Small wonder

New Delhi, Dec. 28: Maruti Suzuki may cut the price of the Maruti 800 to compete with the Tata Motors small car.

“We will have to do at least that,” managing director Shinzo Nakanishi said in Hamamatsu, home to Suzuki Motor in Japan.

Maruti Suzuki’s cheapest model now costs around Rs 1,92,124 (ex-showroom, Delhi), according to the company’s website.

The company enjoys a market share of over 50 per cent in India, where growth in car sales is the second highest in the world.

The Maruti 800 was launched in 1983 and is regarded as an iconic brand that brought in the winds of change in the Indian auto market, used to the Ambassadors and Fiats till then.

The 800 is the highest selling car in the country.

The base model contributes about 10 per cent to Maruti Suzuki’s volumes.

The car has gone through many facelifts and reports good sales, especially in rural India.

Maruti Suzuki’s plans to cut prices differ from previous stands taken by its parent.

Earlier in India, Suzuki Motor Corporation chairman Osamu Suzuki had said that the company was not ready to venture into the sub- -Rs-2-lakh segment, citing safety issues.

Speaking at an industry conference in India, Suzuki had taken a dig at Tata Motors’ ability to produce a car for Rs 1 lakh.

Suzuki said he doubted whether a “responsible manufacturer” could produce a car at that cost after meeting all safety and emission standards.

The Tatas’ Rs 1 lakh car, codenamed X3, will be a four-door vehicle with a rear engine (624 cc) and a seating capacity of five passengers.

Initially, the company plans to make between 2,50,000 and 5,00,000 units a year.

While the base model will cost Rs 1 lakh, the company will offer two variants with added features.

Concerned about safeguarding its market share in a country that will see other manufacturers also introducing cheap cars, Nakanishi said in his interview, ‘So far, it’s been easy to maintain a 50 to 55 per cent share, because there weren't strong competitors. But from now on, it won’t be the case.”

Other auto makers, such as France’s Renault, have proposed selling cheap cars in India.

“By cutting prices, the profit margin will drop, and it may also hurt the brand image,” said Koichi Ogawa of Daiwa SB Investments, Tokyo.