Maruti Cuts Prices by Up to 5000 Rupees

India's top car maker, Maruti Udyog Ltd., has cut prices by 3,000 rupees to 5,000 rupees after Haryana reduced a concessional central state tax by 1 percent, a newspaper said on Monday.

The tax is levied on inter-state sale of goods. Maruti's factories are located in Haryana.

"This small gain will dilute the impact of hardened interest rates that have impacted demand," Jagdish Khattar, managing director of Maruti, told the Business Standard paper.

Demand would stabilise in three or four months, when consumers get over the "initial shock" of higher interest rates, Khattar told the paper.

A company spokesman confirmed the report, and said the reduced prices across models became effective April 1.

Banks' lending rates have risen by 300 to 350 basis points from a year earlier as the central bank has stepped up its pace of policy tightening. More than 80 percent of passenger vehicles in India are bought with loans.

Maruti, majority-owned by Japan's Suzuki Motor Corp., last raised prices across models by up to $23 in March after the government imposed an additional 1 percent tax.

Suzuki Won’t Mind More LIC Stake In Maruti Udyog

An aggressive bidding war could erupt for the government’s residual stake in car maker Maruti, with the company’s current owner Suzuki understood to have agreed to LIC of India Ltd raising its stake beyond 10%. “Suzuki Motor Corporation has told the Indian government in reply to a letter that it has no objection to LIC’s stake in Maruti going beyond 10%,” a source said. Suzuki was approached as LIC’s stake in the company had already touched 8.1%. The agreement with Suzuki during the earlier round of disinvestment had made it mandatory on the government’s part to ensure that in the stake sale, share of no institution should cross 10%.

As the state-owned insurance company was the most aggressive bidder when government off-loaded 8% stake in the company in January 2006, the government wanted it to bid in this round of disinvestment too.

During the previous sale, LIC had cornered 1.68 crore shares of the company, amounting to 5% stake. The government has already invited Expressions of Interest for the remaining 10.27% stake in Maruti and 22 financial institutions and mutual funds have put in their applications.

SX4 Will Lead Maruti’s Drive Upmarket

The launch of the SX4 next month would mark several firsts for Maruti Udyog, the country’s leading carmaker. To begin with, Maruti is hoping to shed the image of a small car maker and join the mid-sized sedan club presently dominated by other global majors such as Honda, Ford and Hyundai. The SX4 is likely to be priced between Rs 6.5-8 lakh - the highest price tag for any Maruti car in the country till now.

The arrival of SX4 also heralds advanced engine technology, since this would be the first car to be strapped with the M-series engine.

“We are preparing ourselves for engine capability that is Euro IV and Euro V compliant and this involves heavy investments. All future models from Maruti will be equipped with the new generation of engines, since Maruti is aligning itself with parent Suzuki Motors Corp’s strategy to comply with stricter emission norms. Suzuki is already producing Euro IV and V compliant engines for Europe and we are trying to run parallel to them,” says managing director Jagdish Khattar.

The investment on the new engine technology would be a part of the Rs 9,000 crore Suzuki has already announced for the country, he added.

The M-series, dubbed as the future of Suzuki engines, is currently being imported from Japan and assembled at Suzuki Powertrain India’s facility at Manesar for SX4 sedan.

Maruti is already in the process of increasing localisation levels of the car.

Government to invite financial bids for Maruti stake in May

The government will invite financial bids for sale of its residual 10.27 per cent stake in Maruti Udyog Ltd next month.

"Financial bids for the 10.27 per cent stake in Maruti will be invited in May," official sources said.

The government will sell around 2.96 crore shares in the country's top carmaker. Based on the current price of Rs776.30 , the government could raise around Rs2,300 crore by the stake sale.

The government had invited expressions of interest (EOI) from potential bidders in February, but deferred a decision in view of the high volatily in stock markets. Finance minister P Chidambaram had said in March this year that the sale of residual government stake in Maruti Udyog was likely in 2007-08.

