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Old 30th April 2021, 20:46   #1
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Default The curious case of the Maruti Alto and its pricing!

Few days ago I stumbled across a thread which had a discussion about pricing of cars when first launched, how steadily the prices have increased, and for how much the same cars are being retailed now. And it is quite obvious that Toyota Innova is the one name that pops up in the mind of most people and not without reasons. When launched in 2005, the ex-showroom prices of Innova across variants ranged from 6.8 to 10 lakh rupees. At present the ex-showroom prices range from 16.1 to 25.5 lakh rupees! This equates to a price increase of approximately 2.5 times in about 16 years. Taking into consideration the relatively higher present day road taxes and the insurance premiums, on-road prices probably have gone up almost 3 fold since the initial launch. Probably the same holds true for Toyota Fortuner as well.

It's not just the Toyotas have become pricier exponentially, in fact, most cars and even two wheelers have in the same period. The fact that Innova still has no real competition and the fact that the price range actually covers couple of segments of vehicles probably highlights Innova more than the other cars. It may also be true that the percentage increase in the price of Innova might be the highest among all the cars. As clichéd it might sound, there are exceptions. In fact there is one. It is none other than Maruti Alto.

Maruti launched Alto way back in 2000 in the price range of 2.7 to 2.9 lakh rupees. And now, 21 years later Alto range still starts from 2.99 lakh rupees. Astonishing! Let's not forget, today even the base model is equipped with driver side airbag, ABS and reverse parking sensors. And yes, for once let's not get into the discussion/arguement regarding how safe/unsafe the car is. Over the period, Alto has undergone minor and major facelifts, changes to the platforms/body panels, feature additions and a lot more. One thing that hasn't changed much is the pricing! In fact when Maruti launched the completely revamped model in 2012, if I am not wrong, it was priced cheaper than the outgoing version! While people have divided opinions about Maruti cars, I assume that not many can deny the fact that Maruti cars are generally niggle free, reliable, economical and easy to maintain. A perfect recipe for an entry level car, IMO.

Twenty years is a long period and a lot of things have changed for sure. If I can summarise in one word, the production cost/input cost would have definitely gone up multifold. Inspite of all this, an ALTO stills costs the same(well, almost) as it was 20 years back!
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Old 30th April 2021, 21:04   #2
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Default re: The curious case of the Maruti Alto and its pricing!

While Innova has gone upwards in looks, feel, materials, features etc. with every iteration, the Alto has moved downwards. Maybe the owners can chime in here, but from limited experience I have with the Alto of mid 2000s, they look and feel solid even today. I am not sure about the latest gen models though.

That's not to take anything away from the value proposition of an Alto though. An Alto was affordable, good looking, fun-to-drive, economical car back then, and it happens to be the same today too.

PS: I believe that just the sheer volumes that the Alto, Swift and Dzire bring for Maruti, MSIL may be able to apportion the inevitable price rise much gently for these models, of-course backed by the advances in manufacturing technologies.
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Old 30th April 2021, 21:05   #3
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Default re: The curious case of the Maruti Alto and its pricing!

Maruti has mastered the art of pricing especially with their bread and butter models, especially the smaller cars in their range. Alto was the top selling car for almost 2 decades before it was dislodged by the Dzire which I think also shows how the market moved from an aspirational and affordability perspective. Today, the Alto still is priced like this to draw the customers who are typically looking to buy their first car and don't want to spend a fortune, I think a large chunk of these customers are from the smaller towns and rural areas as well as the city residents looking for a second car.
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Old 30th April 2021, 21:11   #4
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Default re: The curious case of the Maruti Alto and its pricing!

Quote:
Originally Posted by Emvi View Post
Twenty years is a long period and a lot of things have changed for sure. If I can summarise in one word, the production cost/input cost would have definitely gone up multifold. Inspite of all this, an ALTO stills costs the same(well, almost) as it was 20 years back!
Another thing which has changed - Alto has replaced 800 as the cheapest/entry-level offering of Maruti Suzuki. Back in 2000 if I remember correctly, a fully loaded 5-speed MPFI 800 Dx cost around 2.7L on-road (or about 2L ex-showroom).

It's a game of volumes vs. margin. To keep the volumes coming in, Maruti has kept the prices low. After all, its competitor, Renault Kwid starts around 3.15L and Maruti has to fight it. Others like Tiago and Santro also had base models during their launch but discontinued them and now, start much higher in the price point.

I know you mentioned not to compare the build and that's where lies the secret ingredient.

