Maruti Plans To Launch A Competitor To The Honda Civic

After taking initial steps to compete with the runaway success of Honda City through its latest sedan SX4, Maruti Udyog, the country's largest car company is planning to launch an even bigger car by 2009-10, which will take on the likes of the Honda Civic.

Moreover, after almost a decade and a half, the company will drive into the sunset one of its oldest and most successful models, the Esteem. The entry level sedan will be replaced by a sedan version of the runaway success 'Swift', sometime next year.

According to sources, MUL has sounded its vendors to gear up to supply components for its big car project. MUL is also scheduled to launch a new compact car in 2009 that would mainly cater to the European market, but plans are afoot for its launch it in the domestic market as well.

According to industry sources, the 'big car' from MUL's stable will compete with cars in the A4 segment, which comprises the likes of Honda Civic, Toyota Corolla and Skoda Octavia Rider which come in a price bracket of Rs10-12 lakh.

MUL's plan to go to the next level is buoyed by the success of its latest offering, the SX4 sedan, which has successfully made a dent in the segment that was led by Honda's City. The big car foray is also in step with global plans of Maruti's parent company, Suzuki Motor Corp, which is seeking an image makeover from a successful small car maker to a car company with competence in bigger cars as well.

After 13 years of the launch of the Esteem, MUL has decided it is time to bring the curtains down on the Esteem. The new Swift sedan, which is expected in replacement is likely to have both petrol and diesel engine variants, in keeping with MUL's diesel strategy.

Esteem owners can rest easy, as the company would continue to provide service support the model, as it had done in the past with other models that have been phased out.

Source: http://www.domain-b.com/companies/companies_m/maruti/20070827_competitor.htm

Maruti’s Swift Sedan Coming Early Next Year

The launch will strengthen the company’s presence in the sedan market, where it currently has another model, the SX4.

India’s largest car maker, Maruti Udyog Ltd, is getting set for the launch in 2008 of a mid-size sedan built around its new global car platform, the Swift. The new car, to be launched in January-February, will give the manufacturer renewed presence in the budget segment of the domestic sedan market, where newer, more contemporary models from competitors have edged out its Esteem model.

A person close to the development said the company would launch Swift with its new-generation 1.3-litre multi–jet diesel engine and in a 1.3-litre petrol variant, priced at around Rs5.5 lakh.

Maruti officials declined to comment on future models.

MUL’s long-standing Esteem sedan has been witnessing flagging sales in the last few years. The model sold little more than 6,000 units in April-July, down from 7,011 units in the year-ago period. The model is currently available for about Rs4.5 lakh, depending on the features included, but suffers from what analysts call model fatigue.

The car, however, continues to win critical acclaim, including last year’s JD Power best entry-sedan award.

Maruti already has two diesel variants of premium hatchback Swift and a petrol offering on the same platform since its launch late last year.

The launch of the Swift sedan will strengthen the company’s presence in the sedan market, where it currently has another of Suzuki’s global new car initiatives, the SX4 model, which replaced its premium sedan Baleno. The SX4 is available for about Rs654,000 and people familiar with its performance said it sold 9,500 units between April-July, driven largely by its premium features at a very aggressive price.

MUL is, meanwhile, increasing production capacity at its Manesar, Haryana, factory. “By the end of next fiscal, the Manesar plant is likely to produce more than 250,000 cars,” this person said. The Swift has sold 141,893 units through July, with a waiting period of two weeks to two months for the car, depending on the model and features.

Sales of Indian car makers grew 22% to 10.7 lakh units in the year ended March, up from 8.82 lakh units. With the likes of Volkswagen AG, General Motors Corp., Nissan Motor Co. and Toyota Motor Co. stepping up their interest in India, MUL has been in an overdrive, launching five models and variants in just the past year and promising at least one additional model every year. The launch of the Swift and SX4, its first sedan in six years, was the first of its new initiatives.

MUL will invest an estimated $2 billion in expanding capacity and launching new products. It is also changing its name to Maruti Suzuki India Ltd, which will allow it to better leverage the Japanese car maker’s brand.

During April-June, MUL sold 160,604 units domestically, a growth of 17.1% over the year-ago quarter. Total sales, including exports, were 169,669 units, also up 17.1%. In July, MUL sold 52,839 vehicles within India, up from 44,653 vehicles in July 2006.

Maruti’s Grand Show

Of late, Maruti Udyog has changed a lot and that includes its name change to Maruti Suzuki. The Maruti brand had gathered an image of a bargain hunter’s car and not a poseur’s car.

Until Swift and, recently, the SX4, people bought dated Marutis simply because they were cheaper to buy and run.