More than 20 public sector banks, financial institutions and mutual funds had shown interest in acquiring the government's stake when the EOIs were sought, sources pointed out.

Japan's Suzuki Motor Corporation holds 54.2 per cent equity in Maruti Udyog while banks, financial institutions and the public hold the remaining stake.

Maruti's Swift petrol sales vroom on diesel power

Problems can be pleasant at times and that is exactly what the country's biggest car maker Maruti Suzuki has discovered with its inability to meet the demand for diesel variant of its premuim hatchback 'Swift'.

With diesel cars becoming a favourite in the Indian automart, the company has been flooded with requests for the Swift's diesel variant, resulting in long waiting periods for the car.

Yet, the company is still laughing all the way to the bank as sales of the petrol variant have almost increased by 50 per cent after the introduction of the diesel variant.

When the Swift 1.3l diesel was launched earlier this year at an introductory price of Rs 4.68 lakh for the lower-end and Rs 4.96 lakh for the top-end model, the buzz in the market was that sales of its petrol sister would be badly hit.

"On the contrary, ever since we launched the Swift Diesel, sales of the petrol version have jumped," Maruti Udyog Managing Director Jagdish Khattar said.

Before the launch of the diesel variant, Swift was selling about 3,000 units a month. "Currently, we are selling about 4,500 units of the petrol variant and 2,500 units of Swift diesel," he said, adding that in March, Swift's total retail sales stood at 9,000 units.

Explaining the unusual situation, Khattar said Maruti's limited supply of the diesel variant was owing to a fixed number of engines allocated by Suzuki Powertrain India Ltd (SPIL), which has led to long waiting periods for the diesel variant.

"Many customers who came for the diesel variant are buying the petrol version as they would rather have a Swift than owning any other badge," he said.

And for those customers who are waiting for the diesel Swift, things are unlikely to change in the near future as according the annual plan of SPIL, Maruti Suzuki will continue to get limited engine supply.

GM Takes On Maruti With Chevrolet Spark

General Motors Corp. plans to ramp up production and sales in India, one of the world's fastest-growing auto markets, the company's chair said yesterday as he introduced the tiny Chevy Spark to Indian customers.

GM is also scaling up procurement of low-cost auto components from India to lower costs at its plants in other parts of the world, chair and chief executive Rick Wagoner said.

Japanese and Korean car makers such as Suzuki Motor Corp. and Hyundai Motor Co. have done much better than their American counterparts with small and compact cars that dominate Indian roads. GM and Ford haven't seen much success because of pricing.

The Spark faces tough competition from Hyundai's Santro and Alto & the WagonR from Suzuki-controlled Maruti Udyog Ltd, India's largest car maker.

Both Maruti and Hyundai have a network of sales and service centres, and a much larger production capacity than GM would have even a year from now.

But Wagoner said GM's focus on India goes beyond market share.

Asia will account for 70 per cent of the growth in global car sales over the next decade, Wagoner said. And India is set to become the second fastest-growing automotive market after China.

"It is also important that half of this country's population ... is below 25," he added. "That is a lot of potential for future car buyers.''

Single institution stake capped at 10% in Maruti

The government has capped the equity a financial institution can hold in Maruti Udyog Ltd at 10% in the last tranche of its residual stake sale this year. The government has 10.27% in the car maker.

At present, various FIs together hold 31.06% in Maruti, India’s largest car company with 53% market share. State-owned Life Insurance Corporation with 8.02% and the HSBC group with 3.07% are two of its biggest institutional shareholders.

“While bidding, each institution will have to give an undertaking that its holding will not exceed 10%,” said a government official. According to government sources, this has been done to ensure that the promoter group in the company, Suzuki Motor Corporation, has a free hand in running the company.

At present, Suzuki Motor Corporation is the largest shareholder with 54.2% in Maruti. The company was floated as an equal JV between the government and Suzuki in 1981.

But it is not clear if the government wants to cap institutional holding after divestment at 10% for public sector companies.

