Jazzing up the market

By ALASTAIR SLOANE motoring editor

Honda New Zealand has been talking up its "price promise" philosophy since it changed the way it did business last year.

Basically, it is defined as, "What you see is what everybody gets". There are no more discounts. Even lease prices for fleet and private buyers are the same.

It has fixed its prices to protect the value of its cars. That way, it reasons, it can ease the rate of depreciation, and new and used Honda customers will get a better deal.

Discounting leads to a domino effect and rapid depreciation, it says. This has led to a perception of instant depreciation on new cars.

Even consumer groups have advised buyers to go for a car that has suffered its first big hit of depreciation but still has a couple of years left on the manufacturers' warranty.

"The new-car industry is not going to grow while customers have this perception," said Honda New Zealand chief, Graeme Seymour.

"The new-car market is half what it was 20 years ago. In 1984-85 it was a 100,000 market. Then in the late 1980s New Zealanders were exposed to used imports when we were paying high prices for new cars. Customers quickly learned about depreciation."

Seymour said depreciation "was a reality", but it could be managed better with a new rationale about the value of new cars.

"We are on a mission at Honda and are determined to spread this new rationale."

Honda is banking on its price promise as the key to growth. It aims to sell 7000 new cars a year by 2010.

Said Seymour: "That's 88 per cent up on last year's figures. This target will come from a new understanding of what it means to buy a new Honda."

Honda has earned praise within the industry for its pricing philosophy and rival dealers have even adopted it unofficially.

Before the change last year, Honda's dealers bought cars at a wholesale price from Honda New Zealand and sold them to the public, earning a retailer's margin.

Most of the new-car industry works this way. Dealers live on this margin, some better than others.

But Honda restructured its dealer and distribution network, instead stocking each yard with cars it owned.

The change in distribution left 33 national outlets - 13 showrooms owned by Honda and 20 independent dealers, called agencies.

Dealers are paid a commission on each car they sell. The new order provides a better service for customers, it says.

Says Seymour: "It [new order] has reduced the costs of delivering cars to end-users and enhanced Honda's ability to pass on price benefits to its customers."

This rationale is of course behind the pricing of the latest Honda, the award-winning 1.3-litre Jazz small car launched on Wednesday in Auckland.

Two models are available - a five-speed manual costing $20,500 and a CVT (constantly variable transmission) at $22,400.

The value-for-money component in the Jazz is outstanding. It oozes quality. "Because it represents a realistic entry to the new-car market for buyers who might otherwise have chosen a used car, the Jazz could be the catalyst that brings about a welcome resurgence of the market for new small cars in New Zealand," said Seymour.

The five-door hatchback has won car of the year awards in Japan and Britain.

It is the first car off Honda's new, small-car platform. The exterior design was created in Japan and altered by Honda designers in Germany to give the car a more international look. The German team had responsibility for the interior.

The outstanding feature of the Jazz is its packaging, with a rear seat system - Honda calls it "magic seat" - that folds every which way to accommodate more than 1300 litres of luggage.

Even the doors have fixed opening positions for convenience - three stage for the front, two stage for the rear.

It comes well-equipped, with air-conditioning, dual front airbags, anti-lock brakes, seatbelt pretensioners and child-proof locks. The three-point lap/sash seatbelt in the European Jazz wasn't available for New Zealand, nor was the more sophisticated CVT unit.

The 1.3-litre, eight-valve engine produces 61kW at 5700 rpm and 119Nm of torque at 2600 rpm. Most of the torque is available between 2500 and 5000 rpm.

Honda expects the CVT Jazz to be the big seller. The stepless transmission is about 8 per cent more fuel efficient than the previous unit used in the Logo.

Ride is firmish, handling predictable, power steering well weighted. It is a quiet achiever, beautifully bolted together, with classy instrumentation. Weight distribution split is 64:36.

The fuel tank is amidships, below the floor under the front seats. There were two reasons for this, says Honda: to move the tank away from an accident impact area and to lower the floor to allow a compact rear suspension for efficient use of space.

The Jazz goes on sale next Saturday. Honda reckons it can sell 800 a year.