Maruti rings down curtain on Baleno

India's largest car maker Maruti Udyog is slamming brakes on its upper-end mid-sized car Baleno. The company is discontinuing production of Baleno to make way for its new premium segment car — code-named YY4 — which is slated to hit the Indian roads by April next year.

Sources close to the development said Maruti — which has closed its plant for the annual maintenance shutdown — is not expected to restart production of Baleno when the plant reopens in the first week of January. "There are some limited stocks left with the dealers and efforts are underway to clear this inventory," a source said.

Company officials were not available for comments despite repeated attempts. Meanwhile, sources said the decision to discontinue Baleno was taken in view of the pending roll-out of the new sedan, which will be the costliest made-in-India Maruti Suzuki car till date. This new vehicle — which will be pitted against the Chevrolet Optra and Toyota Corolla in the premium mid-size car market — is being build from scratch by Maruti and Suzuki engineers.

Though the firm is yet to finalise brand name for this new vehicle, sources said there has been a line of thinking within Maruti to do a Zen encore and use Baleno badge for the new mid-sized car too. "However, there are some others who feel that the Baleno badge should be laid to rest and not used on the new car given the brand's not-so-inspiring performance in the Indian car bazaar," a source said.

Baleno was first introduced as a premium segment car, sporting a tag of close to Rs 8 lakh. However, the car failed to attract much demand and the company later slashed its tag to around Rs 5.6 lakh — a move that resurrected the brand in the domestic market.

This would be the third model being discontinued by the company after the original Zen (and the Zen Classic) and the Alto VXi (sporting a 1.1-litre engine). The new car — with a nearly Rs 8-9 lakh price tag — will be positioned in the fast-growing premium sedan market, which has witnessed an 80% growth in 2005, outpacing all other segments. "The car is being developed on an all-new platform and is being engineered from scratch by a team of Indian and Japanese engineers. This will mark a big image change for Maruti, which has till now been identified as being a small car maker," a source said.

Maruti wants more rail space to ferry vehicles

Auto major Maruti Udyog (MUL) has approached Indian Railways for allotting more rakes to transport its vehicles across the country.

Shifting its focus from road to rail, Maruti has demanded 30 rakes per month from existing eight per month. This will enable Maruti to enhance car transportation capacity from 1,000 vehicles per month to 4,000 vehicles per month by rail.

“Maruti has estimated a sharp rise in car sales in the next fiscal. Hence, the requirement for transporting cars from plant to all parts of the country,” a government source said.

“Timely supply of rakes is an important issue, which we are trying to address in the forthcoming Rail Budget. Also, we are looking at offering rebate on freight wagons. The rebate can be extended to up to 15%,” an official in the Rail Bhawan said. Currently, only 10% rebate is offered for such guaranteed rakes.

Railways is also planning to offer additional two rakes per month on a guaranteed basis, but there would be no freight rebate on these additional rakes.

Suzuki and Maruti will export 2 lakh cars per year from the latter half of 2008. It is also learnt that Suzuki chairman O Suzuki, while on a visit to India, had requested the government for improving rail infrastructure from plant to port, as export of 2 lakh units need seamless infrastructure facility. Mr Suzuki had also indicated upgradation of existing ports and development of new ports.

Suzuki will produce a brand new car in A-segment at the Manesar (near Gurgaon at the outskirts of Delhi) plant of Maruti Udyog and will supply 50,000 cars to Nissan. In addition, the company will produce another one lakh cars of the same model for exports to Europe.

Chevrolet Aveo U-VA to take on Maruti Swift

US based General Motors has launched an attack on India’s dominating automaker Maruti by launching their latest product Chevrolet Aveo U-VA.

Chevrolet Aveo U-VA would take on Maruti Suzuki Swift and the base model of the car is priced at exactly the same price of the Swift LXI model at Rs. 3.99 lakh.

The other cars in the segment include Hyundai Getz, Tata Indica and Fiat Palio.

Maruti has been quite successful with Swift in India as it dominates this segment in India. They sell around 5000 units of Swift per month compared to just around 1,300 units of Hyundai Getz.

GM is benefiting from the government’s policy of low taxes on cars with up to 1.2 liter engine. Swift has a larger engine thus could not gain tax concessions on this ground.

GM is aiming at sales of 20,000 units of this car per year. Rajeev Chaba, president and managing director, General Motors India added on this: "We will not launch the diesel variant of U-VA until the end of the next calendar year."

Government to exit from MUL

The United Progressive Alliance Government on Thursday went into overdrive, ostensibly to kick-start some earlier proposals — residual stake sale in Maruti Udyog Limited and amendment of insurance laws, including a hike in the FDI cap — which were put on the back burner, mainly for lack of consensus in the wake of stiff opposition from its Left allies.

The Cabinet Committee on Economic Affairs (CCEA), at its meeting here, cleared the proposal for the Government's exit from Maruti by selling its 10.27 per cent residual stake in the joint venture with Suzuki Motors of Japan. The stake sale, at current prices, is likely to fetch the Government about Rs. 2,700 crore. Currently, Suzuki has the majority stake of 54.2 per cent in Maruti, which commands more than 50 per cent share of the domestic passenger car market. The sell-off of the Government's stake will imply offloading the remaining 2,96,79,689 shares (as on September 30, 2006) to public financial institutions, private sector banks and domestic mutual funds. For selling the stake, the Government is likely to come out with a floor price over which bids are to be invited. Finance Minister P. Chidambaram, however, refused to indicate when the shares would actually be sold. "Significant money can be raised through the sale which can be this fiscal, may be next fiscal... depends on the market condition. The call is mine," he told a briefing. The proceeds from the sale would not go to the National Investment Fund. "Strictly no, as this not a disinvestment of a public sector undertaking."

The decision completes the gradual withdrawal by the Government from Maruti. In June 2003, it sold a 27.5 per cent stake in the auto major to the public at Rs. 125 a share to mop up Rs. 993 crore.

On the insurance front, the Cabinet took up for discussion the hike in FDI cap from 26 to 49 per cent, which was part of the comprehensive amendments proposed earlier, and referred the issue to a Group of Ministers (GoM).

Mr. Chidambaram was confident that the GoM would not take more than two sittings to give its views. "It should not take much time since already, [the] K.P. Narasimhan Committee's report is there, views of [the] Law Ministry are there.''

The changes proposed pertain to amendments in the Insurance Act of 1999, the LIC Act, 1956 and the IRDA Act, 1999, among others. The UPA Government the proposed a hike in the FDI limit in its maiden budget in 2004-05. However, no decision could be taken in view of the Left opposition.

Maruti Udyog: A godsend for Suzuki and India

As the Indian government looks to shed its final 10 per cent stake in Maruti Udyog Ltd, few will recall the fortuitous chain of events that got the automaker up and running a quarter-century ago.

Back then, India was an automobile backwater where annual car sales, mainly of British knock-offs, were below 40,000--or one car for every 14,000 of its 550 million people.

The government had just nationalised Maruti, set up in 1971 as a pet project of Sanjay Gandhi, son of then-Prime Minister Indira Gandhi, to produce an affordable, Made-in-India 'people's car'.

But Maruti needed a foreign partner.

In 1980, a search team dispatched to Europe all but settled on collaboration with Renault. The French firm had already set up in India, and plans to build the Renault 18 sedan with Maruti started to roll. Then, the following year, a handful of technocrats replaced the project team.

R C Bhargava, a core member of that group, says it was quickly decided to drop the Renault 18. Market surveys had shown that Indians wanted low cost and fuel efficiency, and the French model provided neither.

Bhargava's team set off around the globe, scouting companies from Fiat SpA to Fuji Heavy Industries Ltd. There were few takers. Japan's Suzuki Motor Corp was among those that demurred, opening the door for Maruti to start talks with Suzuki's local rival Daihatsu Motor Co.

"It was purely by chance that Suzuki again got involved in this project," recalls Bhargava, an articulate, sharply dressed ex-bureaucrat who still sits on Maruti's board.

It transpired that Suzuki had not meant to give Maruti the brush-off. In early 1982, a Suzuki director in India saw a newspaper article about Maruti's imminent deal with Daihatsu. Alarmed, he phoned headquarters and was told that Maruti's search team had been turned away.

Suzuki telexed Maruti seeking a second chance. Within weeks, Bhargava's team was back in Japan, meeting Chief Executive Osamu Suzuki. Bhargava, Suzuki and V. Krishnamurthy, another core member of the Maruti team, immediately hit it off.

Between the strong personal rapport and Suzuki's suitable product line and cost-consciousness -- Bhargava recalls being shocked at the lack of air-conditioning in Suzuki's offices in Hamamatsu, near Mount Fuji--the team concluded Suzuki was it. A letter of intent was signed in April 1982.

BEATING THE ODDS

Suzuki Motor proved a godsend for Bhargava's team.

Because Osamu Suzuki took a personal interest, decisions were made swiftly. He treated Maruti like one of his own even though the Japanese firm's equity stake was initially only 26 per cent.

"Right from the beginning, everything proceeded very, very smoothly," Bhargava, who became the first head of the reborn Maruti, said. "Mr. Suzuki was a force for that success."

Maruti's demands were far from easy.

The Indian government, which said on Thursday the cabinet had approved the sale of its remaining Maruti stake to banks and financial institutions, wanted production to start in 1983. That gave the partners 20 months to resolve legal issues, draft a licensing agreement and overhaul an idled, rudimentary plant that had been taken over by monkeys.

