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Old 11th January 2010, 08:06   #1
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Default Maruti to Slash Prices for Top Sellers!

This is from Today's Economic Times:

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MARUTI Suzuki plans to introduce stripped-down versions of its best selling cars Alto, WagonR and Swift, as it gears up to defend market leadership against global biggies Toyota, Honda and Volkswagen that plan 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 world-wide 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 its M-800, its cheapest car at present, will not be sold in the country’s 11 cities that will adopt Bharat IV emission norms. The new variant will boost the market leaders’ numbers in the sub-Rs 3 lakh segment. Maruti had taken a similar step with the redesigned Zen Estilo, 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 lakh cheaper than the Versa. Rejigged rollout expected next month.

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 Maruti Suzuki’s managing executive officer (engineering) IV Rao. 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.
So it's official that the Alto will take M800 place. And the price reduction in Swift is only because of the lowered CC of the new engine...
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Old 11th January 2010, 08:22   #2
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With the spurt in small cars having been announced during the Auto Expo 2010, Maruti may feel jittery. The Nano will probably not make a dent in Maruti small car sales, but the cars like the GM Beat certainly could. That they realize this and are moving in the direction to safeguard their position in the Indian market is a good thing, but I hope in trying to bring out less expensive versions, they do not sacrifice on features/power etc too much as this could easily backfire.
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Old 11th January 2010, 08:25   #3
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What is left in a Alto Base version to make it so cheaper? Looks like a hog wash all along and now maruti is waking up to reality margins. Anyways - good news for the new buyer, bad news for resellers!!
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Old 11th January 2010, 09:40   #4
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Quote:
Originally Posted by svsantosh View Post
What is left in a Alto Base version to make it so cheaper? Looks like a hog wash all along and now maruti is waking up to reality margins. Anyways - good news for the new buyer, bad news for resellers!!
I think they can do a lot to save cost, such as
1. Removing the trip meter
2. Providing single din slot
3. Removing the heater
4. Using more plastics in the already running PLASTIC BOX (alto)
5. And of course after the launch of Alto in 2003 till date they have made a good amount of money through it (21000 units selling a month i.e.till date they had sold around 15,12,000 units) and should pass on some benefit to its customers.

All the above points are as per my opinion and no ofence meant to anybody.
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Old 11th January 2010, 09:41   #5
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well thts the news i was waiting for , would be selling my 1997 MZEN MH410 to get my hand on one of those new variants !

Bring it on maruti
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Old 11th January 2010, 09:42   #6
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Glad to know swift will come out 30K cheaper and other cars are getting cheaper too! Nothing like some good old competition to cheer things up for the customer.
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Old 11th January 2010, 09:48   #7
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excellent step taken by maruthi.Every other company are trying to increase the price telling the economy is good. Now a price war will start IMO which will help us
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Old 11th January 2010, 11:14   #8
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Guys guys take it esay on the Alto. I don't think it will be stripped down much. Whe nthe Alto was launched it was selling around 3000 units per month similar to what the M 800 is doing now. Fast forward to the present and now the Alto is selling in excess of 20,000 uits now. This leads to huge economies of scale. I was damn sure the prices of the Alto would be dropped when the E IV norms kick in. How? Because I read between the lines when the MD gave his interview at the Auto Expo. He was speaking about talking to vendors to reduce costs now that the volume has gone up so that the benefit can be passed on to the customers (he was speaking exclusively about the Alto). I heard this and I was sure that the prices of the Alto would be coming down soon,very soon!
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Old 11th January 2010, 11:32   #9
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The excise benefit getting passed on for the Swift 1.2 is something expected anyway. With Beat's killer pricing, I would expect Maruti to go one step ahead and pass on the economies of scale benefit on Swift as well. If we take the combined numbers of Swift and Dzire they have a huge number and they can pass on atleast part of the benefit to the customers.
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Old 11th January 2010, 11:40   #10
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Good News,
Maruti can do it because of their high rated sales (low profit margin, but more number of units sold will still get them good profit!).
But in the same way, the second hand sales will also get affected because of the rate reduction for new cars.?
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Old 11th January 2010, 11:50   #11
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Well, the Chevy Beat pricing has opened a Pandora's box. Why would someone go in for a WagonR or Estilo when the all new Beat is available at a similar price. With the Eeco breathing down the Alto's neck, there's only one way Alto prices can go, and that's down ! I just hope they don't strip the Alto's plastic panels on the doors and replace them with vinyl+cardboard like they have on the Eeco.
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Old 11th January 2010, 12:33   #12
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the new suzuki swift is under development (testing) its gonna be bigger and better. streched out under 4meters with tweaks here and there!. they will put lots of goodies in it i think to attract customers.eg.(power mirrors, nice alloys,USB port, i20 goodies kinda stuff ) i am game for the new swift! if it looks a lil bit different than the current version! (i mean a sportier facelift)

Last edited by Caramelo : 11th January 2010 at 12:35.
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Old 11th January 2010, 12:36   #13
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lets hope along with pricing they dont reduce the quality as well, instead they should offer some good quality with same pricing.IMO.
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Old 11th January 2010, 12:51   #14
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i was wondering what maruti will do to "beat" the compitition. they are getting competitors in every segment. i10 for wagon-r and now Beat, Ritz not meeting expectation.M800 gone out of production, Dzire from Manza etc. Swift is the only hope. Nice strategy from MSIL.

now with competition hotting up, car manufacturers in india are inclining more towards "customer is king"!
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Old 11th January 2010, 16:27   #15
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One undesirable outcome : Maruti has an innumerable array of hatchbacks in the 3 - 5 lakh segment. Price cuts on cars like the Swift will only lead to higher product overlap. And even more confusion to the potential customer in their showroom.

Also, while I'm all for a cheaper Swift (and cars in general), it doesn't make good business sense. The Swift is a cult car (well, nearly) thanks to its styling, and is the undisputed best-seller from the segment. Its rare to cut the price of a best-selling product. Maruti can continue selling 9,000 Swifts a month at the current MRP, and use price cuts on other cars that need it!
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