Mumbai: Maruti Suzuki India Ltd (MSIL) received bumper pre-launch bookings of more than 10,000 for the revamped version of the entry-level small car Alto, its most successful model.
Bookings opened on Tuesday. The successful day one bookings could signal a turn of fortunes at the company that’s been bogged by a series of labour strikes mainly at its plant in Manesar as well as dwindling sales.
The company is in the process of enhancing its production capacity after solving the labour woes at the Manesar plant.
The new Alto replaces its predecessor in the small car segment that’s suffering due to few diesel engine options when fuel prices are rising, though it still holds 65% of the total market.
In the six months ended 30 September, sales of diesel cars contributed half of the total units sold in the Indian car market, according to lobby group Society of Indian Automobile Manufacturers.
The new Alto claims an impressive mileage for its petrol version, at 22.74km a litre. The company will shortly introduce a compressed natural gas (CNG) variant as well.
The labour strikes cost Maruti a revenue loss of at least Rs.4,000 crore in the past 18 months. Its market share fell by nine percentage points to 36% in this period.
Last month, the firm increased pay for workers by 75% and approved a housing scheme for them. It is expected to reach an optimum level of production by the first week of December at the Manesar plant, removing capacity constraints to accelerate sales.
The company will also look to revive the combined sales of its Alto and Alto K10 models, which at their prime sold 38,000 units in March 2011 but in August this year, the sales fell to as low as 10,000 units. Overall, the company’s domestic sales grew 12.7% from a year ago to 88,801 vehicles in September according to Society of Indian Automobile Manufacturers.
The company has sold at least 20 million Alto models since its introduction in 2001, but the dated design needed to be changed. The company has spent Rs.270 crore on the revamp and its vendors have spent Rs.200 crore.
“A lot is riding on the second-generation Alto,” said Yaresh Kothari, an analyst at Angel Broking Ltd, a Mumbai-based brokerage. “We expect its contemporary design and impressive fuel economy to generate good response in the market.”
“We are introducing the model at a moment when petrol car sales are declining. With this car we aim to revive the market,” said Mayank Pareek, managing executive officer (marketing & sales), Maruti Suzuki. “Alto has been the preferred car of the youth. At least 40% of Alto buyers are below 25 years of age.”
Surjit Arora, an analyst at brokerage Prabhudas Lilladher Pvt. Ltd, said he expects the new car to add at least 30,000 units to Maruti’s volumes for the year.
“According to our interaction with the vendors/component manufacturers of MSIL, the company is currently working on a production schedule of 800 cars/day for the new 800cc to be launched on 16 October,” he wrote in an 8 October report. “Currently, the old Alto production is pegged at 500-600 cars/day. Hence, in our view, the incremental volumes from the new car could be 200 cars/day.”
The new Alto is priced between Rs.2.44 lakh and Rs.3.56 lakh (ex-showroom, Delhi), giving it an edge over rival entry-level models such as Hyundai Motor India Ltd’s Eon, priced at Rs.2.75 lakh (ex-showroom, Delhi), and General Motors India Pvt. Ltd’s Spark that sells at Rs.2.85 lakh onward.
“Eon had started making an impact on Alto sales with its sales slowly going up to 9,000 units per month. The change was needed at Maruti’s end to regain some market share that it has lost in the recent months,” said Mahantesh Sabarad, senior vice-president (equity and research), Fortune Equity Brokers Pvt. Ltd. “We expect the firm to gain market in the short-term.”
Maruti will start exporting the new Alto to Latin America and Africa by January end.