Suzuki balked, but the team wasted no time. Working late into the night through interpreters, a final joint venture pact was signed at a Delhi hotel on Oct 2, 1982, and the first Maruti 800--an 800cc hatchback based on Suzuki's Alto--rolled off the assembly line at the converted shed in Gurgaon, outside New Delhi shortly before the government's December 1983 deadline.

"The promise Mr Suzuki made, he fulfilled completely," Bhargava, now in his early 70s, remembers.

Suzuki didn't stop there. Insisting on equality in the workplace in a class-conscious society, he ordered open-plan offices, a single canteen and uniforms for executives and assembly-line workers alike.

A BIG BET

The venture worked for both sides.

In the early 1980s, Japanese automakers were preparing to build their first cars in the United States, the world's biggest car market. Suzuki's tiny cars had little chance of competing there, and it needed another battleground.

India was not an obvious target. Few believed demand could even reach 100,000 cars a year--a target the government had set for Maruti--and the economy was heavily regulated.

It looked a big gamble for Suzuki. Its 26 per cent stake, which has since risen to 54.2 per cent--cost nearly as much as its $22 million net unconsolidated earnings that year.

But Maruti was an instant success.

The automaker singlehandedly created a car market that is now one of the fastest-growing in the world. Maruti's production reached 100,000 cars within a few years, and order books were more than full.

Last year, Maruti accounted for half the 1 million cars sold in India, contributing handsomely to Suzuki's bottom line.

Suzuki's stake in Maruti is now worth more than $3 billion.

Maruti ranks highest in customer satisfaction

According to the findings of the 2006 four-wheeler Total Customer Satisfaction study released by leading market information provider, TNS, an international market research firm, Maruti and Honda rank highest in multiple segments owing to higher satisfaction with their overall brand experience.

The 2006 four-wheeler Total Customer Satisfaction (TCS) study conducted by TNS specialist division, TNS Automotive, is the largest syndicated automotive study in India, representing the responses of more than 7,500 new car buyers.

Key areas

This comprehensive study covers over 50 models with customer evaluations taken in the key areas of sales satisfaction, product quality, vehicle performance and design, after-sales service, brand image, and cost-of-ownership.

Index score

The TCS index score provides a measure of satisfaction and loyalty a given model enjoys with its customers.

"Maruti's older models such as 800, Zen, and Esteem continue to lead their segments for total customer satisfaction owing to an enhanced ownership experience," said Pradeep Saxena, senior vice-president of TNS Automotive.

"Maruti continues to maintain high levels of market share and customer commitment by delivering on its promise of peace-of-mind for the new car buyer," Mr. Pradeep Saxena said.

Rankings

Rankings for the TCS study are done at the vehicle segment-level to provide comparisons among similar groups of vehicles.

The models ranking highest in their respective segments for total customer satisfaction are Maruti 800 in "Entry Compact", Maruti Zen in "Premium Compact", Maruti Suzuki Swift in "Upper Premium Compact", Tata Indica Diesel in "Small Car - Diesel", Maruti Esteem Petrol in "Entry Midsize", Honda City in "Midsize", Skoda Octavia in "Premium Midsize", Ford Fiesta Diesel in "Midsize Car - Diesel", Honda Accord in "Entry Luxury", Toyota Innova in "SUV/ MPV", and Honda CRV in "Premium SUV". Tata Indica Diesel continues to top the small car diesel segment.

Indica owners were satisfied most with the brand Image of Tata and the sales experience followed by performance and design.

Delighted

They were delighted by the fact that the sales process went through without anyone putting excessive pressure on them for buying.

It was supported by the Tata brand image of a financially solid company with market leadership.

Ford Fiesta Diesel, a new entrant in the Midsize Car - Diesel segment, ranks the highest overall in this segment and across all satisfaction parameters.

Response

Customer response to Fiesta has been strong with average monthly sales of 2,000 cars.

Customers were especially delighted with the sales experience where they appreciated the dealership atmosphere and the range of financing options available.

In terms of product, their delight emanates from the overall exterior styling.

They also believe that Ford makes exciting cars they are proud to own.

Single point

In the premium midsize segment, Skoda Octavia pips the new Honda Civic by a single point with a strong performance across all satisfaction measures.

Civic owners were extremely satisfied with all aspects of their ownership experience except for their sales experience, where the lack of post purchase contact was a key contributor to their dissatisfaction.

Common strength

Despite losing out to Octavia in the premium midsize segment, Honda leads in three other segments with City, Accord, and CR-V. A common strength for all Honda models is the industry leading satisfaction with Honda's brand image.

"This example clearly shows the growing importance of brand image in creating a satisfying ownership experience," Mr. Pradeep Saxena said.

Maruti to hold its own for model touch-ups

India’s largest car maker Maruti Udyog will increasingly work independently on model upgrades and collaborate with parent company Suzuki Motor on all new model launches.

Maruti intends to launch a new car and two model upgrades every year, which means Maruti’s R&D team will work independently on the facelifts and collaborate with Suzuki on designing and developing new models right from scratch.

This follows a recent communication from its Japanese parent to step up its local R&D efforts. “We received a message from Suzuki saying Maruti should ‘grow up’ and help Suzuki’s other global subsidiaries.

Suzuki says it is short of manpower in Japan and it has to divide its attention between Hungary, China and India. They are pushing us to do our own work now as making major changes in cars is a time-consuming process,” said Mr Jagdish Khattar, MD, Maruti Udyog.

About 20-30 Indian engineers had worked with their Japanese counterparts for two years to help design the Swift, a hatch-back car and make it suitable for Indian conditions. Maruti is expected to play an incremental role in all future product launches, said Mr Khattar.

Maruti has budgeted around 4% of its turnover for R&D and is setting aside a major portion of land at its new Manesar facility for a test track. Suzuki is investing in training Indian engineers, who spend two to three years in Japan learning the ropes.

What started with a chance meeting between Mr Khattar and the senior MD(Engineering) of Suzuki Motor (SMC) on the stairway in Suzuki’s headquarters six years ago has grown into a fairly large operation today with three divisions employing over 250 engineers.

Nearly 90 of these engineers have been trained in Japan by SMC and Suzuki has committed to extending further help by stationing four senior engineers from Japan in India to train and guide the team here.

Maruti kicked off its R&D operations six years ago and its first baby was the Zen facelift in 2003-end. This was followed by the Esteem facelift and the Swift collaboration.

When the Zen Estilo was unveiled earlier this month, the R&D team at Maruti Udyog had much to celebrate as the new car came fitted with over 91% of local components. This is considerably higher than the indigenisation on cars launched by any of Suzuki’s other subsidiaries, usually around 60-65%, and helped Maruti keep the cost of the car competitive.

There are speculations that the R&D team at Maruti may be slowly inching towards an indigenously designed car. “ Suzuki is not in a hurry and neither are we. At the end of the day in terms of quality, safety emission etc we have not reached the top level. Suzuki has to step in there and revalidate our efforts,” said Mr Khattar.

Maruti's Esteem, Baleno gear up for makeover

After Zen, it is time for Esteem and Baleno to undergo a makeover. Sources said Maruti Udyog will roll out two new sedans with a price tag of Rs 5 lakh and Rs 9 lakh next year.

While the sedan with lower price tag will replace Esteem, that carrying higher sticker price will edge out Baleno, MUL’s jinxed offering in the luxury segment.

Ahead of that, MUL will introduce the diesel variant of Swift next February-March. The diesel plant that is under construction, will cater exclusively to Swift.

While most of it will be used in domestic market, the rest are likely to be shipped to Suzuki’s Hungary plant where Swift is manufactured for EU markets.

While a huge chunk of customers are awaiting Swift with diesel powertrain, those who currently own Esteem, Baleno or other mid-sized cars are looking forward to MUL’s serious foray into sedan segment.

"Despite the runaway success of Esteen, sedan segment has been the biggest chink in MUL armour. Parent company Suzuki Motor provided MUL a huge portfolio of small cars to choose from. But sedans were not its strength. The new cars will help address the gap," a source said.

In 2008, MUL will launch a new compact car for exports. "A major chunk of cars exported last year was to EU. This year, all 42,000 cars are bound for non-European countries in South Asia, Africa and Latin America," Mayank Pareek of MUL said.

MUL eyes emerging mkts for exports

Maruti Udyog Ltd (MUL) is betting big on emerging markets like Egypt, Algeria, Jordan, Chile, Morocco, Sudan, Sri Lanka and Nepal for future exports.

Talking to newspersons here on Thursday, Mr Mayank Pareek, chief general manager (marketing) at MUL said: “Maruti has entered markets like Egypt, Algeria, Sudan, Morocco and Chile and witnessed sizeable growth. We are also exploring the Venezuela and Argentina markets. Our focus will be on Far East, South Africa and Latin America."

The company expects to achieve an export figure of 42,000 units in 2006-07 compared to 34,800 cars in the last fiscal, a growth of nearly 21%. "These days, MUL exports cars only to non-European countries. Our exports to Europe is nil this fiscal as Suzuki Motor Corp (SMC), through its new facility in Hungary, is supplying cars to the European markets," Mr Pareek said. Japan’s Suzuki Motor holds 54.21% in MUL.