Swift made quite an impact when it came to the market. It was perceived as a thoroughly modern car with the same affordability factor as all Marutis.

The latest to shed the company’s image as a rationed, budget car-maker is the Grand Vitara(GV) pitted against the other petrol-driven, soft-roader, the Honda CRV. Known as Escudo in some other markets, this SUV is here to do what the previous version, the XL7, couldn't do- sell!

Compared to the last generation Grand Vitara XL7, the current version has been built on a different and totally new platform. And in the process, it evolved from an off-roader to a soft-roader, having dropped the big, thirsty V6 engine and adopting a small four pot.

It has also shrunken in size from a large seven-seater to a compact fiveseater. But importantly, it has changed itself from looking dated and dull, to trendy and youthful without losing the ruggedness.

The old version was based on a chassis to improve off-road performance, but this one is monocoque to improve dynamics, with an integrated ladder frame to increase structural rigidity. That, in simple English, means, it is built in one piece and will be good on road and won’t get bent, if you take it off-road.

The overall design theme of the GV is similar to Swift. The chunky wheel arches and the pseudo vents on the edges of the bonnet lend it a touch of muscularity. The profile of the car is interesting as the wraparound tail lights originate from the same point that the rear quarter windows end. The spare wheel is mounted on the tailgate as in old-school SUVs, and adds character to the rear.

Inside, you wonder whether Maruti- Suzuki ran out of parts and resorted to searching the SX4 and Swift parts bin. The circular air conditioning vents and power window switches are from the Swift, the steering looks no different than the SX4s, the overall dash layout is similar to SX4 and even the seat upholstery reminds me about the dotted one in Swift.

The totally black interiors are well designed but do not exude the impression of a Rs14 lakh car. But they are functional with every control falling into hand and working brilliantly.

The three hooded dials with red needles and white lettering are bold and bright. The well-integrated single CD player looks good on the dash and sounds just as good.

That brings us to the engine which is a 1995 cc petrol-driven, 120 bhp, 17.3 kgm mill, based on the latest Suzuki engine platform like the SX4. It is mounted longitudinally and mated to a five-speed manual or an auto.

The engine does exhibit decent midrange performance, despite the low output and the vehicles 1.6 ton KERB weight. But it sounds coarse and strained at high revs and the low rpm response isn’t great either.

It takes about 14 seconds to reach 100 kmph and runs out of breath at 160 kmph, adequate for an SUV, or is it?

There is a shift on the fly rotary selector on the dashboard which lets you shift to low option and lock the differential. The off-road ability of the GV is miles ahead of the Honda CR-V that is brilliant on the road but pretty useless on anything less than the flattest grounds.

There is ample ground clearance in the GV in the form of 200 mm and this, along with the brilliant four-wheel drive system, ensures that you never get stuck in foot-deep mud or rocky inclines.

But, sadly, all this potential is likely to go waste with most owners confining themselves to well-paved roads.

The car always runs on four wheel drive mode which gives it great grip on the wet roads, but at the cost of fuel economy.

The body rolls slightly, but the handling is otherwise neat. The ride quality, on he other hand, is plush and superb. It runs over potholes just as if they weren't there.

So, how is it, compared to Honda CRV? Well, it may not have CR-Vs performance, handling, equipments and rich interiors, but it costs Rs 4 lakh less which makes it a lot more affordable. Yes, the interiors do feel cheap, but it has better off-road credentials and promises a plusher ride than the Honda. And being a Maruti means it will be just as reliable as the Honda. Wish it could switch off that four-wheel drive when not needed and it had that 1.9L diesel engine with which it is sold elsewhere in the world.

Maruti Raises Discounts To Drive Car Sales

India's top car maker, Maruti Udyog Ltd., has raised discounts on many of its models as demand slows amid higher interest rates, newspaper adverts on Saturday showed.

Maruti, majority-owned by Japan's Suzuki Motor Corp., has raised discounts to up to $1,090 and extended the offer to many of its models, including its best-selling Alto and the Esteem sedan, to shore up sales.

Maruti, which has nearly half of India's market for mostly small cars, has said it would be hard to match its record domestic sales of 2006/07 because of slowing demand.

The "Smile India Smile" offer introduced between Aug. 1-15 has been extended until the end of the month. The company has also included a bonus for exchanging old Maruti cars, the adverts showed.

Under the extended offer, discounts and bonuses range from 12,000 to 45,000 rupees ($291-$1,090), up from 7,000-30,000 rupees, according to the adverts.

Other vehicle makers, such as No. 2 car maker Tata Motors Ltd., have scaled back production as demand has eased.

