New-Generation Honda City To Be Sold Alongside Current Model; What’s The Logic?

We analyse, whether the decision to sell both, the new generation and the old generation Honda City alongside, makes for a strong business case or otherwise.

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The new, fifth-generation Honda City has been in the queue for launch for quite some time now. Had it not been for the novel coronavirus, the new generation City would have found owners by this time. However, Honda is gearing up for the launch of the all-new City in India and a virtual introduction should happen anytime soon.

Another interesting bit of information coming through is that the Japanese auto giant will not discontinue the current-generation City sedan with the arrival of the new-generation model and it will be sold alongside the new generation. 

2020 Honda City Front

Honda Cars India has decided to sell the new and older versions together to offer a wider buying choice to its customers in terms of trims and price range. Now, does this decision make any sense in the current scenario where the demand for sedans has decreased significantly? They’ve clarified that this decision has not been made for the old model to be sold to fleet owners. So what’s the logic? Will the current-gen car be sold until they clear inventory? Let us dig into it in detail.

Over the past few years, the demand for sedans in mid-segment and premium segments has decreased considerably and that market has shifted towards SUVs. SUVs have been selling like hot pancakes in the recent past and that trend is here to stay. In times like these, Honda has pulled a surprise by announcing that both the current and the new generation will be on sale in the Indian market simultaneously.

Honda City Lunar Silver (2)

Well, this is not the first time that a newer model will be sold alongside the previous model. Maruti Suzuki did that with the DZire, while Hyundai did the same with the XCent/Aura. However, both the above-mentioned models have segregated into two categories- for normal customers and for fleet customers who want to run a cab. However, this is not the case for Honda City. Honda has confirmed that both the models will be open for sale to private customers in the market.

Also READ: New-generation Honda City: Three Ways In Which It Impresses, Two In Which It Disappoints

The City has been the most popular product of Honda in its India portfolio for a very long time. It is also currently one of the longest-running models in India with its first launch over two decades ago. Therefore, it has been able to survive all these years thanks to some strong showing in sales numbers. The sales have been very good over the years courtesy of that VTEC motor, some premium features, reliability and brand image. People want to own a Honda City and that is how it has created a name for itself.

So coming to the prime question- Does it make any sense to keep both the generations at sale simultaneously? That too of a sedan? Firstly, the City is by far the most popular product from Honda and there are no two ways about it. However, we doubt that if anyone who has his/her heart set on the City, will settle for an older model, considering the obvious fact that the new car looks sharper and should be better than the current car for being new. Moreover, the current-gen City is already priced between INR 10 – 14.5 lakh (Ex-showroom). If the new-gen model takes the highest price point even higher, there are plenty of options out there which offer more features and a body form which everyone favours these days.

They already have the Amaze in the INR 6.2 – 10 lakh space. If they lower the price of the current-gen city to make the entry point more accessible, top variants of the Amaze may be cannibalised. So it’s a strange decision which might or might not work in their favour. The Honda City is one of the last remaining sedans in the market which still manage to stand taller than SUVs and how Honda prices it will decide if it continues to do so.

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