Like a mythical Phoenix bird that never dies and is able to rise from ashes, the latest rumour is that the previous generation Honda City will be revived by Honda Automobiles Thailand as the basis of their new Eco-Car. If the rumour is true, Honda is not the only one tweaking and reengineering its older models and sending out into the sales battle field again as an affordable car for developing markets. Earlier, we have also seen how Ford revived and "repackaged" its outgoing European Fiesta model as the Figo for developing markets.
The Eco-Car is a long term project of the Thai government to remodel their automotive manufacturing hub, expanding away from their current truck centric model to include green cars. Under the scheme, heavy tax incentives will be provided to car manufacturers who invest USD 150 million in manufacturing of vehicles that meet the following key criteria - fuel consumption of 20km per litre of fuel with petrol engines below 1.3-litre (or 1.4-litre diesel) and emits no more than 120g/km of CO2. On top of the, annual production volume must reach at least 100,000 units per year by the 5th year of operation. Read more here.
It is still unclear to what extent the similarities will end and how much underlying components will be reused (of course with newer updates to them), but it is expected that there will be very minimal exterior similarities between Honda's new 4-door eco-car sedan and the previous generation City. The previous generation City is known to be a fuel miser. With a little more tweaks and addition of "mild hybrid" components (i.e. auto engine start-stop, regenerative braking) and some aero and weight saving tweaks, meeting the 20kpl should not be too difficult.
If the rumour is true, positioning the model could be a bit tricky. It could be priced lower in Thailand due to the government incentive, but what about the export destination countries where no such incentive exist? I don't think Singapore's green car incentive is applicable to mild hybrid vehicles with engine start-stop and regenerative braking functions only. So will the model be priced above or below a standard City? Those mild hybrid components will bump up the price premium, but would anyone want to pay more for a car based on an older outgoing model? Unless significant differentiation is engineered into it.
It should be noted too that the Thai Eco-Car project also said to be initiated by Honda, to the ousted Thai former PM Thakshin Shinawatra. As Honda does not have a truck (the unibody Ridgeline is only for North American market, and is hardly a commercial success) model, it plays into Honda's strategic interest to convince the Thai government to promote eco-cars. Toyota Motor Thailand is also said to be involved in some dispute with the Thai government over the eco-car issue because Toyota have invested very heavily to make Thailand its primary manufacturing hub for its truck vehicle based IMV project - which includes models like Fortuner and Hilux (Innova's manufacturing is largely centered in Indonesia, the MPV capital of ASEAN). A shifting buyer demand towards smaller, low running cost eco-cars (expected to be priced around THB 500,000) will surely affect demand for cheap trucks, which still remains the most popular vehicle body type in Thailand. Nevertheless, Toyota has since confirmed its participation in the eco-car project, but not much is known about the model being developed, though we already know for sure a Yaris and Corolla hybrid is on the way by the next model change timing. Some say there will even be a Hilux hybrid.
With an eventual annual production target of 100,000 cars, surely at least a third of them have to be exported to other regional markets with a sizeable passenger car market, Singapore and Malaysia in particular. Sales small passenger cars in Thailand is overly concentrated within Bangkok city only. The rest of Thailand is still a truck dominated market. Currently Honda Automobile Thailand also exports the City to Australia.
By the way, on a recent trip to Bangkok I spotted the W221 S-class facelift model, undisguised, sitting on the back of a flat bed carrier. I was on a taxi on my way out of Survarnabhumi heading towards Bangkok city on a Friday afternoon when I spotted the carrier. But couldn't get my camera out in time. Plus the Hello Kitty pink Corolla Altis taxi was already doing close to 120km/h on the fast lane while the flat bed carrier truck was still lumbering in the slow lane. An Isuzu MU-7 was in between and blocked the view soon anyway. Nothing much to it. It's everything as expected after seeing the images posted in an earlier entry here. Guess the W221 S-class facelift launch will be very soon in Malaysia and Singapore.
Also, an interesting comment I heard is that the rapid development of Thailand as an automotive manufacturing hub and the most popular tourist destination in the region is largely due to the policies of ousted PM Thakshin Shinawatra (in spite of his corruption charges). What else would you expect from a business savvy former CEO of a telecoms giant? It is a controversial thing to say particularly to Thai society elites and large private enterprise business owners. Thailand's direction as an automotive hub is a little less clear under current PM Abhisit Vejjajiva. Still, it is a lot better than the clueless Malaysian government and their misguided open-AP and National Automotive Policies.
2 comments:
If it is priced nearly that of the City, it will be hard for them to push the sales further. Significant differentiation or not.
True. The general price assumption for an eco-car is from 500,000 baht onwards.
A base model Honda City starts from 524,000 baht. So we will see how will manufacturers get around that. I think a difficult question to answer is do people see a small city run about eco-car as higher or lower class vehicle than a typical B-segment Vios/City.
Eco-car's selling point besides being green is also about being economical. Does economical=cheap price tag? Asian consumers always equate engine capacity with the status of a vehicle. How does one sell a slightly smaller 1.3-litre hi-tech eco-car compared to regular 1.5-litre B-segment?
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