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Maruti to bring new variants of Alto, WagonR & Swift
Maruti Suzuki plans to bring out refreshed variants of its best-selling cars Alto, WagonR and Swift that may be cheaper than the existing models, as it gears up to defend market leadership against global biggies Toyota, Honda and Volkswagen that are planning small car launches in India.

The latest move by Maruti, which makes every second car sold in India, is aimed at queering the pitch for new entrants taking aim at the world’s largest market for small cars.

The Indian arm of Japanese carmaker Suzuki Motor, known worldwide for its small cars, is going against the industry practice of launching new variants at higher prices.

This is in line with company CEO S Nakanishi’s view that 2010 will be the toughest year for Maruti. “We have to gain volumes to protect our market share with global car makers entering the compact car segment,” Mr Nakanishi had said earlier.

The new variant of Alto, slated for launch in the next three months, will be cheaper than the cheapest variant currently. The move has been widely anticipated as Maruti will need a product to take on Tata Motor’s Nano as the M-800, its cheapest car at present, will not be sold in the 11 cities that will adopt Bharat-IV emission norms. The new variant will boost the market leader’s numbers in the sub-Rs 3 lakh segment.

Maruti had taken a similar step with the re-designed Zen Estlio, which was at least Rs 50,000 cheaper than the outgoing model. Similarly, the new multi-purpose vehicle Eeco, priced at Rs 2.59 lakh (ex-showroom Delhi), is Rs 1,00,000 cheaper than the Versa.

The new Swift petrol, expected to hit the market in the first half of 2010, could be Rs 30,000-35,000 cheaper than the cheapest variant at present. The new variant likely to have a 1.2 litre KB series engine against the existing 1.3 litre engine. All cars in India with 1.2 litre petrol engine and under 4-metre of length attract 8% excise duty compared with 20% for larger vehicles. Maruti is expected to pass on the excise benefit to customers.

Maruti is refurbishing its entire portfolio as per the international norm of revamping cars every three years. Most of its cars have attained that cycle of change. Moreover, these models have older engines that will be replaced to meet the new emission norms applicable from April.

“We would offer greater value for money with our new range of cars,” said IV Rao, Maruti Suzuki’s managing executive officer (engineering). He however refused to divulge further details.
The latest moves form part of Maruti’s three-year-old cost-reduction programme where it set new price-targets for every model to face increasing competition. As per component suppliers working closely with Maruti’s R&D team to cut costs, the company has plans to refurbish the entire portfolio and the roll out is expected early next month.

“Maruti has embarked on a massive cost-reduction programme along with its vendors for each model after the launch of Tata Motors’ Nano. Though Nano is yet to gain the volumes expected of it, Maruti’s exercise is bearing fruits and soon it’s refurbished range would come with an highly aggressive price tag,” a person working close with Maruti said, requesting anonymity.

Maruti’s R&D had been working on Alto, WagonR and Swift to maintain the value preposition in the compact car segment, which accounts for 60% of its total sales. Entry level models Maruti 800 and Omni will also be revamped, but will be positioned for customers in small cities, towns and rural markets.

Other companies have already taken note of Maruti’s strategy and Hyundai Motor India, Honda Siel Cars India, Ford Motor and Fiat India are looking at sharpening their product lines and prices. Some companies are working on high localisation content to cut costs while others are undertaking changes in design and basic manufacturing processes.

Honda, which is looking at a new small car (2CV) for India in 2012, plans to make it its cheapest model. “We would buy raw material like steel and components locally to make our small car cost competitive. The car will be under Rs 5 lakh which will be highly competitive in 2012,” Honda Motor executive vice-president Koichi Kondo said. The company currently buys steel from Tata Steel and is now in talks with other Indian steel makers for possible supplies and has set up an R&D centre in India to adopt high local content for 2CV.

“Our premium hatchback Punto comes at Rs 4 lakh and competes with other smaller cars at the same price. To add value to Punto, we would soon launch its CNG-variant that will have the country’s first integrated multi-port engine supplied by Fiat, but will come at Indian prices,” Fiat India president & CEO Rajeev Kapoor said.

Meanwhile, Hyundai is looking at a cheaper variant for its Santro, while Ford plans to bring its compact car Figo at under Rs 4 lakh to beat competition from Fiat’s Punto, Chevrolet UV-A and Skoda Fabia.

Global carmakers are eyeing India, the world’s fastest growing car market after China, as their largest markets in the developed world are still to recover fully from the impact of the global recession that had most of the world under its grip. About 1.6 million small cars were sold in 2009, with the segment accounting for almost three fourths of the market. There is a global shift in demand towards fuel efficient small cars, sparked by growing concerns over climate change.

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