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Maruti gears up for the small car war

Maruti Udyog Limited has the fired the first shot as the Indian automobile industry gears up for a major war in the small car segment.

Driven by apprehensions that it may suffer a major dent in the market share when the much-talked-about small cars -- Telco's Mint, Hyudai's Santro and Daewoo's Matiz (earlier called D'Arts) -- hit the Indian market, the public sector car-maker has decided to consolidate its dealer and service network, considered its major strength.

To ensure that dealers would not fall prey to the overtures of the new entrants, Maruti has increased the dealer commission on its Zen model by a whopping 50 per cent -- from Rs 6,300 to 9,700. Apart from keeping the dealers happy, the move may rattle the competition as it would make their task of matching Maruti's priceline all the more difficult.

For instance, Matiz, which is to be launched later this year, would be priced around Rs 300,000 as against Maruti 800's Rs 245,000. However, to what extent the price tag would hold the key remains to be seen, considering that the new entrants promise to revolutionise the small car segment with their 'superior technology'.

Maruti has also been encouraging its dealers to launch several schemes to woo the customers, including good bargain price for old Maruti cars in exchange of new cars and offering free accessories.

Sources said the schemes have evoked little response as the buyers seem to have adopted a wait-and-watch policy as the country grapples with recessionary trends.

As the Indian market comes to terms with demand-side economics, Maruti seems to be optimistic. It plans to increase the production of Zen from 6,000 to 7,000 cars. As for Maruti 800, around 180,000 cars are expected to roll out of its factory at Gurgaon, near New Delhi.