The Hindu : Entry level: Maruti will retain its dominance

Online edition of India's National Newspaper
Wednesday, Oct 22, 2003

Business

Business

Entry level: Maruti will retain its dominance

By K. T. Jagannathan

HAMAMATSU (JAPAN) OCT. 20. Maruti Udyog Limited (MUL) is confident that it would defend its dominance in the entry level car segment (now controlled by Maruti 800) should there be a challenge to its number one status from any quarters.

Interacting with visiting newspersons from India at the headquarters of Suzuki Motor Corporation (SMC) here, the Chairman of MUL Shinzo Nakanishi, claimed that Maruti 800 was by far the most economical car produced across the globe.

Asked to react to the stated ambition of Ratan Tata to see the Tatas rolling out a `People's car' before his retirement, Mr. Nakanishi declared that, "We will challenge them in case they come out with any thing like that.''

Mr. Tata, it may be recalled, had talked about his dream of producing a people's car in the price range of Rs.1.25 lakhs to Rs.1.50 lakhs. Mr. Nakanishi, nevertheless, felt that it would be difficult for the Tatas to produce a car at this price. Should there be a challenge from the Tatas, MUL would pick up the gauntlet. Maruti 800 is the oldest car in MUL portfolio and has been there since the company went on stream a couple of decades ago.

This is, perhaps, the first time that MUL has openly said that it would guard its dominance in the entry level in the Indian market.

Critics have always predicted that Maruti 800 has almost reached the end of the road. Yet, Maruti 800 is selling on an average 17,000 units a month.

Notwithstanding the chairman's declaration about challenging any threat to the long-holding top position in the entry level car segment, Mr. Nakanishi was quite conscious that the fate that had befallen `Oldly Amby' should not happen to Maruti 800. How long could MUL continue producing Maruti 800? Not willing to commit a direct answer, he said MUL would keep producing Maruti 800 as long as the market wanted.

Yet, he conceded that MUL had a real challenge on hand what with the new emission norms coming into force sooner. He reckoned that MUL had plenty of options.

The ongoing cost cutting exercise, he expected, would provide MUL the width vis-a-vis Maruti 800

Mr. Nakanishi said MUL had an in-built capacity to beef up production to even 600,000. With the 30 per cent cost reduction target over the three-year period set not long ago, the chairman was confident that MUL should be in a position to double the profitability in the next three years.

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