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Old 28th January 2008, 11:49   #1
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Default Have we been paying more to the innovator?

Well, we all loved the Maruti 800 (and the alto even more but lets keep that out for the time being) ever since it was launched. The innovators of the "Peoples car" concept in india charged us nearly Rs.2,00,000 for this baby. But now we see india's most ethical business brand TATA coming out with an equally comparable car at half that price. SO what do you guys think. Have we been paying more to the maruti people just becouse we did not have another choice in the same category? Were they actually ripping us while we really thought they are giving us Value for Money?
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Old 28th January 2008, 12:07   #2
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At the time Maruti started in India they had virtually no competition.
Though the car was an age old design by Suzuki (I believe it is the first generation alto)
it still sold in good numbers because of the following reasons:
a) looks (in comparison to competition)
b) Reliability
c) Fuel Economy
d) Latest technology as per Indian standards at that time.

Tell me if a manufacturer has so many advantages in comparison to the competition will he not take advantage of the monopoly and mint money???

What i would also mention here is that maruti had to pay loyalty to Suzuki and many components were imported.
As of today Tata has got a huge supplier base and the car "Nano" is 99% Indian (if not 100%). These things give Tata a Huge cost advantage and they are passing it on to the customer.
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Old 28th January 2008, 12:34   #3
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Originally Posted by gemithomas View Post
Well, we all loved the Maruti 800 (and the alto even more but lets keep that out for the time being) ever since it was launched. The innovators of the "Peoples car" concept in india charged us nearly Rs.2,00,000 for this baby. But now we see india's most ethical business brand TATA coming out with an equally comparable car at half that price. SO what do you guys think. Have we been paying more to the maruti people just becouse we did not have another choice in the same category? Were they actually ripping us while we really thought they are giving us Value for Money?
From a sales guy at Maruti, I got to know that the 800 has amongst the best margins between the small cars they sell
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Old 28th January 2008, 13:13   #4
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From a sales guy at Maruti, I got to know that the 800 has amongst the best margins between the small cars they sell
Thats because they broke even a long time ago and lets not forget the economy of scale.
If they want to, Maruti can price the 800(AC) at Rs.200,000 on-road all over the country.
This can create quite a pressure on the Nano since this is tried and tested for decades.
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Old 28th January 2008, 13:43   #5
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Although Maruti 800 is tried and tested people still admire the ethics of Tata and will go in for their new cars be it the Nano or the Sumo Grande,because they know Tata won't rip them off to make an extra buck.Tata will even go to the point to bleed itself to keep by the promise of a 1 lakh car.
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Old 28th January 2008, 19:16   #6
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Quote:
Originally Posted by motorheadinc View Post
At the time Maruti started in India they had virtually no competition.
Though the car was an age old design by Suzuki (I believe it is the first generation alto)

Tell me if a manufacturer has so many advantages in comparison to the competition will he not take advantage of the monopoly and mint money???
The first Maruti model launched in India was 1969 Model in Japan. They have changed the models in india only after few years.

They have denied technologies like MPFI for years to Indians, When public welfare suite filed in the court, the company said that the technology wasn't available. Then later admitted only when pointed out that their export varients are MPFI. The court ruling helped people to get less polluted cars launched with Euro1,2 etc..

Suzuki make use of globally, their Metal Sheet / cast Dies and oter forgings beyond the lifecycle for every model. SO they make killing for every investment.
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Old 28th January 2008, 20:57   #7
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Originally Posted by TeddyBear View Post
The first Maruti model launched in India was 1969 Model in Japan. They have changed the models in india only after few years.

They have denied technologies like MPFI for years to Indians, When public welfare suite filed in the court, the company said that the technology wasn't available. Then later admitted only when pointed out that their export varients are MPFI. The court ruling helped people to get less polluted cars launched with Euro1,2 etc..

Suzuki make use of globally, their Metal Sheet / cast Dies and oter forgings beyond the lifecycle for every model. SO they make killing for every investment.
One very peculiar example i can put here.
The suzuki F5A engine (dates back to 1980's) came fully loaded with mpfi, turbocharger, turbo intercooler.

To add to the woes , this engine can be perfectly mated to the 5 speed gearbox made available in the Alto/ Zen/ M800(5 speed) without a "single change".
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Old 28th January 2008, 20:57   #8
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Originally Posted by TeddyBear View Post
The first Maruti model launched in India was 1969 Model in Japan. They have changed the models in india only after few years.