Maruti sold 227,578 units in April-July, up 19 percent from the same period a year earlier.

As Going Gets Tough, Maruti Designs New Ways

For the past few weeks, Maruti Suzuki managing director Jagdish Khattar has been visiting many of his over 120 key vendors. He has also been meeting main dealers and even the shop-floor workers in his factories. All these meetings have been held to convey a simple message: pull out all stops to boost sales.

Maruti, much like other car makers, has been struggling to maintain growth momentum in a market where high finance costs are affecting many of its flagship brands. Realising that a bearish market sentiment could play havoc with its retail sales, the company has begun thinking of novel ways to generate extra sales.

Khattar said over the past two-and-a-half months, the combined pool of vendors, dealers, business associates such as companies that provide insurance to Maruti cars and shop-floor employees have helped him generate incremental sales of over 22,000 units.

"We realised at the beginning of this year that the market was likely to be impacted by the increase in finance costs. These initiatives have been charted out to spur sales and they seem to be working satisfactorily," he said.

For example, dealers and vendors of Maruti have been encouraged to incentivise their own employees by giving them cars; Maruti’s shop-floor workers are being offered between Rs 1,000 and Rs 1,500 as incentive for making referrals that translate into sales.

Under "Wheels of India" scheme, the company has sold over 1500 cars to
government officials over the past two months whereas almost 7,000 have been sold due to employee referrals over the same period. But is generating sales through innovative schemes enough for Maruti to maintain its lead in the passenger car market?

In the latest annual report, Khattar himself has acknowledged that a
major challenge before the company is keeping costs under check. Besides, Maruti’s overwhelming dependence on the domestic market could also cause concern.

"With competition hotting up, stringent automotive regulations and high customer expectations, there is a likelihood of increase in costs, putting pressure on the company’s margins. Increase in commodity prices puts further pressure," Khattar said.

Maruti And Fifty Thousand Luxury Condominiums

As a small kid, in the early 1980s, I grew up in the suburban town of Gurgaon - then more known for growing wheat and vegetables than rampaging Toyota Qualises ferrying sleepy teenagers.

Things changed in 1983 when the government set up Maruti, in collaboration with Suzuki, and its car manufacturing plant came up on the outskirts of the town in a huge tract of land - approximately five square kilometres, or more than a 1,000 acres. Those were dull times - land was cheap. The government probably paid not more than INR 20,000 per acre for the tract, if at all.

Cue 2007. Times have changed. Blame it to rapid industrialisation, the scorching growth pace of the service industry and the speculative behaviour of the realty business, land in the vicinity is floating at around INR 60,000 per square yard. Even if one was to look at a bulk deal, Maruti's 1,000 acres will fetch a cool INR 150 billion!

That is USD 3.3 billion!!

That's exactly the sum that Suzuki (Maruti's parent) wants to invest in India over the next few years.

The above may be a completely worthless and stupid calculation, considering that Maruti has to make cars at the plant and while a potential fifty thousand luxury condominiums, ten malls, a couple of IT parks and some commercial buildings have the potential of turning the Gurgaon realty scene on its head, this is little more than wishful thinking...till I start looking at the scene from a different perspective.

Maruti's second plant at Manesar is operational and being a huge facility in itself can be potentially expanded to a million units, the company's target for the near future.

The Manesar facility is close to Maruti's existing Gurgaon plant so it won't affect logistics to a great extent. Theoretically, production can be shifted from the Gurgaon plant to the Manesar plant, in phases to maintain smoothness. Already the Swift line is at the Maneasr plant and the SX4 sedan should be getting put together there as well. The models that are not being built at Manesar currently can be shifted there, model-by-model, in 2-3 years, all except the 800, which might be on its last wind by then.

And in case the Manesar plant proves small then Maruiti-Suzuki can set up another one in the nearby upcoming Reliance SEZ. The SEZ plant can be used for exports and will benefit from duty waivers as well.

While looking at its plant as an asset in this sense may not be in Maruti's idea of things for now, the plant itself is as juicy as they come. Once on the outskirts, it is now as central as one can be in a place like Gurgaon with easy connectivity to the old town as well as the new areas. The plant has a huge frontage on the old Delhi-Jaipur road and is a few hundred metres away from the busy NH-8 expressway. There are already premium residential complexes, a planned golf course and a large number of software and services companies (their employees would love to live in the luxury condos that come up at the MUL plant site) in near vicinity with a bunch of existing and planned five-star hotels within a 3-4 kilometre radius. Heck, even the international airport is a few kilometres away.