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Originally Posted by museycal View Post
...the Alto has moved downwards. Maybe the owners can chime in here, but from limited experience I have with the Alto of mid 2000s, they look and feel solid even today. I am not sure about the latest gen models though.
+1

Last edited by ashis89 : 30th April 2021 at 21:13.
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Old 30th April 2021, 22:23   #5
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Default re: The curious case of the Maruti Alto and its pricing!

I think the answer is already on this forum in this 11 year old thread

https://www.team-bhp.com/forum/india...ar-sold-2.html (How much profit do they make on each new car sold?)

Essentially, Alto 2000 vs Alto 800 in 2021 is the same car whose platform is unchanged. When you keep the platform unchanged for 21 years, you have reached your breakeven of R&D cost way earlier and now it is just replication and profit munching. Yes cost of materials have increased but so has the volumes of sale numbers in MSIL favour. Adding two airbags in the same platform does not help boost your NCAP that much and hence does not make it safer overnight. There was a reason why Alto K10 costed much more.

Where one should look at is how the service cost is as compared to 21 years back including parts duraility. It may be like buying those yesteryear color inkjet printers where a susequent cartrige used to cost as much as the whole printer + stock cartrige equivalent.

There are already several news elsewhere that MSIL may discontinue the Alto and come up with a newer platform car and when platform upgrades definitely cost appreciates.

Since comparison is with Innova, the platform may not have changed but the power, transmission, internal trims have significantly gone up. When you upgrade power by more than 60-70% you have to upgrade your transmission, brakes, everything to cope up with that.

Last edited by haisaikat : 30th April 2021 at 22:24.
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Old 30th April 2021, 23:16   #6
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Default re: The curious case of the Maruti Alto and its pricing!

An Alto 800 LXi, used to cost 3.01 lakhs in 2010. On-road. Delhi. (Source: My cousin bought one)
An Alto 800 LXi 4.19 Lakhs. On road Delhi. (source: carwale)

Thats a 39% price increase.

Lets not talk about the variant without AC and power steering
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Old 1st May 2021, 08:37   #7
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Default Re: The curious case of the Maruti Alto and its pricing!

Quote:
Originally Posted by haisaikat View Post
Since comparison is with Innova, the platform may not have changed but the power, transmission, internal trims have significantly gone up
Now, who's comparing Alto with Innova!? I never did

Quote:
Originally Posted by turbo View Post
An Alto 800 LXi, used to cost 3.01 lakhs in 2010. On-road. Delhi. (Source: My cousin bought one)
An Alto 800 LXi 4.19 Lakhs. On road Delhi. (source: carwale)

Thats a 39% price increase.
It would be interesting to know the ex-showroom price of Alto LXi in 2010. As I have already mentioned in my initial post, due to higher taxation and insurance premiums, the on-road prices have significantly gone up now, more so since 2018.

https://m.economictimes.com/wealth/i...w/66132366.cms

Quote:
Lets not talk about the variant without AC and power steering
As far as I can remember, Alto(800cc) had only two variants when first launched and none of them had power steering. It was added much later. I see that there are 8 variants of Alto(Petrol+CNG) on sale today. I don't know how many opt for the base model these days, but, it's still relevant.
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Old 1st May 2021, 10:54   #8
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Default Re: The curious case of the Maruti Alto and its pricing!

In 1990 when I bought my first car (Padmini) the Maruti 800 cost Rs 2.2 lakhs in Mumbai ex-showroom. Adjusted for official inflation figures that is roughly Rs 20 lakhs today. The Maruti 800 then and the Alto today are roughly the same car though catering to different market segments because India's per capita has changed a lot in these 30 years, especially the per capita of the top 25% of the population. It is amazing that Maruti sell an Alto today at Rs 3 lakhs odd. A remarkable feat of productivity, inventory management, cost controls and efficient processes at every stage of procurement-manufacture-reach to market. Any one who has run a manufacturing plant on the ground in India will know how tough it is to not only drive productivity but also bring in process improvements. Hats off to Maruti.
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Old 1st May 2021, 11:29   #9
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Default Re: The curious case of the Maruti Alto and its pricing!

Quote:
Originally Posted by V.Narayan View Post
In 1990 when I bought my first car (Padmini) the Maruti 800 cost Rs 2.2 lakhs in Mumbai ex-showroom. Adjusted for official inflation figures that is roughly Rs 20 lakhs today. ................
There must be some mistake in either date or price.

I Bought M800 in 1991 - no AC but heater. Total outgo was around 1,25,000/ on the road. The AC model was 20K more.

In 2010 in got ALto K10 Vxi for around 3.5 on the road.

