If you’re wondering why Honda Cars Philippines decided to bring in just one variant of the all-new City Hatchback, the reason is quite simple: Filipinos aren’t buying enough small hatchbacks.
Maiko Viar and Andre Ramos from Honda Cars Philippines’s product planning team explains that the sub-compact hatchback segment has been declining for quite a while. In 2017, when the Jazz (may it rest in peace) got a mid-cycle refresh, the Philippine B-segment sold one hatchback for every ten sedans (9 percent to be precise). That number has since declined to just one out of every 100, or as low as 1 percent (3 percent on some months).
This means that the City Hatchback finds itself in a very niche market. Truth be told, Honda could have pulled out of the segment altogether (North American Honda set a precedence in the U.S. after all). However, they realized that they wanted to continue serving a segment where they were the undisputed leader; even if that segment is worth about just 40 units a month—a number smaller than the sales of some sportscars.
For the City Hatchback to work, they had to balance what buyers wanted with what made business sense.
They noticed that the B-segment hatchback buyer tended to skew towards upper grade trims, with particular emphasis towards style. This happens so much so that even with an overlapping price tag—the City Hatchback costs the same as the lowest trim Civic 1.8 S—the buyer profile is different. Buyers who zeroed in on the City Hatchback stay with the City Hatchback, while those who’d prefer the Civic 1.8 S, would stick with the Civic 1.8 S.
Then, it’s down to the unsexy, but inevitable part of the auto industry—the business side. As it is, the City Hatchback’s sole variant, available in four colors, means that Honda Cars Philippines and/or their dealers has to stock at least four of them, in the most simplistic sense. Now, imagine if they went with three trim levels like the Jazz did during its heyday—that means keeping at least 12 units in stock. Add a manual gearbox option to one variant, and that number goes up to 16. This is quite alright for a segment that sells closer to a hundred per month, but not forty.
Oh, and as to why there’s no turbocharged City for the Philippine market? Accord to Honda, there are four factors they consider when deciding which powertrain to bring in: performance, fuel efficiency, and engine displacement (all vis-à-vis its class), and (with emphasis) tax regulation.
The reason for introducing the City with a 1.0-liter turbo in Thailand is simple: it’s part of Phase 2 of their eco car program. With that, it has to achieve CO2 emissions of less than 100 grams per kilometer, and a fuel economy figure greater than 23.25 km/L. This was only achievable by using a small displacement turbo with idle start/stop. That’s why Nissan went with a 1.0-liter in the Almera too, the Vios displaces just 1.2 liters, and Mazda opting to sell their Mazda2 with a 1.5-liter diesel. The tax levied is 14 percent for gasoline engines and 12 percent for diesel engines, while for non-compliant cars, it goes up to 35 to 40 percent.
Besides, at the end of the day, the performance between Thailand’s turbocharged City and the Philippines’s normally aspirated City is closer than you think—the 0 to 100 km/h sprint takes about 10 seconds in both versions.
Still, not everything’s lost at this point though. Despite the economic downturn, both Maiko and Andre say that Honda Cars Philippines is not keeping their minds closed. There’s still the possibility of seeing more City Hatchback variants, or perhaps more engine choices. In the end, it’s all up to the market.
Huh? Filipinos aren't buying small hatchbacks? Don't know what country those planners live in cause I'm seeing wigos, mirages and brios literally everywhere. I understand why the honda jazz sales are weak, cause it looks pretty fugly compared to the City.
ReplyDeleteB-segment if you want to be specific.
DeleteNice article, but the reason why they introduced turbo engines in Thailand has nothing to do with the Philippine market...We are just shortchanged and the auto industry critics keep silent about it. The turbo is a newer and more efficient engine. 0-100 time is irrelevant. Our market is just undeserving in their viewpoint. So far, only the Sino brands are giving value for money and no amount of fake RS decals will persuade a "woke" costumer. Wake up Honda. The Chinese are coming and you are losing.
ReplyDeleteTurbocharged engines are expensive to maintain and won't be that reliable..The 1 liter engine of the City hatchback isn't that powerful..The Chinese are only relying on crossover SUVs with questionable and unknown reliability..Honda is doing well with the City and Brio..
DeleteIt's the same reason why all Chinese brands run on 1.5 turbos. It's our tax.
DeleteBesides, the "RS" isn't something invented locally, it's something you see for other markets where the City HB is found.
Turbo's are unreliable? Stay happy with the status quo. You deserve a twenty year old Honda engine. You are exactly the type who will apologize for the major car brands when they decide to bring in third rate engines due to the alleged "poor quality" of our fuel. You're part of the problem mate. But I still believe you deserve better.
