Tuesday, December 7, 2010

Is Honda dumping the Insight to Malaysia?

This was a question posed to me by a friend when he heard that Honda Malaysia is offering the Insight for just RM98,000.

I said that the attractive price is probably made possible by the incentives the the Government is giving to Hybrid cars under 2.0-litre until the end of the year.

He seemed unconvinced as the price gap is quite huge between what Honda itself offers as the Civic Hybrid (RM109K) and Toyota's Prius (RM139K).

He then cited poor Insight sales figures in the all-important US market where Honda targeted between 60,00 and 80,000 unit sales this year and up to date the company is struggling to shift 20,000 units .

"If they can't sell 20,000 units in the US which has a population 10 times bigger than Malaysia and where the population enjoys much higher disposable income, why would they think it is possible to sell 4,000 units here? That was the question that I have been struggling to answer.

Yesterday I wrote a piece saying that the 4,000 units target sales could be achieved quite easily if fuel prices continue to rise and that is still a valid proposition, however upon closer inspection of the US numbers I am having second thoughts about Honda's market projections.

The Prius, which is more expensive is outselling the Insight 8 to 1 in the US so is there some strange economics quirk at play here?

Is the Hybrid considered a luxury item that only becomes attractive if the price is high enough? is it a status symbol that demand financial sacrifice to gain its positional value?

Is the low price of the Insight going to be the reason it would not sell?

If the low price of the Insight is the result of Honda dumping the model into Malaysia just to make up global numbers, it may not work.

I cannot say for sure that the sub RM100K is not the result of some corporate loss-taking but I do know that the Japan FTA has given Japanese car companies more comfortable margins and as a result the Insight 's good price could be just Honda Malaysia taking in smaller margins in order to gain market leadership in a segment that could be critical in the future

From the interest shown by the public at KLIMS, the Insight seem to have a large number of fans but how many of them can be converted into customers?

Read the print version of Mail Motor for our impression of the Insight on Friday, together with the comparison test between the Toyota Prius and Honda Civic Hybrid.

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