The Cabinet Committee on Economic Affairs had given its go-ahead to the sale of the government stake on December 21, 2006. The government has also approved the appointment of SBI Capital Markets and Kotak Mahindra Capital Company as advisers to the disinvestment process.

Only public sector banks, FIs and MFs, registered in India, are allowed to participate in the bidding.

The government’s original plan had the stake sale marked for the last financial year. But a downturn in the stock markets forced a postponement. The government now hopes to complete the sell-off in the first half of 2007-08.

In January 2006, the government sold about 8% in Maruti and raked in Rs 1,567 crore.

Nissan may rope in Maruti as local ally

Nissan and Renault will crank out independent marketing strategies in India to avoid confusion at the retail end.

This means that the two companies are likely to have separate local partners while sharing the same greenfield plant along with Mahindra & Mahindra to make their cars.

In an exclusive chat, Nissan-Renault big kahuna Carlos Ghosn said Nissan will look for its own partner, which may be Mahindra but not automatically so. “Nissan will have a partner to market and sell its cars in India because there are a lot of advantages when you have a local partner to help you out,” he said.

“It can be M&M but not automatically so...it’s open. Renault and Nissan will have entirely separate marketing structures so that the Indian consumer does not get confused between the two brands.”

There is considerable speculation, which is entirely unconfirmed, that Maruti could be Nissan’s Indian marketing and distribution partner because of the close links between Nissan and Suzuki worldwide.

Maruti is making a small car for Nissan, on a contract manufacturing basis, for the Indian and European markets. It plans to roll out 50,000 units per year.

Sources said at a recent supplier meet, Nissan and Renault indicated that Renault may also consider the Megane for the Indian market in both two- and four-wheel drive options.

As for Nissan, it’s looking at a small car and a mid-size sedan and the options include the Micra and Teana, industry sources said. But these products will be sold through separate marketing channels.

The partnership between Renault and Mahindra may in the future take on the kind of product-sharing arrangement that Tata and Fiat are following outside India, said M&M vice-chairman & MD Anand Mahindra. That has been discussed and it’s something both partners are looking at.

“I would be delighted if there are products in the M&M stable that Renault and Nissan find interesting to help them carve a niche in some overseas markets,” Mr Mahindra said. “That would be a real opportunity for us and it’s on the table.

In fact Carlos (Ghosn) brought it up,” he said. Mr Ghosn also said Renault would make 250,000 engines in India but is not looking at transmission systems now, though it may consider this in future. A ramp-up of both car and engine capacity is also a possibility.

“We have a tendency to be cautious when we are looking at volumes, particularly when we enter a new country,” he said. ”It’s not that just because we are talking about 250,000 engines that’s what is going to happen. But first let us ensure that on the basis of 250,000 engines, we are going to be able to do something cost-competitive and efficient.”

The greenfield facility near Chennai, to be shared by the three partners, will have a capacity of 400,000 units by 2013-14. The engine plant, with a capacity of 250,000, is a 100% Renault subsidiary.

As for transmission systems, “it’s not a priority but that doesn’t mean it will not come”, he said. “But for the moment we are focusing on engines because we want to make sure the localisation works out right,” he added.

Maruti sale up by 14 %

Maruti Udyog Ltd sold 71,772 vehicles in March, up 14 per cent from 63,196 units a year earlier, a release from the company said.

According to the company, it sold 64,556 units in the domestic market, up 6 per cent from 61,141 units a year earlier. Its exports more than tripled to 7,216 units from 2,055 units a year earlier.

For the fiscal year to end-March, Maruti sold 674,924 units, up 20 per cent from 561,822 units sold in the previous year.

It is worth mentioning here that Maruti is 54.2 per cent owned by Suzuki Motor Corp Japan's largest mini car maker.

Suzuki Motor's Indian Sales Seen Surpassing Japanese Sales In FY2007

Suzuki Motor Corp's sales of new cars in India is likely to surpass those in Japan in the year to March 2008, thanks to buoyant demand there, the Nikkei reported, without citing sources.

The automaker has seen domestic sales stagnate, selling 594,000 new cars between April 2006 and February 2007, down 2.7 pct on the year, the business daily said.

