June 23, 2021 (MLN): With multi-year high GDP growth and lower-for-longer interest rates, the auto industry sales in the sedan segment are expected to continue the present momentum in MY22 as the sixth generation Honda City will likely be launched in July 2021.
Honda Motor Company (HCAR) has already received an overwhelming response as more than 7,000 units of the new City have been pre-booked against recent 1000 per month sales during MY21, with deliveries for the 1,500cc variants now slated for Feb 2022, as per a report by Intermarket Securities (IMS).
While, this 6th generation City, according to the reports by PakWheels had debuted in the international market in 2014 and got replaced by the next 7th generation last year, in 2020.
Despite the negligible sales in April-June 2020 due to lockdown and increased competition from Kia Sportage and Toyota Yaris, HCAR’s sales grew by an impressive 50% YoY between July-February 2021. Even if the City model is not the latest one available globally, it boasts several new features to attract customers and overshadow close competition, in IMS view.
With the expiry of the Auto policy at the end of June 2021, an influx of new cars in the market is highly likely, where Lucky Motor Corporation, Sazgar-BAIC and even MG are expected to announce new models, mainly in the premium segment. Although this will further intensify competition for HCAR, it is expected that the new City would recapture market share lost to the Yaris, having features such as rear-seat vents, potential retractable side mirrors and an overall stylish appearance while also attracting sales from the used imported car market (surge in imported car prices due to increased restrictions), Abdul Ghani Mianoor, Analyst at IMS said.
It is pertinent to mention that City sales are expected to be concentrated in the 1,500cc category as opposed to the 1,200cc variants which could be underpowered compared with the 1,300cc INDU’s Yaris and 1,400cc Changan’s Alsvin.
Given the recent popularity of crossover SUVs, the potential launch of both the Peugeot 2008 and Kia Stonic by Lucky Motor Corporation at competitive prices could also challenge Honda's sales. However, to thwart the competition, HCAR may introduce a new Civic model (recently launched globally) during MY23, he added.
Further, HCAR has an added advantage of larger production capacity (50,000 units pa) compared with other new entrants such as Hyundai, Changan and Proton, enabling the former to swiftly roll out deliveries. Even with better features than the Yaris and potentially the City, Changan has yet to dent sales of the Japanese OEMs.
The new City may also appeal to the rural population due to its higher ground clearance as compared to its predecessor, while healthy farming dynamics should itself draw good demand.
Going by the report, the prices of different variants of Honda City are expected to be between PKR2.69mn to PKR3.13mn.
The research believes that despite the elevated global commodity prices, the sharp growth in sales is likely to negate any negative impact. A strong outlook for sales ahead of the arrival of the new City, the recently announced Roshan Apni Car scheme and possible reduced financing rates (6% pa) in the new Auto policy will likely strengthen the profitability of the company.
Copyright Mettis Link News
41855