"In countries like Alegria, Morocco and Chile, MUL is witnessing a huge growth. In 2002-03, MUL exported only 780 units to Alegria. But in the current fiscal, we hope to achieve an export figure of 9,800 units in Algeria. Similarly, in countries like Chile we expect to export 5,900 cars compared to 700 in 2002-03. The maximum growth has come from Morocco where we expect to export of 2,300 cars compared to 100 cars in 2005-06," he added. Popular models in the non-European countries are Maruti 800, Alto, Omni and WagonR.

However, MUL plans to yet again enter Europe in 2008-09 with a new car. "This car will be manufactured at our Indian facility purely for the European market. It will not be sold in India," said Mr Pareek.

MUL on Thursday launched Zen Estilo in the city. Earlier, it had withdrawn the first generation Zen from the Indian market this June. While unveiling the car, Mr Pareek said: "This is a lifetsyle car which comes with a bigger engine (1061 cc), offers more boot space and superior air-conditioning. We will not export this car right now. We will watch its acceptability in the domestic market and then take a call on exports."

Maruti to export Zen Estilo to South East Asian markets

Maruti Suzuki is the largest automobile maker in the Indian market and they have just launched their Zen Estilo model here in the domestic market.

The company added that after fulfilling the initial domestic demand they would start exporting this car to the South East Asian markets.

Maruti Udyog Ltd managing director Jagdish Khattar said in a statement on their plans: “We have a plan wherein we will initially sell the product in India and master it. After that we will look at exports in the next year.”

Estilo is being made as a right hand model in India thus exports would be limited to markets where these models could be sold.

Khattar added: “We are working with Suzuki on the South African market and plan to enter it next year.”

The company has priced the Zen Estilo in India between Rs 3,30,440 and Rs 3,89,783.

Source: http://business.techwhack.com/1514/maruti-to-export-zen-estilo/

New Zen Estilo at Rs 3.19 lakh

Eight months after it was phased out from the market, Maruti on Tuesday unveiled the new Zen sporting an all-new look and under a new name 'Estilo', pricing the base variant at Rs 3.19 lakh (ex-showroom Delhi).

The company, which had discontinued the sale of the Zen after deciding to go in for an all-new model, decided on an aggressive entry-level pricing to make it competitive in the market, against models like Hyundai's 'Santro' and Tata's 'Indica'.

"Young people in India today desire products with contemporary styling and international appeal. The new Zen will appeal to this new India, just as the original Zen appealed to the India of the mid 1990s. It incorporates features and attributes that are uniquely suited to India and valued by Indian car buyers," Jagdish Khattar, Managing Director said.

The Estilo will strengthen Maruti's position in the compact car segment where it already has models like 'Alto', 'WagonR' and 'Swift'. However, analysts say the presence of many models around the same price band could also lead to some cannabalisation.

The company said the Zen Estilo is roomier than the original Zen and sports a bigger engine (1061 cc). "It is taller, offers more boot space and superior air conditioning.

It delivers 64 bhp and its low-end torque of 84 nm (at 3500 rpm) makes it ideal for Indian city conditions," the company said.

Touted as the marvel in tall-boy designing, the new Zen Estilo, combining great looks and practicality, is the latest offering from Maruti and will be available in the market from Tuesday.

The new version is being tipped as the most ambitious re-incarnation in the 13-year-old history of the Zen. This comes after other versions, such as the Classic, the sportier two-door Carbon and Steel and one more version, turned out to be a damp squib and were phased out of the market.

The Zen Estilo - Spanish expression for style - is an amalgam of Japanese simplicity and European chic. It has been put together to conform to the standards of a rigid 'monoform' design with smart interiors and distinctive aerodynamics.

The car is, for the most part, a carry forward of the original Suzuki's MR Wagon - a popular small car once that has now been replaced by a new car in Japan.

An attractive new shape with good amount of space has been made available in the car, which is a total departure from the earlier much lower jellybean shaped Zen.

The Estilo will sport a more powerful 1061 cc, 4 cylinders inline engine (the earlier Zen carried a 990 cc engine), which has been sourced from the Wagon R, and will generate 64 bhp of torque.

The Estilo shares the same platform as the Alto and Wagon R. The car was launched some 10 years back in Japan and is a bit unrefined compared with Maruti's last offering the Swift.

The large trapeziodal headlamps, straight rear lights and a rear door handle in the middle make the looks outdated. The straight arches on the body rather than curves also make the design look old.

Maruti had discontinued Zen early this year, which was among its most popular models. The company had sold a total of over 760,000 cars of this model in the domestic market and exported 122,000 units of the Zen.

The new car will be pitted against Hyundai's Santro, and Getz, Tata Motor's Indica and may also eat into the sales of Maruti's own popular models, the Swift and Wagon R.

Source: http://inhome.rediff.com/money/2006/dec/05mul.htm

Maruti to drive into S Africa, Europe

Maruti Udyog (MUL), the country's largest car manufacturer, will launch its cars in South Africa by next year and re-enter the European market in 2008-09.

Managing director Jagdish Khattar said the company was planning to enter South Africa, but refused to disclose the features of the model that will be launched. "But it will form a part of direct exports from India," he added.

Meanwhile, the company has also envisaged plans to re-enter the European market with a model, which could be on a shared platform such as the Zen Estillo (the car shares its engine with the Wagon R and the platform with that of the Alto) or the company will build a completely new model for the launch date of 2008-09. Khattar said, "We are planning to launch a model specifically developed for the European market. With this model our total export sales are expected be in excess of 100,000 units. The discontinuation of exports to the continent has affected us badly but with the launch of the new model we are our exports will hit an all time new high."

Alto contributed as much as 90 per cent of company's exports to Europe. Now with the launch of a new car, Maruti hopes to regain a key export market.

For the non-European market, the company is expecting to post a total of 40,000 units for the current financial year and it is further expected to grow to an overall figure of 100,000 units including the introduction of the new model in Europe.

At present, Sri Lanka is the company's major export market where it is clocking sales of 8,000-9,000 units, followed by Chile where it is selling 5,000-6,000 units.

Earlier, Maruti-Suzuki had a tie-up with Nissan Motor company to manufacture 200,000 small cars, which were to be sold under the Nissan badge in the domestic market. The deal, however, fell through when Nissan expressed its desire to join the Mahindra-Renault contract to manufacture the Logan.

Nissan has, however, not scrapped the deal with Suzuki for manufacturing 50,000 cars in India exclusively for exports under the Nissan badge, in the European sector.

Meanwhile, MUL today launched its new model, Zen Estillo, in Mumbai. The Estillo will replace the old Zen which was one of the most highly successful brands of the company. MUL even refused to withdraw the brand name Zen from the newly launched car as Khattar believes that the brand itself is powerful enough to drive sales initially.

The car will be priced in the range of 3.30 lakh for the base version to 4.20 lakh for the fully loaded model which the company is offering with airbags and ABS. Both the prices are Ex-showroom Mumbai.

Maruti November sales rise 16 per cent

Passenger car market leader Maruti Udyog has reported a 16.13 per cent rise in total volume sales to 55,033 units for the month of November 2006, including exports of 2,459 units, as compared to 47,391 units during November 2005. On a sequential basis, sales have declined 8.53 per cent from 60,163 units reported for August 2006. The performance is commendable as November is historically a sluggish month.

Total domestic sales for the month increased by 20.67 per cent to 52,574 units from 43,568 units a year ago. Domestic sales for the month have declined 5.94 per cent sequentially from 55,894 units during the previous month.

The premium hatchback segment or B segment continued to drive volume growth. The B segment, which includes models like Alto, Wagon-R and Swift, has reported an increase of 32.3 per cent to 37,060 units for the month as compared to 28,019 during November 2005. On a sequential basis, sales in this segment have declined 4.83 per cent.

The company is all set to launch the replacement for its Zen model, tentatively branded the Zen Estillo, later this month or early next month.(See: Maruti's Zen reborn as Estilo) The diesel version of best-selling model Swift is also expected shortly.

Sales of entry level model Maruti-800 declined by 18.3 per cent to 6,040 units as compared to 7,397 units for November 2005. Sales for the month were 4.94 per cent lower than October 2006.

The passenger van segment recorded the highest percentage growth of 36.2 per cent with sales of the Omni and Versa increasing to 7,150 units as compared to 5,250 units for November 2005.

Sales growth in the mid-sized sedan segment declined 14.5 per cent. Sales of Esteem and Baleno were at 2,083 units as compared to 2,437 units for November 2005. The company is readying a new model to replace the Baleno in the mid-size sedan segment while a sedan version of the Swift may replace the Esteem next year.

Exports declined substantially by 35.7 per cent for the month to 2,459 units from 3,823 units. Exports would increase next year as Suzuki is expected to source more units from Maruti's new assembly plant coming up at Manesar.

send this article to a friend The company would also supply cars to Nissan under a global alliance between Suzuki and Nissan, but the proposal of joint assembly unit with Nissan has been dropped.

Zen Estilo: Japanese simplicity, European chic

Maruti's premium compact car — the Zen — had an amazing run right until early this year, when it was yanked off the turntables at the company's showrooms.

It was the first premium compact car in the country. The enviable 13-year history of sales is the highlighted by the fact that Maruti had but once tried to give the Zen a facelift.

The car had had a loyal the fan following that had fallen for the car's jellybean design. But with the entry of more players and choice in the compact car segment widening, the Zen's design did seem less attractive, though it still had the trusted, peppy and rev-happy engine that was a delight to drive for the enthusiast and the novice alike.

