New Models

Honda Australia considers dropping Jazz

The new-generation Jazz won't arrive in 2020, and may not come at all. Like a few other brands, Honda is battling to make light cars profitable
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Honda Australia has conceded it might have to stop selling the Jazz once the current model’s production run ends, because cheap city cars are becoming almost impossible to make profit from, and sales are falling against more popular (and lucrative) small SUVs anyway.

The company this week said it would continue to sell stocks of the now-previous-generation Jazz model in Australia throughout 2020, but what comes next remains a matter of discussion.

Honda revealed the new-generation model at the Tokyo motor show last month, with cuter looks, familiar ingenious cabin packaging, and a new hybrid drivetrain. But despite the badge being one of Honda’s most successful in Australia since 2002, there’s no guarantee this one will ever make it here.

“Jazz at this stage we don’t have a lot of news,” said Honda Australia’s director Stephen Collins. “We’re still working through what will happen with the next-generation Jazz. That segment is very, very challenging.”

It’s a similar situation to the one Hyundai Australia found itself in when the popular Accent ceased production, at which point it opted for the more expensive Venue crossover as its new entry model. Mazda was also forced to up the price of its 2 city car recently, citing similar issues.

Neither of these cars gives you change from $20,000.

The fact of the matter is, with city cars now needing to be fitted with active safety features and high levels of connectivity, brands are battling to make them cheap enough to sell affordably while covering the manufacturing costs. The problem is amplified by unfavourable exchange rates, on such low-margin fare.

“It’s a full business model issue, the cost of the car, where the segment’s at, where we can position the car, they’re all of the factors we’re juggling. It’s a challenge,” Collins said. "It’s no small decision and we are very conscious of that. They’re very loyal buyers, and it’s the entry point to our range.”

We asked Collins if the day of the $14,990 city car is done and dusted.

“I think it depends on your long-term assumption of where the Aussie dollar sits, but if it stays where it is today [relative to Thai currency in this case] then it’s gone. There’s a trend of a lot of manufacturers moving away from base grades and models.”

The vast majority of Jazz models that Honda sells – about 70 per cent – are the $16,990 Jazz VTi automatic.

Industry data VFACTS shows that sales of light cars are down 16.9 per cent this year, and have managed just 6 per cent total market share. Almost every major contender in that market has declined in sales this year, with exceptions being the cut-price MG3 from China and Suzuki Baleno from India. The premium-priced VW Polo is also up, perhaps giving Honda some hope.

Nevertheless, the best-case scenario for Jazz fans in Australia is that they’ll see the new one some time from 2021. The worst case is, they never will.

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