Maruti to Mahindra, car firms seek sales spurt with new launches

Among the models that will be introduced this month are the new Alto, Figo, Storme and Rexton
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First Published: Tue, Oct 09 2012. 06 00 PM IST
Ssangyong Motor Co.’s Rexton model
. Car makers are hoping the new models and discounts will help revive sales in India, where high interest rates, slowing economic growth and rising fuel prices have depressed demand for cars
Ssangyong Motor Co.’s Rexton model . Car makers are hoping the new models and discounts will help revive sales in India, where high interest rates, slowing economic growth and rising fuel prices have depressed demand for cars
Updated: Wed, Oct 10 2012. 01 31 AM IST
New Delhi: India’s car market may be slowing but Maruti Suzuki India Ltd, Tata Motors Ltd and other car makers are set to introduce several new models, which, complemented by the discounts and freebies that are already being offered to consumers on existing models, could well see a spurt in sales during the coming festival season when car sales traditionally peak.
Among the new models that will be introduced in the week starting 15 October are the new Alto from Maruti, an upgrade of Ford’s Figo, Storme, the refurbished Safari from Tata Motors, and Rexton, the model from the Ssangyong Motor Co. stable that will be launched in India by the company’s Indian owner Mahindra and Mahindra Ltd.
Car makers are hoping the new models and discounts will help revive sales in India, where high interest rates, slowing economic growth and rising fuel prices have depressed demand for cars. Economic growth in Asia’s third biggest economy is expected to expand 4.9% in 2012, the weakest pace in a decade, according to forecast released on Tuesday by the International Monetary Fund.

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      Analysts expect the launch of the new Alto to boost sales of Maruti Suzuki, the nation’s biggest car maker. “The new Alto 800 is what I think could be a game changer among all the products to be launched next week,” said Surjit Arora, a Mumbai-based analyst at Prabhudas Lilladher Pvt. Ltd. “It’s a decent move by Maruti and it should do enough to revive the petrol car market in the next six months.”
      The Alto is aimed at the first time buyer and has sold more than 20 million since its introduction in 2001. Arora said Maruti is currently working on producing 800 cars a day of the new 800cc Alto and he expects the model to be priced at around Rs.2.5 lakh because most of its components are locally produced.
      In the first five months of this fiscal year starting 1 April, sales of passenger vehicles grew 7.42% to 752,440 units, according to data provided by industry lobby Society of Indian Automobile Manufacturers. In the last fiscal, passenger vehicle sales grew 4.66%.
      Analysts like Arora are also closely looking at Tata’s launch of the Storme.
      “It seems after buying JLR, Tata seem to have lost focus on its own cars. That’s why they have been consistently losing market share for the last two years. Not more than 4% of Tata Motors’ profit comes from its own passenger cars,” said Arora. “I hope they would have taken the competition in mind while developing the car. It is seen as an iconic car and its success would depend on if the company has been able to better it.”
      Indeed, Mahindra has surpassed Tata Motors in terms of the number of passenger cars (and utility vehicles) sold, a fact that Ratan Tata expressed disappointment about in his last address to Tata Motors shareholders as chairman.
      Ssangyong is slowly limping back to normalcy with the company posting growth in the last few months.
      In the first nine months ended September, Ssangyong sold 86,240 units globally, registering a growth of 0.6% from a year earlier. However, its future will depend on its performance in the Indian market. “Rexton will definitely gain from Mahindra’s brand image and marketing network. This will help them start with a good response,” said Yaresh Kothari, sector analyst, Angel Broking Ltd. “But it will take them a while to contribute to Mahindra’s profits as even in India, it will have tough competition in Hyundai’s Santa Fe, Skoda’s Yeti and Toyota’s Fortuner.”
      Prabhudas Lilladher’s Arora said that Rexton might face competition from Mahindra’s own sports utility vehicle XUV 5OO.
      General Motors India Ltd may introduce the hatchback Sail U-va., a car that comes from the portfolio of SAIC Motor Corp. Ltd, a Chinese company that has a joint venture with General Motors.
      SAIC holds a 50% stake in the Indian unit. A larger passenger van from SAIC’s stable will begin production in India by the end of 2012.
      But analysts do not expect the car to have a significant impact because of the kind of competition it is pitched against.
      “They have to play really hard on the pricing front and how the car looks,” said Kothari of Angel Broking. “Swift (from Maruti) and (Hyundai’s) i20 are very strong products. It will be difficult for GM to make a dent in their market share.”
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      First Published: Tue, Oct 09 2012. 06 00 PM IST
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