That despite its production having been stopped from March, the Zen should win the top honours in TNS' Total Customer Satisfaction Study 2006 under the premium compact segment, ahead of the Hyundai Santro and the Tata Indica, no doubt made Maruti sit up. The company also divined the Zen's undiminished image amongst the young and the old, as also among the performance and the style conscious alike.

The Zen brand is quintessentially Japanese and with its strong recall, Maruti-Suzuki was not going to let it die. So, after a breather, the Zen is back adorning the panels of a completely new premium compact car. Here's the new Zen Estilo, the all-new small car from Suzuki with a refreshed, but recognisable brand name.

The Zen Estilo (with a lowered emphasis on the `t', Spanish style) is, even as the name seems to suggest, an amalgam of Japanese simplicity and European chic. Put together to conform to the standards of a `monoform' design, the car is for the most part a carry forward of the original Suzuki MR Wagon, the Japanese parent's popular small car.

That the new Zen?

The big news is not that Maruti Udyog has introduced the all-new Zen Estilo, but the fact that they have actually retired the old one. Little Marutis started populating our country way back in 1984, and since then, all cars that the nation’s carmaker introduced still live on in one form or the other.

But now, the evergreen Zen gets the dubious distinction of being the first ever Maruti to officially go out of production. Not a fate that the doughty Zen deserved, after over 13 years of thrilling enthusiasts.

Replacing it is this, the new Zen Estilo. Adding that Estilo tag to the hallowed Zen brandname might have just saved Maruti Suzuki’s skin. I can imagine hordes of Zen lovers banging on the gates of MUL’s Gurgaon plant demanding that the Zen tag be removed from the new car — How can you call this the new Zen — it’s just a funky Wagon R! The original Zen was a snappy, honest, fun-to-drive number, but this looks like one of those preening, self-conscious kind of cars that are indifferent to drive...

I would have been among those angry fans myself, because these were the thoughts that were going on in my mind as I laid my eyes on the Zen Estilo for the first time. I had seen this car in its Suzuki MR-Wagon guise in various motor shows but never thought that it would take this long for it to be launched in the country. MR-Wagon?

Yes, Suzuki made this little runabout for the Japanese market between 2001 and 2005, but that had a smaller 660cc powerplant and differed in a few details. Now that it’s stopped production in Japan, MUL got the dyes and the rest of the aggregates of the car (hopefully for cheap) from Suzuki, fitted it with the Wagon R powertrain, gave it a few design changes, and bingo!, there you have it, the new Zen Estilo.

Of course I have oversimplified it here, as the development process of the Zen Estilo took 18 months till it was signed off for production. During that period Maruti engineers and designers worked with those from Suzuki, giving it that smiling, chrome-trimmed visage and sporty grille/air-dam treatment, completely reworking the interiors, shoehorning the bigger drivetrain and making it suitable for driving in India (you know, LOUD horn, EXTRA ground clearance, STRONGER suspension components...). Which begs the bigger question: is it as much fun as the original? Just coming to that.

Sitting inside the Zen Estilo, you know that this is not the Zen. In the first place, it’s a not-so-tall tall-boy, fitting neatly between the Alto and the Wagon R. Which means that there is tremendous headroom. The thick A-pillar and the quarter glass means that this is a modern, contemporary car, all-right.

Getting inside also is easy, no bended knees/folded hands, etc. And the interior dash treatment is modern. It has that trendy dual-tone treatment, and while the instrumentation is familiar to anybody who’s driven a Maruti, it is better laid-out.

There are useful nooks and crannies to store stuff too. The shoulder room is just about adequate, but tough if you’re generous with your helpings at the dining table. And don’t blame me if you feel your co-passenger’s knee every time you’re in first gear.

Fire up the engine and it’s deja vu all over. The 1061cc 16-valve four-cylinder motor that develops 64 bhp at 6200 revs and 8.5 kgm of torque at 3500 rpm is to me the best small displacement engine around. It develops adequate power, but the way it delivers it is great fun.

The motor is rev happy, in fact, it’s like a Suzuki motorcycle, effortlessly going beyond 6000 revs. And it’s a proven motor too, having done sterling service for quite some time now, under the Wagon R’s bonnet, and once upon a time, even under the Alto’s hood. Best of all, it’s fuel efficient too.

The five-speed manual gearbox that’s paired with this engine does a great job of making the car driveable, but the long throws plus rubbery shifts mar the overall package. Hey, but it’s not unique to the Zen Estilo — it’s an issue with the Wagon R as well.

The gearshift quality also does not go well with the sporty Zen image nor the smooth exterior design of the Estilo. But the gearing is spot-on, which is why Maruti had kept the whole drivetrain unchanged. Second gear takes you to 80 kph, while third tops out at 120 kph.

What that allows you is an easy flexibility between second and third which is what you’ll end up doing on our city streets. The Zen Estilo manages a 0 to 60 kph timing of 6.16 seconds and manages to hit 100 kph in 16.26 seconds. Which is marginally better than what the boxy Wagon R manages.

The Alto, Wagon R and the Zen Estilo are spun off the same platform. Which again means a proven underpinnings package that has done sterling service in the country. The suspension package on offer — McPherson struts at front and three-link rigid and isolated trailing arm at the rear — can surprisingly take a great amount of abuse, so expecting the Zen Estilo to take the rough with the smooth won’t be asking too much.

The Estilo’s ride is pretty good for a car of its class and is not unduly harsh. Handling is also well-sorted and surefooted, but it’s the tall-boy structure that does not allow you to corner the way the Zen used to do.

And here is where the biggest issue between the predecessor and successor is: the Zen was a brilliant corner carver, while you are isolated from the experience in the Estilo — the new car is perfectly capable, it’s just that understandably, the thrills are missing. The electronic power steering once again takes away any semblance of feedback.

So to answer the question: it’s not as much fun as the original. Still, since all things must come to pass, we have to accept that the Zen Estilo is the car for here and now. And taken by itself, it’s quite a good machine too — a clever little car that marries the convenience of the Wagon R with funky styling and contemporary architecture.

Expect its pricing to be between the Alto and the Wagon R, somewhere around the Rs 3.5 lakh range, when it’s launched any time now. The only issue that rankles is the Zen tag — if it’s being positioned as a trendy, young person’s car, just the Estilo brand should have been fine.

But the Zen brand, as a survey once pointed out, was stronger than Maruti – too much of a good thing to let go, I guess. Still, to me, it’s not the Zen for the 21st century.

Manufacturers gear up for the next round of car wars

Much of the action in the near future is expected in the upper compact car segment, also called the B-segment. Maruti, which had a major hit in this segment with the Swift, would launch the all new Zen – which is sold in Japan as the MR Wagon – by early next year. The car would be priced slightly lower than the Wagon R, which has received a favourable response after its recent facelift. Maruti is also expected to launch a diesel version of the Swift – powered by a common rail diesel engine developed by Fiat and licensed to Suzuki.

Korean favourite in India, Hyundai also has plans to soon launch an updated Santro as well as a diesel version of premium hatchback Getz, to retain its share in the B segment. Though there is some speculation about a diesel-powered Santro, the company has refrained from announcing it.

Tata Motors is working on the next generation Indica, which would be launched by 2008. The company is expected to position the new version against the Swift and Getz while the older version would continue to be offered to lower-end customers. The next generation Indica would feature common rail diesel engines sourced from Fiat, same as the one to be offered by Maruti on its diesel Swift.

GM has started work on its new plant in Maharashtra, which would roll out the Chevrolet Spark, an upgraded Daewoo Matiz, in the B segment. Ford has already announced that it is not interested in the compact segment as it is too crowded.

Fiat plans to bring out the Grande Punto, which is a major hit in Europe, by the middle of next year. The model would be positioned at the high end of the compact segment and the company has just received government permission to bring in an additional Rs2,000 crore in investments. An upgraded Palio, expected in early 2007 and would be positioned against the Swift and Getz, will precede the Grande Punto. Fiat would continue to expand its marketing and production alliance with Tata Motors.

Volkswagen, Europe's largest carmaker, has just announced its plans for India. The company is setting up a plant at an investment of $530 million, which would roll out the premium hatchback model Polo – one of the most successful models in this segment globally. French auto giant Renault may also look at the compact segment, once the JV with Mahindra completes the manufacturing plant.

Honda may launch a premium hatchback, most likely the Jazz, by next year to mark its entry into the compact car segment. Toyota has reportedly deferred its plan to launch either the Yaris hatchback or the small car Echo till 2010.

Another new entrant in this segment is Hyderabad-based MLR Motors, promoted by auto ancillary group Lokesh Machines. The company is planning an investment of Rs1,300 crore in a manufacturing plant to bring out a diesel powered hatchback.

MLR has acquired the technology from a European company, rumoured to be the Uno platform from Fiat, and has appointed B V R Subbu, former marketing head of Hyundai India, to manage the venture.

Maruti's Zen reborn as Estilo

In a clear instance of extending the brand equity of a phased out model, Maruti Udyog (MUL) is launching the Zen in the incarnation of the Estilo next week.

However, the new Zen will not bear any resemblance to the popular old model and is said to have greater resemblance to the WagonR and Alto.

The Estilo meaning 'style' in Spanish is expected to compete against the Hyundai Santro, Tata Indica and may also eat into the sales of its own model, the Swift, launched in 2005. It is in fact none other the Suzuki's popular hatchback MR Wagon launched in 1999 in Japan and other countries. It would also be one of the first of the five models Maruti promises to launch in India over the next five years.

