

Limited Sedan Models:

There are only five sedan models in contrast to nine midsize SUV models, providing customers with more options.

Consumer Preference for SUVs:

Consumer sentiment leans towards SUVs with higher ground clearance, a trend that is expected to continue.

Saket Mehra, Partner & Auto Sector Leader at Grant Thornton Bharat, notes that midsize sedans not only compete against midsize SUVs but also against more affordable sub-4-meter SUVs that offer similar driving comfort, occupy less road space, and have lower ownership costs. While some existing sedan consumers may remain loyal to the category, the overall shift towards high ground clearance SUVs appears to be a lasting trend.

In a changing automotive landscape, the Honda City faces significant challenges in maintaining its dominance in the midsize sedan market.

 Also Read : 
Financial Express

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