NEW DELHI: Honda's Indian car unit has cut prices of its premium Jazz by up to Rs 1.62 lakh in a move to win back customers. The hatchback will now be available for a starting price of Rs 5.50 lakh, taking on competition from Hyundai's i20, Nissan's Micra and Volkswagen's Polo, Maruti's Swift, Fiat's Punto, Toyota's Liva and Skoda's Fabia. "The new Jazz, with an attractive pricing, will surely appeal to customers. With better sourcing and economies of scale for Jazz from higher production, we would be able to garner larger chunk of sales in the premium hatchback segment," Honda Siel Cars India director (marketing) Seki Inaba said. Powered by the same 1.2-litre i-VTEC petrol engine, the new Jazz is said to give an average of 16.7 km a litre. It sports improved aerodynamic design on the front grill besides beige interiors and a USB port in the music system. Monthly sales of Jazz have dropped nearly 50% over the last few months to about 250, despite freebies and cash incentives for buyers. The model, launched in India in June 2009 by Honda Siel Cars India, has sold a little over 13,000 units so far with a price tag over Rs 7 lakh. Analyst say the price cut could do the trick for Honda. "Jazz's sales could off-take now and the car could reach an average of 3,000 units per month if Honda can manage to supply it. While other manufacturers would be forced to increase discounts, leading to a virtual price war," IHS Automotive India's managing director Deepesh Rathore said, adding that customers could look forward to some of the best prices this decade. The price has also been revised to accommodate Honda's upcoming compact car 'Brio', which is expected to cost below Rs 5 lakh. Premium hatchback is the fastest growing segment in the Indian car industry with sales of over 3.5 lakh cars in FY11. Honda's price cut comes a day after Maruti Suzuki, the country's largest carmaker, launched a new version of its popular 'Swift' hatchback with starting price of Rs 4.22 lakh. Falling sales has forced some hard decisions on Honda. The carmaker reduced the price of its flagship 'City' by Rs 66,000 a few months ago after Volkswagen's Vento, Maruti's SX4 and the Hyundai's Verna pushed the top-seller to fourth position. Its cumulative sales dropped 26% to 12,526 cars in the April-July period. Source - Economic Times