Maruti wants to position the new Zen as a fashion statement and will launch it at a Tarun Tahiliani fashion show.

Maruti's dealers who received details of the car at a series of zonal conferences with the company said the Zen Estilo has a monoform design, smart interiors and distinctive aerodynamics.

Suzuki MR Wagon was launched in Japan in 1999 and is based on the Alto and Wagon-R platform. The car has been phased out in Japan. Though dealers remained non-committal about its price, Maruti is expected to price the Suzuki MR Wagon between Rs3 and Rs4lakh.

The Zen, launched in 1993 and discontinued early this year, was among MUL's most popular models and almost as ubiquitous as the M800. In all, the company has sold a total of over 760,000 cars of this model in the domestic market and exported 122,000 units.

MUL launched the Zen to cater to a slightly upmarket audience than that of the M800 had and to capitalise on the latter's success. It priced the Zen higher and also gave it a bigger 1000cc, 50bhp engine. In 1998, the diesel version of the Zen was launched, which send this article to a friend proved popular. In 2000, the Zen with the MPFI engine was launched that had more power, making it a value-for-money proposition that Indians love.

In 2004 the Zen Classic came in with an ambitious Mercedes look-alike front grill and some other design changes.

Technical Specifications — Suzuki MR Wagon
Power:	64 bhp@6400 rpm
Torque:	8.56 kgm@3500 rpm
Length:	3401 mm
Width:	1575 mm
Height:	1669 mm
Wheelbase:	2334 mm
Fuel tank:	30 litres
Engines size:	1061cc, 4 cyliners inline
BHP:	60.32 bhp/litre
Gearbox type:	5 speed manual
Front suspension:	McPherson strut
Rear suspension:	three link rigid type
Front brakes:	ventillated discs
Rear brakes:	drums
Tyre:	145/70 R13

GAIL will supply gas to Maruti’s new plant

GAIL (India) Ltd has agreed to supply natural gas to Maruti Udyog Ltd’s (MUL) plant at Manesar in Haryana. The government-owned gas company plans to develop pipeline infrastructure from Gurgaon for meeting the industrial requirement in areas like Manesar, Dharuveda and Bhiwadi in the state.

Sources said natural gas would be supplied through purchase of liquefied natural gas (LNG) on spot (as and when) basis in the international market. “Besides, long-term LNG supplies can also be made from international sources,” said an official.

Suzuki Motor Corp (SMC), Maruti Udyog’s Japanese parent, had in July announced fresh investment to the tune of Rs 3,000 crore in India, over and above the Rs 6,000-crore investment SMC and Maruti had already committed to India till 2010. The fresh investment will flow into the new car plant Maruti is commissioning at Manesar and the diesel engine facility coming up alongside.

MUL’s existing plant at Gurgaon is receiving regassified LNG of around 0.22 million standard cubic metre a day (mmscmd) since March 2004 at around $3.86 per British thermal unit (Btu) ex-Dahej LNG terminal. The price is exclusive of transportation charges and taxes. Besides, GAIL is supplying MUL propane at Rs 24,000-32,000 per million tonne.

Maruti Suzuki's managing director talks about the need for small cars

At a time when most of his colleagues are leading a life of leisurely retirement, Jagdish Khattar, 63, is facing the managerial challenge of a lifetime. The former India bureaucrat is managing director of Maruti Suzuki, the Indian subsidiary of Suzuki Motor, the Japanese automaker's biggest operation outside of its domestic market.

The Indian unit now faces an onslaught from global competitors rushing into the country with ambitious expansion plans. Honda (HMC), Toyota (TM), Hyundai (HYMZY), General Motors (GM), and others have announced plans to make small cars in India.

Maruti has 65% of India's one-million-unit car market and 11 brands, but is hardly sitting still. It will spend more than $650 million to make diesel cars and set up two new plants in Manesar in the northern state of Haryana, one of which was to be with Nissan Motor (NSANF).

However, Nissan recently scrapped talks with Suzuki and Maruti about a new car-making facility and instead will work through a joint venture between India automaker Mahindra and Renault (RNSDY) of France, which owns a 44% stake in Nissan.

Such are the current competitive dynamics facing Maruti Suzuki in one of the fastest-growing auto markets in the world. Khattar spoke to BusinessWeek.com correspondent Nandini Lakshman in New Delhi about the Indian car market and strategy. Edited excerpts of the conversation follow:

Now that the Nissan deal has fallen through, what does it mean for Maruti Suzuki?

When (Suzuki chairman Osamu) Suzuki was in India in September, he had made it clear that there were two parts to the Nissan deal. We were going to invest $2 billion in Manesar to produce 100,000 small cars for export to Europe. Nissan said it would pick up 50,000 cars from us for export, and that deal still stands. The second aspect about setting up a plant to manufacture 200,000 cars for Nissan's export markets was still under discussion, but that won't happen.

Today 80% of your revenues come from compacts and small cars at a time when there is a lot of action in the luxury car segment.

This segment is down 1%. It has grown with big companies and big launches, but where are the numbers to talk about? It is still the small car for the rest of the country.

MR Wagon: Maruti all set to launch their New Zen

As per market sources, Maruti Suzuki is all set to launch their latest new product in the Indian market. Maruti is expected to launch its replacement for the old Zen car in India next week.

This car is expected to be called MR Wagon and it was originally launched in Japan in 1999. The company is expected to have done massive changes to this model and it would be somewhat closer in looks to the Wagon R model.

This latest car should come in similar capacity of 1100 CC engine and the power output is expected to be around 64 bhp. Maruti is expected to market this car between the Alto and Wagon R segment.

The company is expected to price this car between Rs. 3.2 L - Rs. 3.5 L and several variants should be made available to target different segments of the market.

Jilted by Nissan, Maruti halves exports

Japanese major Nissan Motor Company’s decision to not build a manufacturing facility in India with Suzuki Motor Corporation may affect Maruti’s overall passenger car exports.

On his recent visit to India, Suzuki chairman Osamu Suzuki had said that his company would export 40% of total production — or four lakh vehicles — from India by 2010. But hours after the declaration by Carlos Ghosn, president and chief executive of Nissan, in Paris on Thursday about the change in plan, Maruti Udyog managing director Jagdish Khattar told DNA Money Suzuki’s export target from India will now be only 2 lakh units by 2010.

Which also means the production will come down from 10 lakh vehicles to 8 lakh vehicles.

“We had said that from the second plant Maruti is putting up at Manesar, we will export 1.5 lakh cars under the Suzuki brand name and another 50,000 under the Nissan badge. This arrangement remains.

The remaining two lakh cars that were to be exported by Suzuki from India would have been sourced from the new plant of Nissan’s,” Khattar said.

Nissan’s withdrawal comes within days of reports that the government has denied SEZ status to Suzuki’s Manesar facility — a request Osamu Suzuki had made during his recent visit, citing mega export targets from here. Suzuki had also sought corporate tax exemption for ten years, duty exemption on imported components and raw materials, according to industry sources.

When asked about the Government’s denial to grant the SEZ status, Khattar said: “We never sought this status so where is the question of Government rejecting it?”
But does Nissan’s retreat affect Suzuki’s overall investment plans for India?

Khattar says investments by the Japanese parent will come in as planned. This means the additional Rs 3,000 crore announced by the chairman will anyway find its way to the Indian subsidiary.

The Secretary General of SIAM, Dilip Chenoy, welcomed Nissan’s decision to source from the Mahindra Renault plant, saying a large plant which can manufacture multiple cars will lead to economies of scale and an overall cost advantage

Nissan whittles Maruti pact

Japanese carmaker Nissan has called off talks with Maruti Udyog Ltd to set up a plant in the country for manufacturing 200,000 cars a year. Instead, it will join the alliance between Mumbai-based Mahindra and Mahindra and France’s Renault SA, which owns 44 per cent of Nissan’s equity.

However, Nissan remains committed to the deal signed with Maruti, under which India’s largest carmaker, 54 per cent owned by Japan’s Suzuki Motor, will make 50,000 cars for Nissan for exports.

“When he was here, Osamu Suzuki (chairman of Suzuki Motor) announced a Rs 9,000 crore expansion plan, including the production of 50,000 Maruti models, which were to be exported by Nissan under the Nissan brand. There is no change in this stand. Osamu Suzuki also said there were discussions between Suzuki and Nissan for Maruti to produce 200,000 cars for Nissan for the export market. This will no longer happen,” Maruti Udyog Managing Director Jagdish Khattar told Business Standard.

The details of Nissan’s second project with Maruti — investment, capacity of the plant, models — were not announced.

Nissan’s decision follows a Renault and Mahindra and Mahindra announcement to build a plant in India for assembling 500,000 cars a year.

Following Nissan’s announcement, the Maruti stock fell 2.75 per cent in the Bombay Stock Exchange, making it the biggest loser among the Sensex stocks, even as the Sensex rose 0.5 per cent. The Mahindra scrip, on the other hand, climbed 6.15 per cent to Rs 828.05.

The project is part of Renault's strategy to boost global sales by 800,000 cars in 2009, compared with 2.5 million in 2005, on the back of rising demand in India and other Asian countries.

“We need to do more in India and we are very confident,” Renault Chief Executive Carlos Ghosn, who also heads Nissan, said at a news conference in Paris.

