New Delhi: As consumer confidence slips, growth slows and uncertainty clouds the economy, waiting periods for the most popular car models are getting shorter. But Maruti Suzuki India Ltd, the country’s largest manufacturer, is trying to deal with an unexpectedly contradictory trend.
Not only are people keen on the company’s Swift, Dzire and Ertiga models, most of them are dead set on their top-end variants. The problem is that Maruti had expected a more even spread in demand across the range and now it can’t get enough supplies of one key part that goes into the costliest models—alloy wheels.
The company wants to hold onto its Ertiga customers by offering them the option of regular steel wheels but with all the other top-of-the-line features, which would mean a price cut of at least Rs 25,000, according to two Maruti dealers familiar with the development. This version of the Ertiga will start being despatched this week.
“We will be introducing a middle variant, which will not have alloy wheels and may be positioned differently,” said Mayank Pareek, chief operating officer, marketing and sales, said in an interview on Saturday. “We are working on the pricing part of it and we are yet to take a call on that.” The new variant will have steel wheel rims with “full wheel cover”, said I.V. Rao, Maruti’s chief operating officer (engineering). “This will make the rims look almost like alloys.”
Rao said the shortage had occurred because “it is not a standard part developed by all the vendors but only by one vendor who develops it as per our design and that vendor has major capacity constraints, which cannot be expanded in the near term.”
Apart from appearances, alloy wheels are said to be lighter and tougher than regular wheels thus offering better performance.
The company said it wasn’t considering a similar strategy for the other two models. “Demand for top-end variants have shot up unexpectedly,” Pareek said. “We did not anticipate such a demand when we were planning these models. Normally, we plan at least three years in advance and accordingly we place orders with our vendors.” He put the waiting period for the three top-end vehicles at close to a year, with demand having increased from 20% last year to 80% in the first quarter of this fiscal.
Maruti has been unable to import them from Japan as the availability has dried up, said one of the dealers.
Some buyers have already settled for lower variants. Shishir Gupta, who works as a business analyst with American Express in Gurgaon, had booked the Dzire ZDi—the top-end diesel variant—in February. He changed his mind and opted for the VDi in June, costing Rs 1 lakh less.
“I had to downgrade because the dealer said that the company is not making top-end variants due to a parts shortage,” Gupta said. “I could not have waited any longer as my family needed a second car desperately.”
While people may choose to be more careful about making purchases, they don’t seem to mind spending more when they perceive value for money.
The high-end variants of the vehicles score high on affordability, said Joseph George, auto analyst with India Infoline Ltd, a Mumbai-based brokerage.
“I have checked with the dealers, the bulk of the bookings for Ertiga has happened for its top end,” George said. “Because at Rs 10 lakh, a customer gets all the features, including a diesel engine, which otherwise is available only in Rs 11 lakh bracket. And remember, most Ertiga buyers are sedan buyers.”
The Swift is a hatchback, the Dzire is its sedan version and Ertiga is a multi-utility vehicle that seats seven. All three vehicles have been launched in the last 10 months.
The new Dzire, a refreshed version that is less than 4 metres in size, is positioned as an entry level sedan targeted at the premium hatchback segment, which has cars such Hyundai Motor India Ltd’s i20, Honda Siel Cars India Ltd’s Jazz and Volkswagen India Pvt. Ltd’s Polo. Excise on cars less than 4 metres is lower than those that exceed this limit. Monthly sales on average for the Ertiga are 5,500, for the Swift 18,000 and 12,000 for the Dzire.