Why Didn't Honda Cars Philippines Bring In More City Hatchback Variants? And Why No Turbo?

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.