Today’s announcements drastically expand the scope of Mahindra and Mahindra’s existing agreement with Renault to build 50,000 units of the Logan, Renault’s successful no-frills car, at its plant in Nashik, near Mumbai, beginning next year. Mahindra owns 51 per cent of the venture and Renault the remaining 49 per cent.

The agreement announced today envisages a new assembly plant to build the Logan and its derivatives for the Indian market. Renault will also build a powertrain factory. Production is expected to begin by mid-2009 with an initial capacity of 300,000 cars per year, which would be scaled up to 500,000 in five years.

“The facility will not only produce the Logan, but new products from Mahindra and Mahindra as well, which will include utility and sports utility vehicles,” Mahindra and Mahindra’s President, automotive sector, Pawan Goenka, told Business Standard.

According to today’s memorandum of understanding, Mahindra and Mahindra will own 50 per cent of the joint venture. The rest will be shared between Renault and Nissan.

Maruti's all-new Zen set to roll out next week

The all-new Zen from Maruti Udyog Ltd (MUL) will be launched some time next week.

However, the supply of the car for sales would start from January 2007. The new 1.1 litre Zen would come with a base price of Rs 3.62 lakh to Rs 3.75 lakh and high-end model would be priced around Rs 4 lakh.

At present the base model costs around Rs 3.52 lakh while the high-end is priced at around Rs 3.81 lakh. The petrol as well as diesel version of the car would be launched simultaneously.

The new Zen is designed after Suzuki's MR Wagon but to encash the equity of the Zen brand the original name has been retained.

The new hatchback would compete with the likes of the yet to be launched Aveo- UVA of General Motor India, Hyundai Santro, Tata Indica and Maruti's own tall boy Wagon R.

According to people in the know, the floor of the new Zen has been lifted to make the vehicle taller unlike the present variant and is packed with almost all the features introduced in the Wagon R LPG variant.

Maruti stopped the production of Zen in March this year due to dwindling sales of the car.

Introduced way back in 1993 it once ranked among the top selling cars.

However, lately sales slowed down with the launch of newer cars like the Swift, the Wagon R and the Alto.

Mahindra & Mahindra or Maruti: Which one looks better?

Ashutosh Goyal of Edelweiss is of the opinion that even though Nissan is not partnering with Maruti, this will not have a huge setback as Nissan intends to market its cars under its own brand name.

He believes that it is a big boost for Mahindra’s efforts to increase their presence in the automotive space.

Is it a kicker for Mahindra and Mahindra?

Definitely it is a big boost for Mahindra’s efforts to increase their presence in the automotive space. So far they have only been targeting the utility vehicle segment, which is only 16-17% of the overall passenger vehicle market and they have also been saying that they want to expand their addressable market in the passenger vehicle segment and now with this alliance they will be looking at the entire passenger car industry.

What is your price target for M&M after this kick off from Nissan?

We don’t have a price target officially on M&M, we have a buy rating on Mahindra, it’s the top pick in the automobile space as of now. We don’t have official price target.

Why is it then the market seems to be valuing Maruti higher than Mahindra so much?

Maruti so far has been the only pure play car company, which is attracting higher valuations related to other players because it’s basically trading on the India consumption or the income growth story while Mahindra’s existing business of tractors and utility vehicles is considered to be a more cyclical kind of business. So that is why it has been attracting a higher valuation. But Maruti’s valuations are much higher, much richer compared to Mahindra’s valuation.

Accumulate Maruti Udyog: Edelweiss Research

"The global tie-up between Suzuki and Nissan, wherein Suzuki will supply more than 50,000 small cars produced by Maruti Udyog (MUL) to Nissan globally, as well as Suzuki’s plans to export another 100,000 vehicles under its own brand from Maruti, provides a big boost to Maruti’s exports. These developments are significant since the company’s exports had been lackluster recently following the phase out of the Alto from Europe. The initial exports are expected to kick off from FY09E onwards and Maruti is likely to ramp up the capacity of its new Manesar plant to cater to the export requirement. We expect exports to be 12% of total volumes in FY09 and increase further going forward."

"We believe Maruti will lose market share, though gradually, in the domestic market, given the expected introduction of several new models in the compact car segment by competitors, namely, Spark and Aveo UVA by GM, new Indica and the INR 100,000 car by Tata Motors, Getz diesel by Hyundai, and yet unnamed models by Honda and Toyota. Further, given the lack of a new product range in the sedan segment, Maruti’s performance in that segment will continue to be constrained in the medium term as buyers upgrade to bigger vehicles. We expect Maruti’s domestic volume growth to be at a CAGR of 13.6% over the next three years, as compared with the expected industry growth of 15-16% p.a."

"Given its scale of operations, Maruti has been in a position to extract significant cost efficiencies from all aspects of its operation—employee productivity, material procurement, vendor prices, and other factory costs. However, going forward, we believe improving margins will become increasingly challenging, due to 1) the introduction of new models, 2) commissioning of the new assembly plant, 3) pricing pressure resulting from increased competition, and 4) rising share of exports in the sales mix."

"At INR 911, Maruti is quoting at a fairly rich valuation of 17.7x FY07E and 15.8x FY08E our revised EPS estimates. Our earnings revision has been triggered by stronger than expected domestic volumes, better export visibility, and higher than estimated margins. As a result, we are also upgrading our recommendation to 'Accumulate’ from previous ‘Reduce’. However, in view of its volume growth lagging the industry, and sustained pressure on its margins, as well as the huge capex being undertaken, we do not recommend a ‘Buy’."

Nissan dumps Suzuki for Renault, M&M

Japanese auto major Nissan today said it has ended talks with compatriot Suzuki to set up a manufacturing plant in India as it was in discussions with French auto firm Renault and Mahindra & Mahindra.

"Nissan is committed to establishing a manufacturing presence in India as part of our global growth strategy. Nissan is in active discussions with Renault and Mahindra concerning a new industrial partnership, and will make a final decision within four months," the company said in a statement.

"In consequence, we will not continue discussions with Suzuki concerning a new industrial project in India," it said.

The company, however, reiterated that the previously announced agreement to work with Suzuki concerning original equipment manufacturer (OEM) supply from India of a new small car for sale mainly in Europe remained intact.

When contacted, Maruti Suzuki officials declined to comment on the development saying that the talks were held between its parent Suzuki and Nissan. Sources, however, said Maruti Udyog will make 50,000 units of small car a year for Nissan to be exported to Europe.

Nissan and Suzuki had, in June this year, announced expanding their business collaboration including sharing of manufacturing facilities in emerging markets starting from India. They had held discussions about jointly setting up a manufacturing plant largely for exports with a capacity of 2,50,000 units.

Govt. to divest balance equity in Maruti Udyog

The Union Government will decide on disinvesting its remaining 10.27 per cent shareholding stake in Maruti Udyog Ltd. (MUL) this month. Heavy Industry Minister Santosh Mohan Dev said the decision would be taken this month and implementation would be done next month.

Speaking to reporters on the sidelines of the directors' conclave on corporate governance organised by the Standing Conference of Public Enterprises and the Academy of Corporate Governance, he said a final note had been moved for the consideration of various ministries and coalition partners. He expressed confidence that the coalition partners would not object to it. In addition, he said that he would be holding meetings with leaders of Left parties in a day or two to discuss the issue.

Mr. Dev said a group of officers, headed by a Finance Ministry official, would decide on the mode of selling the shares so that the right price could be arrived at by the Government. Competitive bids were expected to be invited for divesting the equity on the same lines as done in January when 8 per cent stake was sold to Suzuki Motor Corporation for Rs. 1,567.60 crore. It may be recalled that the government had handed over the majority shareholding to Suzuki in 2002 and divested 27 per cent of its stake a year later through an initial public offer. It is estimated that the Government holding of 2.96 crore shares, could fetch around Rs. 2,793 crore at current prices for the Exchequer.

Maruti stake sale to be put before cabinet

Union Heavy Industries Minister Santosh Mohan Deb said on Wednesday he had formally proposed the selling of the remaining 10 percent government stake in car maker Maruti Udyog Ltd.

The ministry has sent a note to officials and the administration's coalition partners so the sale can be taken up by the federal cabinet, he told reporters.

"It can be done any time," Dev said.

The government said in August that it had no objection to the sale. Maruti is 54.2 percent owned by Japan's Suzuki Motor Co.

Maruti Alto Is Now India's Top Selling Car!

Car market leader Maruti Udyog Limited sold 55,894 vehicles in the domestic market in October 2006.

The company had sold 50,308 vehicles in the domestic market in October 2005.

In all, Maruti Udyog Limited sold 60,163 vehicles in October 2006. This includes 4,269 units of exports.

During the month, Alto sold a whopping 22,294 units. This was the highest ever monthly sales for any model and make in India. Previous record of highest sales was held by Maruti 800 (20,687 units in March 03)

Maruti’s volume in the domestic A2 segment went up by 23.5 per cent and in C segment grew by 21.6 per cent during the month compared to sales in October 2005.

Consumers derive most satisfaction from Maruti and Honda -TNS Automotive study

Maruti and Honda have been ranked the highest across multiple segments based on higher satisfaction with overall brand experience, suggests the latest TNS findings from the 2006 four-wheeler total customer satisfaction study.