They have denied technologies like MPFI for years to Indians, When public welfare suite filed in the court, the company said that the technology wasn't available. Then later admitted only when pointed out that their export varients are MPFI. The court ruling helped people to get less polluted cars launched with Euro1,2 etc..

Suzuki make use of globally, their Metal Sheet / cast Dies and oter forgings beyond the lifecycle for every model. SO they make killing for every investment.

And that was the time when FIAT were giving us Euro III engines but never knew how to market it.

Coming back. Let just see what the Nano would give us.
1.More space.
2.Bharat III compliant engine
3.Safety (full frontal crash test. Not sure if 800 had done this all these years)

Well this is what i know about the 1L variant. Probably the higher end version would give everything you can think of at atleast 20K less than the base version 800. Well i dont think Maruti would reduce its prices drastically since they would loose the confidence just as daewoo did with the ciello. And daewoo never regained its stance after that. Probably maruti would add a few accessories to the 800 list. But why di they wait for so long even after they had met break even years back. What is the explaination for doing that to a car that was meant for the masses.
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Old 28th January 2008, 21:05   #9
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Only sore point for nano will be its 2 cylinder engine and overall reliability and build. 800 that way has a good track record till date.

Answer to your original question, Yes 800 was being sold with a good profit margin. I still believe they changed the automotive scene in India for good.
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Old 28th January 2008, 21:17   #10
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Initially the M-800 was sold for as little as 45k when an amby costed 1.5L plus(not sure). This was at a time when we had 500-1500% customs duty & something like 48% excise duty.
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Old 28th January 2008, 21:45   #11
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Quote:
Originally Posted by katalysm76 View Post
people still admire the ethics of Tata...because they know Tata won't rip them off to make an extra buck.Tata will even go to the point to bleed itself to keep by the promise of a 1 lakh car.
Based on my experience, I doubt TATA and ethics can be mentioned in the same sentence.

I work in IT/Telecom industry, and their offerings are pathetic not only in terms of quality but even with respect to honesty.

Few examples:
TATA INDICOM MOBILE Reviews
TATA INDICOM ADSL BROADBAND Reviews
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Old 28th January 2008, 22:10   #12
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Maruti's manufacturing cost for the 800 is aroubd 1.1 lakhs. In fact this was an inspiration for the Nano team!
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Old 28th January 2008, 22:13   #13
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Quote:
Originally Posted by gemithomas
Have we been paying more to the maruti people just becouse we did not have another choice in the same category? Were they actually ripping us while we really thought they are giving us Value for Money?
If you look at it from the point of the input costs (taking into account the depreciation in dies/tooling etc) vs the selling price of the car, yes, we have been paying more. But then, there was no one else in that segment to give them any competition and any manufacturer would do the same that they did (no one is here for charity).

Honda prices its cars much higher than the competition today, but is it fleecing ? I dont think so. They price it high as they wish and there still are buyers at that price point and it is not illegal. And this is inspite of having serious competition. So, you can only imagine what the case would be if it had been a sort of monopoly like the M800 segment.

Quote:
Originally Posted by gemithomas
But now we see india's most ethical business brand TATA coming out with an equally comparable car at half that price.
Most ethical ? I dont know where you got that bit from.

Quote:
Originally Posted by katalysm76
Tata will even go to the point to bleed itself to keep by the promise of a 1 lakh car.
Really ? Why ? Is Tata the Mother Teresa of the car industry or what ? They are just another manufacturer, that's all, who is out there to make cars and make money, and BTW there is nothing wrong in that.

Quote:
Originally Posted by Jaggu
800 that way has a good track record till date. Yes 800 was being sold with a good profit margin. I still believe they changed the automotive scene in India for good.
Very rightly said. The M800 might have been an old model in Japan or Siberia, but that is what put India on wheels. And not on just any set of 4 wheels - a reliable set of wheels. There is no denying that.

Quote:
Originally Posted by esteem_lover
Initially the M-800 was sold for as little as 45k when an amby costed 1.5L plus(not sure).
If I remember right, the first ones rolled off for between 35K-40K (in 1983) and by the time we got ours in '85, it was 59,700 on-road. But at that price point then, there was nothing around that could even come close to the M800.
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Old 28th January 2008, 22:31   #14
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I still believe they changed the automotive scene in India for good.
Not that difficult when you enjoy government protection in a closed economy. If Suzuki/Indian Government had wished, they could have got contemporary models into the market, but they didn't. What they did was that they just fed on the artificial scarcity which was the government's own creation.
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Old 28th January 2008, 22:59   #15
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maruti was initially sold for a price of 43354 INR in 1984-83
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