Although rising interest rates threaten to push passenger cars to the middle lane, Maruti Udyog is geared to continue on the fast track with its new car models.
After Maruti Udyog did magic with the Swift, expectations are running high on its newly launched sedan SX4. Launched two years ago, the bold and beautiful premium hatch-back changed the perception of Maruti from being a manufacturer of staid looking last generation cars to one that is capable of producing contemporary cars with x-appeal. Coming eight years after it launched its last sedan offering Baleno, Maruti is hoping to take on competition in the A3 (sedan) segment with its SX4.
Even though Maruti has traditionally dominated the small car market, the company has been unable to conquer the sedan segment so far. Last fiscal, Maruti sold nearly 29,700 three-box cars, less than Honda, Ford and Tata Motors, with just two models Esteem and Baleno, both of which are showing declining sales.
While the company has a stranglehold over nearly 55 per cent of the passenger car market, it has a market share of less that 15 per cent in the A3 segment at a time when car-makers such as Hyundai, Ford, GM, Honda and new entrants like Mahindra-Renault combine are launching new models or expanding their presence in the segment. Fiat and Tata Motors too will launch their new models in 2008.
Certainly, the SX4 has the potential to do well. Built on the Swift platform with an all new engine, the car is priced competitively against the Honda City which is the leader in the segment at present. In spite of a powerful engine, a fully-loaded SX4 with safety features such as ABS and airbags is priced on a par with the base model of the City. If at all, growth may be constrained by Maruti’s capacity to produce enough cars.
Maruti has plans to expand capacity by another 2,00,000 but this will not come on stream this year. Currently, its Gurgaon plant which has an installed capacity of 3,50,000 units per annum is running at nearly double its capacity.
Its Manesar plant, which produces the Swift and SX4, has an installed capacity of 1,00,000 units. Since the company is already selling around 7000 units of Swift per month (84,000 per year) in the Manesar plant, there is little scope for SX4. The capacity at Manesar plant is expected to be scaled up to 3,00,000 units only by 2010.
“We have to live with it till the new capacity comes. But if Dr Reddy has his way the demand may get softened and match supply, and my marketing people would be very happy,” said Jagdish Khattar, managing director, Maruti Udyog in an analysts’ conference call organised after the company announced its annual results for 2006-07.
After Maruti Udyog did magic with the Swift, expectations are running high on its newly launched sedan SX4. Launched two years ago, the bold and beautiful premium hatch-back changed the perception of Maruti from being a manufacturer of staid looking last generation cars to one that is capable of producing contemporary cars with x-appeal. Coming eight years after it launched its last sedan offering Baleno, Maruti is hoping to take on competition in the A3 (sedan) segment with its SX4.
Even though Maruti has traditionally dominated the small car market, the company has been unable to conquer the sedan segment so far. Last fiscal, Maruti sold nearly 29,700 three-box cars, less than Honda, Ford and Tata Motors, with just two models Esteem and Baleno, both of which are showing declining sales.
While the company has a stranglehold over nearly 55 per cent of the passenger car market, it has a market share of less that 15 per cent in the A3 segment at a time when car-makers such as Hyundai, Ford, GM, Honda and new entrants like Mahindra-Renault combine are launching new models or expanding their presence in the segment. Fiat and Tata Motors too will launch their new models in 2008.
Certainly, the SX4 has the potential to do well. Built on the Swift platform with an all new engine, the car is priced competitively against the Honda City which is the leader in the segment at present. In spite of a powerful engine, a fully-loaded SX4 with safety features such as ABS and airbags is priced on a par with the base model of the City. If at all, growth may be constrained by Maruti’s capacity to produce enough cars.
Maruti has plans to expand capacity by another 2,00,000 but this will not come on stream this year. Currently, its Gurgaon plant which has an installed capacity of 3,50,000 units per annum is running at nearly double its capacity.
Its Manesar plant, which produces the Swift and SX4, has an installed capacity of 1,00,000 units. Since the company is already selling around 7000 units of Swift per month (84,000 per year) in the Manesar plant, there is little scope for SX4. The capacity at Manesar plant is expected to be scaled up to 3,00,000 units only by 2010.
“We have to live with it till the new capacity comes. But if Dr Reddy has his way the demand may get softened and match supply, and my marketing people would be very happy,” said Jagdish Khattar, managing director, Maruti Udyog in an analysts’ conference call organised after the company announced its annual results for 2006-07.
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