With MUL's proven clout with the government, things like Change of Land Usage (CLUs) etc. will not matter,. The company's management, alongwith potential prospective buyers DLF and Unitech, can even arm-twist the government to bring a Delhi Metro link from the planned Gurgaon extension to the existing plant's rear gate. That should bump the price of the condos and ensure that the builder, who buys the land, makes a neat profit as well. The plant has the potential of becoming the largest single township in the NCR-Delhi region or even 2-3 big townships, in case one builder finds it difficult to shell out this much moolah.

So has Maruti ever thought of doing this? Maybe. More likely, maybe not!

Far more importantly, have the stock analysts factored in the land value in MUL's share price? If not, spread the word, and watch the stock spiral away.

Maruti Offers Discounts To Boost Car Sales

Maruti Suzuki Ltd., is offering discounts of up to $743 on many of its vehicles to shore up sales, newspaper advertisements at the weekend showed.

Maruti, which has nearly half of India's market for mostly small cars, has said it would be hard to match its record domestic sales of 2006/2007 because of firm interest rates that have slowed demand for vehicles.

Maruti, in which Suzuki Motor Corp. owns 54.2 percent, has said it would limit the impact of high interest rates with dealer incentives and customer discounts. It ran a discount offer in June.

The "Smile India Smile" offer, which runs from August 1-15, offers discounts ranging from 7,000-30,000 rupees ($173-$743) on several models, including its best-selling Alto and the Esteem sedan, the advertisements showed.

The scheme was being offered countrywide, a spokesman said.

Other vehicle makers, including No. 2 car maker Tata Motors Ltd., have scaled back production on the softer demand. A senior banker said on Friday the slowdown would persist until interest rates fell by at least 100-150 basis points.

Maruti, which is seeking shareholder approval to change its name to Maruti Suzuki India Ltd., is trying to shift consumers to bigger, more high-margin cars and launched the SX4 sedan in May and the Grand Vitara sport utility in July.

Maruti has sold 227,578 units in the four months to end-July, up 19 percent from the same period a year earlier.

Maruti Leaves Competition Far Behind

Auto makers didn’t have much to cheer about last month. Though new launches helped some auto makers grow their sales tally, majority reported a decline in sales in July.

Auto analysts have pegged the car market’s growth for last month at just 8-9% and this is largely due to Maruti’s healthy double digit growth. Two-wheeler manufacturers continued with their dismal show and posted negative growth for the month.

Market leader Maruti Suzuki’s cumulative sales were up 24.8% to 57,909 units as compared to 46,408 units sold in July 06. While the company’s domestic passenger vehicle sales grew 18%, its passenger car sales was up 17.8% at 52,315 units.

Maruti Suzuki India managing director Jagdish Khattar said the company clocked high double digit growth despite the subdued demand for passenger cars. “June and July have been tough for the industry due to increase in interest rates,’’ he said. Maruti exported 5,070 units.

Tata Motors posted a 6.7% decline in sales of passenger vehicles at 17,011 units while its commercial vehicles sales were down 3.8% to 20,705 units. The company’s total sales were down 6.6% selling 42,098 vehicles.

Ditto for Korean major Hyundai Motor India whose domestic sales were down 7.4%. The company said domestic sales suffered because it was servicing export orders. Thanks to Hyundai’s 16.6% gain in exports (13200 units) Hyundai’s overall sales in July were up 14.6% to 28,203 units.

Japanese car maker Honda Siel Cars India’s sales were down 17%. Skoda Auto India continued to sell few vehicles and posted a decline of 15.4%.

American car maker General Motors India however managed to grow by high double digit figures due to its new small car Spark. The company’s sales were up 89%,

Mahindra & Mahindra which rolled out its two millionth vehicle in July, posted a 49% increase in domestic sales selling 18,356 units against 12,841 units in the same month a year ago. The company’s exports during the month, however, declined 4% to 627 units against 655 units last year, M&M said in a statement.

Mahindra-Renault sold 2,890 units of its flagship sedan Logan in July. The company said its Logan and SUV Scorpio continue to lead in their respective segments. Analysing the auto sales in July, Price Waterhouse partner Abdul
Majeed said, “Car sales are down because the increase in interest rates have hiked home loan EMI’s.

So the consumers are not ready to spend on a new car. The trend is likely to become positive by the festive season.”

Two-wheeler market leader Hero Honda’s total sales for the month of July ,dipped to 2.01 lakh units over 2.35 lakh units in July 06. Arch-rival Bajaj Auto sales were down 6% to 1.62 lakh units. Its motorcycle sales were down 7% to 1.59 lakh units.

The company in a statement said that motorcycles continued to struggle, owing primarily to product fatigue in the 100-cc segment and said that the 100 -cc plus segments are growing.