On the other hand, Suzuki (other-otc: SZKMF.PK - news - people )'s Indian subsidiary, Maruti Udyog Ltd, saw sales surge 22.6 pct to 571,000 cars during the same period, according to an Indian automobile association, it said.

But in the new fiscal year, as Suzuki is cutting back its minivehicle output to make a strategic shift to more high-margin compact cars, it seems almost certain that its Indian sales will exceed those in Japan, the Nikkei said.

Maruti commands a roughly 50 pct share of the Indian passenger car market.

(1 usd = 117.83 yen)

Maruti eyes bigger pie in large cars' market

Maruti Udyog, which controls more than half of the country’s passenger car market on the strength of its dominance in small cars, has embarked on a strategy to increase its share in the bigger car segments.

It is gearing up to launch two new models — mid-size SX4 and Grand Vitara – in three to four months.Grand Vitara will be made in India.The sports utility vehicle is currently imported as completely built units.

SX4 is a mid-size car expected to be sold for Rs 7-8 lakh and may be launched in the first half of May in three variants.

In the domestic market, it will be pitted against Honda City, Hyundai Verna, Ford Fiesta, Chevrolet Aveo and others. The mid-size segment has been growing at a healthy rate and now constitutes 17 per cent of the market.

“The company wants to change its image with the SX4 launch and will feature it as a clean upmarket car. With the development, Suzuki will also attempt to move from being a compact car giant to a complete carmaker across different segments,” said a Maruti executive. The company’s spokesperson refused to comment.

The India-made Grand Vitara is slated to hit the market in July or August. Manufacturing in India will enable the company to bring its price down from the current Rs 19 lakh to Rs 11-12 lakh and position it against the likes of Ford’s Endeavor.

“Despite being the largest car company, Maruti has dated models such as Esteem and Baleno. The new models will strengthen its position and help it take advantages of the high growth in the premium car segment,” said Huzifa Suratwala, research analyst, Emkay Share and Stock.

Esteem has witnessed 3.3 per cent drop in sales to 27,283 units between April last year and February this year.

The company sold merely 6,034 units of Baleno in the nine months to December last year, compared with 11,083 units in the last financial year.

The SX4 sedan is being perceived as Baleno’s replacement, though the company executives say the two have nothing in common.

Maruti Suzuki Swift Diesel is now more expensive

Maruti has announced that they are raising the prices of their recently launched Swift Diesel car by around Rs. 7000.

The new hiked prices are applicable immediately and follows the price hikes on their other models after the budget raised certain taxes.

As per available information, the LDI model of the Swift Diesel would now cost Rs 4.72 lakh as against Rs 4.68 lakh earlier. The Swift VDI model would now cost Rs 5.04 lakh compared to Rs 4.97 lakh before the price hike.

Maruti had launched the diesel model of their popular Swift car earlier this year as they aimed to benefit from the growing popularity of such cars. Rivals Hyundai are in the process of launching their own diesel Getz which would directly take on the Swift Diesel.

Maruti had said at the time of launch that the initial prices were introductory and they would be raising them at a later date.

24 banks, FIs, MFs in the race for 10% in Maruti

Twenty-four public sector banks and a clutch of financial institutions (FIs) and mutual funds (MFs) are in race for the government’s residual 10.27% stake, worth over Rs 2,300 crore, in India’s largest carmaker, Maruti Udyog. The Cabinet cleared the disinvestment in December 2006 on condition that the stake is offloaded only in favour of banks, FIs or MFs.

Punjab National Bank, State Bank of Mysore, Central Bank of India, Canara Bank, Bank of India, IDBI, Bank of Baroda, Dena Bank and Punjab & Sind Bank are among the banks that are interested in the stake. Others that have thrown their hat in the ring include public sector FIs Oriental Insurance Co., General Insurance and New India Assurance, as well as HDFC, Reliance, Franklin Templeton and SBI MFs.