The 2006 four-wheeler Total Customer Satisfaction (TCS) study conducted by TNS specialist division, TNS Automotive, claims to be the largest syndicated automotive study in India, representing the responses of more than seven thousand five hundred new car buyers. This study covers over 50 models with customer evaluations taken in the key areas of sales satisfaction, product quality, vehicle performance and design, after-sales service, brand image, and cost-of-ownership. The TCS index score provides a measure of satisfaction and loyalty a given model enjoys with its customers.

"Maruti's older models such as 800, Zen, and Esteem continue to lead their segments for Total Customer Satisfaction due to an enhanced ownership experience," said TNS Automotive senior VP Pradeep Saxena. "Maruti continues to maintain high levels of market share and customer commitment by delivering on its promise of peace-of-mind for the new car buyer."

Rankings for the TCS study are done at the vehicle segment-level to provide comparisons among similar groups of vehicles. The models ranking highest in their respective segments for total customer satisfaction are: Maruti 800 in 'Entry Compact'; Maruti Zen in 'Premium Compact'; Maruti Suzuki Swift in 'Upper Premium Compact'; Tata Indica Diesel in 'Small Car - Diesel'; Maruti Esteem Petrol in 'Entry Midsize'; Honda City in 'Midsize'; Skoda Octavia in 'Premium Midsize'; Ford Fiesta Diesel in 'Midsize Car - Diesel'; Honda Accord in 'Entry Luxury'; Toyota Innova in 'SUV/ MPV'; and Honda CRV in 'Premium SUV'.

PLM (Product Lifecycle Management)-Simulate car designs in virtual world?

Take a look at any new vehicle model hitting the roads. Chances are it may never have begun life as a clay model prototype. Chances are also that it may never have undergone physical crash testing. All of these may have been done in the virtual world and perhaps the Maruti Swift model you are driving is the first off the assembly line.

Advanced software tools have been used in the automotive industry for a long time, like CAD/CAM for instance. But the latest trend to hit the Indian automotive space is PLM or product lifecycle management where the entire lifecycle of a product from concept and design to junking it is first simulated in the virtual space before translating it into reality. While the Indian automotive industry has been using PLM for some time now, it has been mainly confined to CAD/CAM end for design.

Now, Indian original equipment manufacturers and their vendors are catching up with advanced countries to increasingly use PLM for advanced uses like reducing physical prototyping and simulation including crash testing and crash analysis.

OEMs like Maruti Udyog, Ashok Leyland, Mahindra & Mahindra, among others, have been using this tool for some time now, not only for product planning but also for process planning, factory modelling, operation simulation, assembly sequencing, quality issues, scrap rates, etc. The costs associated with these processes too decline by 30% on an average with the use of this tool with some like Maruti Udyog reporting savings as high as 50%.

“The reason for faster adoption by the auto industry is driven by the need for faster shorter cycle time. With competition being rather fierce, vehicle makers need to hit the market faster and faster," says an analyst. On an average, the adoption of this tool reduces the cycle time (from concept to production) by six months. The gestation period of a vehicle is typically three years. Ashok Leyland expects a significant reduction in development lead-time and effort to the order of 15%. Maruti Udyog also reports a 25% reduction in the design-to-launch time and expects 15% more reduction as a result of more collaboration with its parent Suzuki and vendors on a real time basis.

OEMs are also increasingly using this tool for factory modelling and layout planning. Maruti, which has used this system for its new plant at Manesar, for instance reports a 50% reduction in assembly/build issues and engineering change notice time (ECN). The number of ECN errors cut by 50%.

Maruti begins production at Manesar plant

Maruti Udyog Ltd has started production of cars at its new plant in Manesar and hopes to reach full production capacity of 3,00,000 units in the new plant by the middle of 2008.

The company, which began production at Manesar last month, has shifted the production of its popular premium hatchback 'swift' to the new plant, company Managing Director Jagdish Khattar said.

Maruti currently has a capacity of around 6,00,000 units at its existing manufacturing facility at Gurgaon and Khattar said the company will initially scale up production levels to 1,00,000 units at the new Manesar plant, in which the company will invest a total of Rs 1,524 crore.

The company will be manufacturing its proposed new compact car at the new facility which will be meant both for the domestic as well as the export market.

Khattar said the company will invest a total of Rs 9,000 crore by 2009-10, of which Rs 4,000 crore will be pumped in the existing Gurgaon facility for launching new models, expansion, automation and for new engine series.

The balance investments would be for the Manesar plant as well as the company's diesel engine plant.

Backed by the massive investments and new model launches, Maruti is eyeing sales of one million cars in 2010. The company, in which, Japan's Suzuki Motor Corp owns 54.2 per cent stake, plans to launch five new models over the next five years.

Backed by high sales and realisations, the company reported a 40 per cent rise in net profit in the quarter ended September 30 at Rs 367.4 crore while its total income (net of excise) shot up 12.5 per cent at Rs 3,540.8 crore.

Maruti to review car prices in December

India's biggest carmaker Maruti Udyog Ltd today said it will review car prices in December this year.

"We will take a call in December for a price review from January," Maruti Managing Director Jagdish Khattar said when asked whether the company plans to hike car prices.

Maruti had last reviewed car prices in August this year, when it raised them by 0.17-1.47 per cent, translating into a hike ranging between Rs 500 and Rs 5,000.

Cars covered under the last review included the 'Alto', 'Maruti800', mid-size 'Esteem' and van 'Omni', though others like the 'Swift' and 'Zen' were spared.

Khattar, however, refused to specify the models which can see a price review or the possible quantum. "How much and when cannot be specified now," he said.

Buoyed by higher sales and realisations, the car market leader today reported a 39.8 per cent rise in net profit for the quarter ended September 30, at Rs 367.4 crore against Rs 262.6 crore in the same period last year.

The company, 54.2 per cent owned by Japan's Suzuki Motor Corp, said the total income (net of excise) in the period grew 12.5 per cent in July-September 2006 period at Rs 3,540.8 crore from Rs 3,146.8 crore in the same period last year.

Maruti Q2 net up 39.5 pct, sells more cars

Maruti Udyog Ltd. reported a rise in line with forecasts in quarterly net profit as demand for its fuel-efficient small cars outpaced rising raw material costs in a booming market.

New Delhi-based Maruti, majority-owned by Japan's Suzuki Motor Corp., said July-September net profit rose to 3.67 billion rupees ($81.1 million) from 2.63 billion rupees a year earlier, marginally ahead of a forecast of 3.62 billion rupees in a Reuters poll of 10 analysts.

Maruti's sales, including the popular Zen, Alto and Swift models, rose 12.2 percent to 157,683 units in the July-September fiscal second quarter. April-June sales were 144,948 vehicles.

Maruti shares, valued at $6 billion, gained 23 percent in July-September, outpacing a 12.9 percent gain on the BSE auto index.

Centre to sell Maruti stake to PSU banks

The government has set in motion the process of exiting Maruti Udyog with an eye to sell its remaining 10.27% stake in India's largest car manufacturer by the end of the current fiscal.

Sources said finance ministry had initiated consultations with other ministries on the issue and was expected to float a cabinet note soon. It is, however, playing safe and is planning to replicate the earlier model of selling the stake to state-owned banks, financial institutions and insurance companies through a process of competitive bidding.

The government plans to use Maruti's closing price for July 29 (Rs 926.70) as the reserve price for this tranche of stake sale. At this price, the Centre can mobilise Rs 2,700 crore from the equity sale.

The government, during NDA regime, sold a part of its stake to Suzuki, its joint venture partner in India's largest car manufacturer, at a negotiated price. It followed it up by divesting a 25% stake through a public offer. In January this year, following a change of guard at the Centre, government opted to sell 8% stake to public sector banks, FIs and insurance firms, which helped it raise over Rs 1,560 crore. Recently, the cabinet approved the allotment of 20 shares each to the 3,500-odd MUL employees at a discount.

Unlike opposition to disinvestment in PSUs, government does not see any pressure on MUL sale with the allies not opposing the move, saying that the firm has already been privatised and even the government nominee on its board has been withdrawn. The heavy industry ministry too is on board and the proposal to sell the remaining stake had come from it. In fact, finance ministry had earlier this year advised the heavy industry ministry to postpone the sale for a while, hoping that the market conditions would improve.

The move comes at a time when the government is under pressure to meet the fiscal deficit and revenue deficit targets for the current fiscal with expenditure ballooning during the first half of the fiscal despite revenues remaining buoyant.

Govt plans to sell residual stake in Maruti within FY07

The government may sell its remaining stake in Maruti before the end of this fiscal year, that’s before the end of March 31, 2007. It is to place the issue before the cabinet shortly. CNBC-TV18 finds out more.

Now the government has decided on the price on the basis of the company's NSE closing price on 26 June 2006, which was Rs 926.10. On that basis, the money is expected to be raised should be around Rs 2,700 crore.

But the government wants to put up a competitive bidding, so that they could get higher prices for the stake. They are expecting to raise more than Rs 3,000 crore.

For this, the government is expected to take the same route as they did in January 2006 by selling 8% of its scheduled stake at the cost of around Rs 1,800 crore. But this is not a stake sale to Suzuki, instead it is to the FIIs and public institutions.

The Department of Disinvestment has been advised to structure this offer as a private placement to domestic banks and financial institutions. So the government is expecting the banks and financial institutions to quote higher prices by taking the same route. SBI Caps and KMCL are likely to appointed as the merchant bankers.

Also, since the government has just 10.2% left in that company, there will be no public issue or no sale to the employees.

