The Telegraph
Since 1st March, 1999
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Price push to stalling Maruti 800
- Car to be available for Rs 1.99 lakh to shift sales up to higher gear

New Delhi, June 13: Stung by an over 30 per cent drop in sales of its time-tested bestseller, automobile-maker Maruti Udyog today slashed the prices of the base Maruti 800 model by Rs 16,000 to below Rs 2 lakh.

While the Maruti 800 Standard Bharat Stage III model will now cost Rs 1,99,350 as against an earlier Rs 2,15,636, the air-conditioned version will carry a tag of Rs 2,22,254 (Rs 2,38,540) in Delhi.

Maruti will do away with all freebies, such as free insurance, that were being offered with the M800.

Through 2004-05, sales of the iconic M800 slipped by 30.6 per cent. Most analysts saw it as the end of the road for the ageing model that set Indian roads afire when it was launched in 1984, going on to become a legend, symbolising the early aspirations of the middle class as India’s economy began to open up.

Automobile analyst Murad Ali Baig said: “We believed Maruti was planning to slip the old girl off the road and bring Alto in its place. Drop in sales would be matched with drop in production.”

The steep decline followed a surprisingly robust year in 2003-04, with sales clocking a 17 per cent growth despite Maruti bringing in the Alto at a price a shade above the M800’s.

Low production costs of the M800 have meant that no Indian car has been able to match its price. A further cut is an obvious attempt to add to the lure of the car for first-time buyers with tight budgets.

Maruti, which has always appealed to this segment, had earlier launched a scheme labelled “2 ka 4” to get two-wheeler owners to graduate to the four-wheeler.

Analysts also see the cut as a bid to block the entry of any other low-priced rival. General Motors is expected to re-launch the Matiz, an entry-level car, in a new re-tooled avatar in the Spark, while German car-maker Volkswagen is expected to come in within the next year with a small car based on the Volkswagen Fox.

Both are expected to pose a challenge in the entry-level segment where Maruti’s M800, Alto, Zen and Wagon-R now compete with Hyundai’s Santro.

The snub-nosed Matiz had come in as a competitor to the M800 in the mid-1990s and proved a success for a short while before fading along with its manufacturer Korea’s Daewoo Motors, which went bankrupt and later came into the GM fold.

The hatchback version of the Volkswagen Fox, which is likely to be fielded in the Indian market, is also an ageing model, but still young compared to the M800. Maruti sources said they considered both a threat to the company’s supremacy in the lower end of the market.

Foreign carmakers are pouring into the country, attracted by a 20 per cent growth rate. “India and China are slated to be the two biggest automobile markets in the developing world as they are for most other goods,” said S. Lahiri, an analyst with a global equity fund specialising on the auto sector.

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