DeletePeople are complaining about the 1.5 liter turbocharged engine of the Civic which is expensive to maintain and not reliable..Just stop complaining and go directly to the office of Honda Cars Philippines and complain there.😂
DeleteNot complaining... educating.
Delete:D
Deleteour tax here is really the underlying problem, DTI needs a shot in the foot....
Delete@kuchi888 what are you talking about? I never heard of any problems with honda turbo engines in the PH. Maybe Subaru with their ringland failure. But anyway, turbo engines are not even expensive to maintain, those who say doesn't even own one. I know cause I own a car with a turbo for 5 years now. You just change it with good oil every 6 months. I use amsoil. Even Ford ecoboosts which were sold here a lot longer here than honda turbos, do you hear owners in the Philippines whining about it? I don't think so.
DeleteThis was in 2017, but it gives you a good indication as to the running cost for a turbocharged Civic.
Deletehttps://www.carguide.ph/2017/02/how-much-does-it-cost-to-run-2017-honda.html
As a Subaru owner, I can say that the turbocharged engines are reliable unless you tinker with them. Keep them stock and they're okay (2009 Forester XT).
Honda and Toyota are the two brands fond of selling RS versions of the their cars.... If you sell an RS version, sell the one with the upgraded engine...stop the fraud...
ReplyDeleteTo Ulysses: One thing for sure is that the consumers don't feel cheated with the 1.5 turbos from the Sino brands... in fact, those who own them are quite happy. The whole tax exempt argument is just a bonus.... As for the RS decals, please use your influence and tell the "top 3" to stop cheating people on cosmetics. Thanks
ReplyDeleteThose Chinese crossover SUVs you're bragging are gonna show its reliability problems and lack of spareparts issues soon..The Chinese crossover SUVs are gonna end up like Chevrolet.
DeleteOh.... not bragging about the Chinese SUV's.... just stating a point that they offer more for your money. Wish them well.....look at the bright side....They're making the "top brands" look foolish. Geely for example, sells millions in China... more than what Honda and Toyota could sell in 5 years here in the PH. So, parts might not be a problem....Don't hate and wish ill on the competition, unless of course you work for them....Good luck mate. Time to play golf.
DeleteIf 1.5 turbos are tax exempt, shouldn't Honda sell them here? For a cheaper price? Probably not...
ReplyDeleteThe lower excise tax for 1.5 only applies to vehicles sourced from China.
Deleteoh that's probably why chinese brands bring in 1.5T cars here......They have perks -_-
DeleteThat's how you know you're being shortchanged.
ReplyDeleteYou're the only one thinking about that.😂As if you've got the money to buy one.
DeletePlease remind your mom to pay for the internet. hahahaha....Cheers man... About to hit a birdie putt...
DeleteI'd be surprised if they decide to bring in the N15 Diesel in the future hehe :D For sure its Euro 4 right? Same as CRV's N16......
ReplyDeleteBirdie!!!
ReplyDeleteWe really had fuel issues especially with Diesels before 2016 when Fuel Companies were selling Euro II diesel and Euro 2 gasoline except for Unioil which sold Euro IV diesel and Euro 4 Gasoline. Now the standard is Euro 4 after January 2016 and Unioil is Euro 5. I think turbos don’t really have fuel issues but for direct injection engines I think those engines are more sensitive to the quality of fuel.
ReplyDeleteWe really had fuel issues especially with Diesels before 2016 when Fuel Companies were selling Euro II diesel and Euro 2 gasoline except for Unioil which sold Euro IV diesel and Euro 4 Gasoline. Now the standard is Euro 4 after January 2016 and Unioil is Euro 5. I think turbos don’t really have fuel issues but for direct injection engines I think those engines are more sensitive to the quality of fuel.
ReplyDeleteFuel Issues??? BMW, Audi, Mercedes and Porsche are mainstream brands that have been selling cars in the PH before 2016 without much fuss over fuel quality.... Apparently Hyundai, Toyota and Honda have better, more complicated and sensitive engines??? Just admit that we get the crappy engines and that we are fools not to get the GDI and turbo versions from these car companies... The Koreans and Japanese are apparently clueless that we now live in the digital age and can compare specs of the cars being sold in other countries vis-a-vis to the ones sold here.
ReplyDeleteOwners of luxury vehicles probably don't even care what fuel they use as long as it's the correct one, and they'll also probably choose top of the line fuels only (I sound stereotypical I know). Plus I think all car manufacturers would want a specific fuel quality or octane for their cars which I think most people don't even follow :/
ReplyDelete