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Maruti to launch super luxury car Baleno in mid-Nov

Veeresh Malik in New Delhi

Maruti Udyog Limited announced today that it would launch the Maruti Suzuki Baleno in the middle of November 1999. Described as a "superior performance vehicle", the Baleno sports a 1.6 litre, 16-valve petrol engine, churning out about 98bhp.

Other cars expected from MUL within the next few weeks are the Multi Point Fuel Injection versions of the Esteem, Zen, "new" Omni and the 800 basic model.

MUL Managing Director Jagdish Khattar said in a statement that with the introduction of the Baleno, Maruti would be able to cover the entire spectrum, from the entry level Maruti 800 and Omni to the super luxury Baleno at the top end.

The price of the new luxury car will be announced at the launch.

Why, however, did MUL make this early announcement, especially as there are no directions on possible price?

At any other time, an announcement of this sort would have set the automobile market abuzz with excitement. Especially when the industry in India as a whole reports increased sales every month, bucking global trends which currently point downwards. But these increased sales have come in the small car segment, the hatchbacks with engine capacities around 1-litre.

New launches over the last few weeks have been in the sluggish mid-size luxury car segment, which in India means a 3-box (sedan) with engines in the 1.3 to 1.8 litre range. The Hyundai Accent was off the block first with an announced low entry level price of Rs 535,000, a position they held for a few hours before Ford announced their low entry price of Rs 499,677 for the Ikon. General Motors, not to be left behind, has also not denied the below Rs 500,000 price tag expected for the Corsa.

The 40 per cent increase in diesel prices has also upset the equations, where manufacturers collected hefty premia over similar petrol models. A rethink is in the offing, as higher prices for diesel are expected in the forthcoming months. (Diesel used to cost about 40 per cent of petrol prices, and has now reached about 60 per cent. It is expected that diesel prices would stabilise at about 80 per cent of petrol prices in India within the next few months.)

The environmental lobbies are also pressing hard, and the early onset of winter smog in Delhi while air-conditioners and fans are still on is not helping matters much. Reports on rampant adulteration of both petrol and diesel, a position that the oil companies have always denied but is a home truth from which there is no hiding anymore, makes matters worse, as it is the costlier and therefore technically better cars that get impacted more.

Fact remains that behind the spurt in overall sales hides some amount of desperation. It is the cheaper and smaller cars that are moving off the showroom floors. The new cars expected, however, barring some new versions from Maruti, are all large and expensive machines. The initial prices can be expected to move downwards, closer to the small hatchbacks in the approximately Rs 300,000 price area. (Cost of production being almost the same, there is no really valid reason for prices to be so wide apart.) Add to that the fact that larger cars traditionally attract lower resales when compared to smaller cars, and you have a classic case of over-supply.

In all this, what gets lost is: why did the manufacturers price their cars in India so artificially high in the first case? To that, there is no answer, especially from Maruti, who must be really re-working their sums.

Is this why, to buy breathing space, they announced the Baleno?

The writer is a Delhi-based motoring correnpondent. His email address is veeresh@vsnl.com

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