Kochi: The stakes were high in 2008 for Maruti Suzuki India Ltd when its engineering head I.V. Rao and his deputy, C.V. Raman, were handed the task of upgrading the Alto, the company’s—and the country’s —largest selling car.
Intense competition had eroded Maruti’s market share in the passenger vehicle segment—from 82% in 1997 to 45% in 2008.
The decline hasn’t been arrested since. The company’s market share narrowed to 39% in the last fiscal; in the first five months of the current fiscal, Maruti’s share fell to 36.61% of 1,049,961 units sold in the Indian market.
The stakes continue to be high for Maruti as the car maker prepares to unveil the result of the four-year-old upgrade of the 800-cc Alto by Rao, who retired last month, and Raman, who is settling into the job of head of engineering.
The car maker needs a winner to be able to compete with the feature-rich Eon introduced in October last year by its closest rival, Hyundai Motor India Ltd.
By virtue of being the country’s largest selling car (over 20 million units sold since its introduction in 2001), the Alto, with a by-now dated design, needs an image booster, keeping the entry-level buyer in mind.
Judging from an 80-km drive in Kochi, Kerala, the company may have pulled it off.
That goes with a caveat: the car’s exterior seems to lack originality; it seems to have been inspired by features in a lot of cars that are already on the roads, with the intention of giving it a sportier look.
Developed on the existing Alto platform, the car gives an impressive mileage; at 22.74 km/litre, it is at least 15% more fuel-efficient. It has bigger leg space in the back. When it comes to the interiors, Maruti has not gone overboard to intimidate its buyers, who will be mainly people graduating to a car from a two-wheeler, with needless features. Still, there is room for improvement in the quality of the plastic used in the car.
The best part is driving comfort. A new steering system and some minor tweaks in the engine have made the car easier to manoeuvre. The car vibration has been brought down significantly. The engine is smooth even at 100km/hour driving on a straight line. But despite higher torque, it lacks the power to climb meandering slopes. Then, again, an 800cc car is not expected to do the job of a sport utility vehicle.
The interesting part will be its pricing. The older Alto starts at Rs.2.32 lakh (ex-showroom, Delhi). Expect the new one to be a bit expensive due to the cost incurred on developing the car.
The company has spent Rs.270 crore while its vendors have spent Rs.200 crore.
While the base variant of the car is likely to be priced at Rs.2.49 lakh (ex-showroom, Delhi), the top-end, with optional driver airbags, may go up to Rs.3.50 lakh. The car will be available in three variants and six colours. Alto’s immediate competition—Hyundai’s Eon—starts at Rs.2.74 lakh. The first two variants of the Alto do not have power steering or power windows. The Alto K-10, the 1,000cc car, is priced from Rs.3.14 lakh.
On the pricing front, economies of scale would give room to finance companies to take a bit of a hit on the margins initially as the car is a mass-market product.
The pricing will also be under pressure given the people’s reluctance to buy petrol-run cars because of the wide differential between the price of petrol and diesel. Sales of petrol cars have suffered over the past year as more customers opted for diesel-run models.
Maruti Suzuki sold an average of 17,800 Altos, including the Alto K-10, monthly between April and August this year. During the same time last year, it was selling an average of 24,400 Altos per month.
The company’s new marketing vice-president Manohar Bhatt said that with the new Alto the numbers will improve.
“This will re-energize the market because of its low-running cost and improved fuel efficiency. We have tried to keep it very, very simple as it is an entry level car.We are sure we will do much better,” Bhatt said. “There is no reason why the numbers can’t go back to last year’s levels with the new car.”
The car will be launched on 16 October and the company will start exporting it to Latin America and Africa by December. In a move aimed at ensuring the car remains behind the wraps until then, Maruti has put a press embargo on carrying photographs of the new Alto in the interim.