Alto-Betim punter wins Maruti Swift at Casino

Customers generally hope to win big when they visit Chances Casino in Dona Paula and this time, a punter struck the mega jackpot — a Maruti Suzuki Swift car.

Gracel Gonsalves of Alto-Betim was the lucky ticket holder, which was drawn from among 1.2 lakh tickets at a raffle draw.

The raffle, which was drawn at a special function at Chances Casino as part of its Diwali celebration on October 20, also featured prizes, which included return tickets to Mumbai and Bangalore sponsored by Kingfisher Airlines and Holiday Packages at leading five-starred hotels in India.

Others present on the occasion included Dr William and Muriel Britto, proprietors of Chances Casino, Phil Sanders, Casino Operations Director and Francisco Fernandes, Casino Manager. The celebrations included live music from Purple Rain, Broadway Dances and a grand buffet to keep everybody happy.

Here comes the Raid again

She started preparing for the Raid last year! So how does she fare?

I hate numbers. They never seem to add up. I find most efforts to quantify things a tad too disturbing, which is why till date, TSD rallies still remain a mystery to me. So at last year’s Raid De Himalaya Reliability Trial, I announced out of the window of my eight-year old Maruti 800 to both man and mountain that I would be back in 2006 driving a Maruti Gypsy in theX-treme category.

The year went by faster than I had expected, and with less than a month to go for the 2006 Raid, there was still no sign of what was to be the most integral part of my enterprise — a Gypsy.

But somewhere in the middle of all hell breaking loose and meeting a psychic who told me that I was a mermaid in my past life, I decided that not going for the Raid was just not an option. This was no time to go que sera sera. Whatever would be would only be if I put my head to it.

Which wasn’t difficult because in my head I had been going sideways, negotiating the fast-medium-right-onto Batal bridge for a while now. So after 727 fights, 392 tantrums and endless fits of rage, I found myself looking at what was in all actuality my rally-ready Gypsy. Next stop, Shimla. Note to self: seemingly violent behaviour and sheer pigheadedness actually yield results.

Top pick at Suzuki is profit

Suzuki Motor is relinquishing its ranking as the world's biggest maker of minicars, the pool-table-size autos that crowd Japanese streets, but beating No. 2 Daihatsu Motor in the stock market.

Suzuki will make 5.1 percent fewer minicars in Japan this fiscal year to focus on selling more profitable compact vehicles in Asia and Europe. Daihatsu, a unit of Toyota Motor, is building a new factory to expand minicar sales.

So far, investors prefer the strategy of Suzuki, whose shares have surged 48 percent this year to become the fifth-best performer in the Nikkei 225 stock average. Daihatsu stock is down 12 percent.

Demand for vehicles in India, China and Eastern Europe will rise faster than in Japan, according to Credit Suisse Securities Japan. Domestic sales have slumped for the past six months.

"I like Suzuki because it is an aggressive company," said Ichiro Takamatsu, chief investment officer at Alphex Investments in Tokyo. "Investors are looking for a chance to buy companies with quality, and Suzuki is one of them."

Japan is the only country with a legally defined minicar category, and the only country where making them is profitable. The Smart minicar, made by DaimlerChrysler, the world's fifth-largest automaker, has never made money.

Shares of Suzuki rose 0.6 percent to ¥3,210 on the Tokyo Stock Exchange on Thursday. Daihatsu shares declined 0.3 percent to ¥1,121.

Japanese minicar sales may exceed two million units this year, a record, as drivers strive to cut spending on fuel and benefit from lower taxes. The growth has enticed rivals including Nissan Motor and Mitsubishi Motor to bring out new minicar models, stealing market share from Suzuki and Daihatsu.

Suzuki, based in Hamamatsu City, southwest of Tokyo, has responded by trimming minicar production in Japan by 60,000 units over two years.

Suzuki's overall domestic production will rise 2.5 percent to 1.16 million vehicles in the year ending March 31. Its overseas sales jumped 9.9 percent to 588,000 units in the five months through August. Daihatsu sales abroad were little changed at 65,354 units. The Osaka- based company plans to raise domestic output 20 percent to 1.09 million units in fiscal 2007.

"I chose sales and profit over market share in Japan," Suzuki's chairman, Osamu Suzuki, said at a press conference in August. The company announced a plan to spend ¥60 billion on a new factory to start production in 2008. The factory, to be located in Shizuoka prefecture, will not build minicars at all.

Investors are willing to pay more for Suzuki, whose shares trade at 25 times earnings. Daihatsu's price-to- earnings ratio is 14.2, slightly less than Toyota's 15.8.

"Suzuki's strategy is driving the share price higher," said Hitoshi Yamamoto, president of Commerz International Capital Management in Tokyo.

Suzuki, also the world's third- biggest motorcycle maker, was faster than Daihatsu in expanding abroad. It was the first Japanese automaker to build vehicles in India in 1983 and owns 54 percent of Maruti Udyog, a New Delhi company that makes half the country's cars.

Govt to shed remaining stake in Maruti Udyog

The government wants to shed its remaining 10.27 per cent stake in Maruti soon.

The finance minister is pushing for a sale before the Winter session of parliament.

The decision comes less than two months after Chidambaram had said the government should wait for the stock markets to stabilize.

Heavy Industries Minister Santosh Mohan Deb is also signaling green. He argues that there was no merit in holding just over 10 per cent stake in the company.

In June this year, the government stopped having any representation on the board of Suzuki.

The government can raise Rs 2,200 crore by selling the stake and it needs the money for social schemes.

A decision on whether the stake will be sold to a PSU bank as happened in January last year or through a public offer will be taken soon by a group of officials headed by finance ministry.

In 2002, the government handed over majority stake to Suzuki. A year later it shed 27 per cent of its stake through an IPO and then sold eight per cent in January 2005 to raise Rs 1400 crore.

The deal is likely to go through because the Left has not raised any objections.

But sources say this is just the beginning. The finance ministry is preparing a list of PSU's in which minority stake can be sold after negotiating with the Left.

Maruti plans expansion in overseas market

Maruti is busy diversifying its exports and is bullish that the efforts will make up for the loss in exports to Europe. The company is seeding the small car markets globally, reports Economic Times.

Maruti`s exports to non-European countries have grown to 23,696 in 2005-06, a jump of over 78% over last year. According to sources, this is likely to cross 42,000 in the current year. The steady decline in exports in 2005-06 was a result of the company`s decision to stop exports of Alto, the brand which constituted nearly 80% of its total exports to Europe, from India. The discontinuation of Alto sales in Europe followed Maruti`s parent Suzuki`s plan to sell Swift in Europe, made at its Hungarian plant.

Algeria has emerged as Maruti`s largest overseas market with sales growing from few hundred in FY`02 to over 6,500 (FY06). The company says it may cross 9,800 this year.

Maruti is quite bullish on markets like Chile, Morocco, Egypt and Sudan, apart from the neighbouring countries. The auto major expects its exports to Chile and Morocco to go above 5,900 and 2,300, respectively, this year. Its volumes from there have moved from under 700 in FY`02 to 3,115 (FY`06), and exports to Sudan was nil two years back.

Meanwhile, Maruti is also reporting a high on current year exports to the neighbouring countries. The company expects to export 9,200 units to Sri Lanka this year, a growth of over 50%, 1,200 units to Nepal, over 1,175 to Bhutan and 700 to Bangladesh.

Maruti, which saw exports dip by 29% last fiscal, also plans to launch a new export model during `08-09, which will target the European market. The company targets to export one lakh units of the model annually.

Buy Baleno with a discount of Rs 50,000!

Hot wheels and hot deals are doing a tango this festival season. Cash discounts ranging from Rs 50,000 to Rs 2 lakh, gift cheques worth Rs 10,000 or more, free petrol and free accessories like music systems are invitations for the customer to open his wallet wide open.

No wonder the Dasara-Diwali fests contribute 20% of the total automobile sales in the country and that amounts to 1.6 million units. The marketing machines of automobile manufacturers come up with the best offer during this period, and it's certainly the best time to head to the nearest dealer.

The nation's largest car manufacturer Maruti Suzuki is giving its Baleno a discount of Rs 50,000, Swift is down by Rs 20,000 and most other models are driving out with free insurance for the first year. TVS Motors' head of marketing Prasad Narasimhan says: "Festive season is the backbone now. Every year the sale is getting better.

Nissan's may locate manufacturing base with Suzuki in Gujarat

Japan's second largest carmaker Nissan is close to finalising its new manufacturing location in India. According to a report by CNBC-TV18, Gujarat may be chosen as the destination.
Nissan is set to establish its manufacturing base in Gujarat.

According to sources, the company along with Suzuki is planning to invest upto Rs3,000 crore for a 600,000-car per annum plant. It has already submitted a proposal to the Gujarat government and held talks with promoters of Mundra, Kandla and Pipavav ports.

According to sources, the plant will come up by second half of 2008. When contacted, a senior Nissan official said that various options to expand its India business are being considered and a decision would be taken sooner rather than later.

However, a Maruti Udyog spokesperson denied this saying, "There's no decision taken about a joint manufacturing operation apart from the one where Maruti's new Manesar plant will manufacture cars for Nissan."

Sources say, Nissan and Suzuki are looking at a location with a population of atleast 15-20 lakh so that it offers fairly good social infrastructure. Nissan is also learnt to be developing a new B segment vehicle for global markets, and it is possible that car may also be manufactured in India.