BusinessWeek profiles world's cheapest cars

What a difference a day makes, or a few years at least. While many automakers were rushing to add premium models to their lineups just a few years ago, today the buzzword is affordability. Perhaps a ripple effect of high gas prices, or the green movement, or even the emerging third-world automotive markets, everybody seems to be thinking cheap. In response, BusinessWeek has compiled a list of super affordable vehicles that will be available over the next couple of years. The common factor here is that all will have an MSRP of less than $10,000. Some as low as $3,000!

BusinessWeek credits Renault with launching this new wave of cheap cars with its Logan sedan back in 2004. That initial sedan has proven popular and spawned a range of six different models. The cheap-car list includes names like GM, Hyundai, Chery, Dacia, Suzuki, Geely, Fiat and Tata. But new entries from Nissan, Fiat, VW, and Toyota are in the works, showing the increasing importance of this segment. Renault-Nissan has even announced it is planning to build a car for under $3,000, perhaps as low as $2,500 according to Chief Executive, Carlos Ghosn. He made the announcement at a plant-opening ceremony on April 4.

Don't expect supercars or luxury rides at these bargain basement prices, but you might actually get more than you realize for your money. These are reasonable alternatives to eight-year-old Civics and Corollas, rather than the equivalent of modern-day Yugos. And the list isn't filled with just microcars, either. Sure, there are small cars aplenty, but the list includes sedans, SUVs and even a minivan.

Maruti reduces price by up to Rs5,000

India's biggest car maker Maruti Suzuki has reduced the price of its products by up to Rs 5,000 following increased tax sops offered by Haryana, where its facilities are located.

"We have passed on the benefit of the reduction in sales tax by Haryana from 3 per cent to 2 per cent effective April 1 to dealers, who in turn have passed it on to customers," a company official said.

The reduced sales tax would translate to a price cut in the range of Rs3,000 - Rs5,000 across various models, the official added. Haryana had in the beginning of the month reduced sales tax from 3 per cent to 2 per cent coinciding with the reduction in central sales tax from 4 per cent to 3 per cent.

Maruti Udyog All Set To Launch SX4 Sedan

Maruti Udyog Ltd., is set to launch the SX4 Sedan in the first half of this month, ahead of its commercial launch in Europe.

Suzuki Motors holds majority stake in Maruti Udyog Ltd. Sources said the Sedan was most likely to be launched in India in the second week of this month. Its commercial launch in Europe would be in autumn this year.

In Japan, the launch would happen later this year, these sources added. SX4 Sedan would be Suzuki's second world car to be launched in India after Swift.

Made on a global new platform, SX4 Sedan is fitted with technologically advanced and next generation M series engine. The SX4 Sedan to be launched in the European market would also have the same engine as in India, sources said.

The 1.6 litre engine SX4 Sedan with the 4 valves would produce a high power of 102 bhp @5500 rpm. The Sedon would offer features like integrated music system, auto climate control, audio control on the wheels, glass antenna and adjustable steering.

"Suzuki has designed this engine by picking up the best features of the engine series used so far in Suzuki vehicles and incorporating them in this latest series of future ready engine," sources said.

In India, the car would be manufactured at Maruti's world class manufacturing facility in Manesar, which had gone on stream in February.

Maruti Q4 Net Profit Up 24%, Beats Forecast

Top Indian car maker Maruti Udyog Ltd. (MRTI.BO: Quote, Profile, Research reported a 24 percent rise in quarterly net profit on Tuesday, as cost cutting and strong sales of its fuel-efficient small cars offset volatile raw material costs. Maruti, 54.2 percent owned by Japan's Suzuki Motor Corp. (7269.T: Quote, Profile, Research, said it earned a net profit of 4.49 billion rupees

($109 million) in the January-March quarter, up from 3.61 billion in the same period a year earlier.

That beat a forecast of 4.23 billion rupees in a Reuters poll of 11 analysts.

Sales of Maruti vehicles, including the best-selling Alto and Swift hatchback, rose 30 percent to 200,112 units in the quarter.

Shares of Maruti, which has a market value of around $5.3 billion, fell nearly 12 percent in January-March, mirroring the decline on the sector index (.BSEAUTO: Quote, Profile, Research and trailing a 5.2 percent fall for the benchmark (.BSESN: Quote, Profile, Research.

($1=41.2 rupees)

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.''