labels: Maruti Udyog, Tata Group, Two wheelers, Cars
Maruti, two-wheeler majors unfazed by Nano news
27 March 2009

The country's largest car maker, Maruti Suzuki,says that the newly-launched Tata Nano may have a marginal impact on the sales of its entry-level small car Maruti 800, but ruled out cutting its price.

''We don't have any plan to cut its price or enter the Nano segment,'' Maruti Suzuki India chairman R C Bhargava told reporters on the sidelines of the CII annual session in New Delhi.

Tata NanoAsked about the company's plans to counter the competition from Nano, he said, ''Nano is in a different segment and we are in a different segment.'' He, however, said Nano will help in expanding the market.

Just prior to the unveiling of the Nano at he Delhi Auto show last year, Maruti Suzuki had denied media speculation that it was ready with a small car with a 660cc engine, positioned below the Maruti 800, and priced at Rs1.5 lakh, India's largest passenger carmaker has said that the company had no such plans.

Will people continue buying the M800? Potential first time buyers feel that the the car would continue to sell because it had proved itself over the years as being a reliable and sturdy product though Suzuki might cut its price to reduce the price gap betwen the Nano and the 800 as a strategy to tempt customers away from the Nano.

Also existing car owners may look at the Nano as a  second car for middle class buyers for city driving.

Justifying its decision not to shrink the size of its products lower than that of its Maruti 800, the company had said that ever since Maruti brought out the first people's car about 24 years ago, India's middle class and Maruti's customers have grown in every facet of their lives ranging from their incomes and lifestyles.

Changing preferences are reflected in the sales data for existing segments in the car market, with models and variants that promise only economy and low acquisition cost increasingly losing out to models and variants that are rich in features and style. According to Maruti this trend holds true across segments, including among entry level cars.

Maruti said in its experienceits own entry-level car customers nurture a high degree of aspiration, both in new cars as well as pre-owned. "They want more from their cars in terms of features, performance, safety and versatility."  (See: Maruti Suzuki justifies decision not to shrink size below M800)

While Maruti's sales have been good in this quarter, Bhargava refused to comment on the future, saying issues such as elections, policies of the new government, interest rates and commodity prices would have to be factored in.

The two-wheeler majors too were unanimous in saying that the Nano would have no impact on their business. ''Nothing much has changed since the unveiling of Nano at the Auto Expo, except for the announcement of prices. I still maintain it is not going to have any real impact on two-wheelers,'' Hero Honda Motors managing director and chief executive officer Pawan Munjal said, also on the sidelines of the CII annual session in New Delhi.

He said there is still a fair difference between the cost of ownership and maintenance of the Nano and two-wheelers. ''The price of the Nano is closer to a high-end bike, the buyer for which is not a car customer,'' he said. However, there may be some two-wheeler buyers who will be attracted to the Nano, he added.

Agreeing with this assessment, Bajaj Auto chairman and managing director Rahul Bajaj said, ''I don't see a Pulsar buyer going to the Nano. He wants a Bajaj Pulsar, not the Nano.''

TVS Motor Company chairman Venu Srinivasan also said, ''There will be no major impact on two-wheelers. It (Nano) will create its own segment.''

(Also see: Is the Nano bad news for the M-800? Maybe not

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Maruti, two-wheeler majors unfazed by Nano