Maruti Udyog was established in 1981 by an Act of Parliament, and Suzuki was chosen 50% joint venture partner in October, 1982.

The government’s decision to cash out of Maruti is well timed. The company’s stock hit a 52-week high of Rs 991.4 on October 3 last year. On Monday, it closed at Rs 797.25, up 1.2%, on the BSE.

At current prices, the government’s mop up could be around Rs 2,366 crore, although that figure could be higher if it garners a premium over current prices. In January 2006, the government realised Rs 1,567 crore from the sale of 8% equity to banks and FIs at an average price of Rs 678.24 a share.

"The finance ministry will now decide on when to call in the bids in consultation with SBI Capital Markets and Kotak Mahindra, who are advisors to the transaction," an informed source said.

While Suzuki holds about 54.21% stake in Maruti (according to the holding structure on December 31, 2006), LIC has 8.02% and HSBC Global Investment Fund 3.07%.

Maruti Suzuki to host mega festival

Maruti Suzuki, in association with the National insurance Company Ltd, State Bank of India and Indian Oil Corporation ltd will host a two-day mega festival on March 10 and 11 at Mapal Kangjeibung, according to a release issued by Eastern Motors.

In addition to providing mass awareness regarding traffic safety rules, energy conservation, art of saving money etc, talented school and college going youth will get exposure to an array of recreational and entertainment activities, the release said.

The objective of the festival is `for a pollution free environment, save oil, obey traffic rules and know your vehicles,` it said.

Maruti’s next model SX4 at Geneva Motor Show

Maruti's next car model, the SX4 Sedan, is being showcased at the prestigious Geneva Motor show which began on March 8. It is expected to be launched in Indian market in three months.

The new Maruti SX4 sedan is expected to be built at Maruti's new manufacturing facility at Manesar. It will be offered in the A3 segment, which currently accounts for 15 % of the Indian passenger car market.

Suzuki, a world leader in the compact cars achieved an image makeover with the launch of Swift. Apart from India, Swift received the Car of the year award across the world. The unveiling of the SX4 sedan at Geneva is Suzuki's effort to make its presence felt in the premium sedan segment in front of a global audience.

Hyundai to launch Getz Prime to compete Maruti Swift

Hoping to turn the tables on Japanese rival Maruti Suzuki's 'Swift', Korean car major Hyundai will launch a new version of its premium hatchback 'Getz' under a new name 'Getz Prime' by the end of this month in India.

"This model will be both for exports and domestic market. While it will retain the name 'Getz' for exports to the European market, we will launch it as 'Getz Prime' in the domestic market," Hyundai Motor India Ltd Managing Director H S Lheem told media here.

He said 'Getz Prime' will come in two petrol engine variants of 1.1 litre and 1.3 litre, enabling it to partly qualify for the benefit of excise duty car on small cars.

As per finance ministry's definition, small cars have been defined as petrol cars with an engine capacity not exceeding 1,200 cc and not exceeding 4,000 mm in length, and diesel cars of engine capacity not exceeding 1,500 cc and not exceeding 4,000 mm in length.

"Towards the third quarter we are planning to bring the diesel variant of Getz Prime with 1.5 litre common rail direct injection (CRDi) engine, similar to the one in Verna," Lheem said. Asked about the pricing of the car, he declined to comment, but said "it will be very competitive".

He said the company will export the car to Europe, which will be the first time that Getz will be shipped out from India, and follow it up with the domestic launch. Hyundai has been struggling to compete with Maruti Udyog's runaway success 'Swift' in the premium hatchback category and the new 'Prime' with competitive pricing is expected to give it the much needed boost.

The Korean car major, which has introduced a new C segment car for Europe under the 'i30' name, is looking at the possibility of bringing it to India.

"We are currently studying the feasibility of bringing 'i30' to India as a replacement for 'Elantra' but nothing has been finalised yet," Lheem said.

He also said HMIL will export the compact car that is being currently developed under the codename 'Pa' to Europe as 'i10', following the company's decision to sell its cars with an alhpa-numerical pattern in Europe.