Mind you in 1991 Dollar was Rs.22/ and in 2010 around Rs. 46/. It is Rs. 74+ today.

Post 1990 both the road tax and insurance have gone through the roof so the OTR prices are much higher today,
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Old 1st May 2021, 13:20   #10
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Default Re: The curious case of the Maruti Alto and its pricing!

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Originally Posted by Aroy View Post
There must be some mistake in either date or price.

I Bought M800 in 1991 - no AC but heater. Total outgo was around 1,25,000/ on the road. The AC model was 20K more.
Sir I have no idea why your numbers are different from mine. I bought the Padmini as it was cheaper and immediately available for delivery. Either way the key point holds that the Alto today in real prices is cheaper by several times, compared to the Maruti 800 of 30 years ago.
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Old 1st May 2021, 14:30   #11
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Default Re: The curious case of the Maruti Alto and its pricing!

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Originally Posted by V.Narayan View Post
A remarkable feat of productivity, inventory management, cost controls and efficient processes at every stage of procurement-manufacture-reach to market.
Without doubt a feat indeed. I just checked with my dad; our M800 was 2.65 lakhs ex-showroom. Suzuki's cousins, Toyota and Honda, should hop over and learn a thing or too.

While there is no doubt that massive advancements in industrialization, automation, supply chain management have brought about tremendous benefits, do you also feel it is a function of any changes in royalty that MS India has to send back to daddy Suzuki Japan? There was quite some talk several years ago how Suzuki Japan milked away the Indian subsidiary by bringing back the profits, rather than pumping it back into R&D facilities in India.
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Old 1st May 2021, 14:43   #12
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Default Re: The curious case of the Maruti Alto and its pricing!

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Originally Posted by libranof1987 View Post
While there is no doubt that massive advancements in industrialization, automation, supply chain management have brought about tremendous benefits, do you also feel it is a function of any changes in royalty that MS India has to send back to daddy Suzuki Japan?
I have no idea if the royalties went up or down and when.
Quote:
There was quite some talk several years ago how Suzuki Japan milked away the Indian subsidiary by bringing back the profits, rather than pumping it back into R&D facilities in India.
This I believe they did. I only know from hearsay. After Suzuki's ownership crossed 56% in 2013 their financial motivation to milk Maruti India would have got tempered down a bit. Just my guess. I have not studied their balance sheets.

Last edited by V.Narayan : 1st May 2021 at 14:59.
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Old 1st May 2021, 14:53   #13
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Default Re: The curious case of the Maruti Alto and its pricing!

Aug 2009 Alto top most variant was LXI costed 2.90 Lakhs on road post discounts.
April 2021 Alto VXI (I'm not talking about touchscreen model) costed 4.40 Lakhs on road post discounts.

What is better for extra 1.5 Lakhs in BS6 avatar:
PEPPY F8D
No more power lag with AC.
2 air bags
ABS
Music player with front speakers
Power windows for front
Rear space
Excellent stock HL throw.
Pretty compact and can enter narrow gaps with elan.

I would say 4.5 Lakhs totally worth it and still costs cheaper than rivals. The BS6 F8D can make any other modern turbo car a run for money in city traffic and single laned roads with moderate traffic for sure. If in doubt one should drive it and see the difference.

Last edited by KPR : 1st May 2021 at 14:58.
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Old 1st May 2021, 15:22   #14
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Default Re: The curious case of the Maruti Alto and its pricing!

My brother in law bought his April'04 Alto Lxi for Rs 3.2 lacs on the road approx on the road, with all fittings. I paid the same amount for mine in June'09 with the same fittings and also extended warranty.

Currently the model costs about a lac more, but I understand offers lot of goodies for the money. Some of which we had to fit after market (such as music system and power windows) and some which were not available then at all. Even the engine is improved. It still is worth the price demanded.

Last edited by Gansan : 1st May 2021 at 15:25.
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Old 4th May 2021, 09:40   #15
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Default Re: The curious case of the Maruti Alto and its pricing!

Great thread. I believe they simply changed the profiteering strategy from product to service. I first owned the m800 and the Alto k10. I upgraded to the k10 hoping the service costs would be marginally high. At around the 4th and 5th year of my k10 ownership the service bills were consistently around the 8 to 10k mark (and it had 5k service interval).

They are super clever. There would be hardly anything you pay for a brand new Maruti car in the first two or three services. Your word of mouth about how cheap they are would have spread widely by then. It is now that they start making money on you. Your service costs would go incrementally higher with every service that after few years it would become so expensive.

So they are milking us at the service center rather than the sales center!
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