Maruti Suzuki India Ltd (MSIL), the maker of the People's Car, is planning to come up with a car costing under Rs 2 lakh to regain its market share in the small car segment that it lost to rival Tata Nano.For this, it has entered into price negotiations with component suppliers. Maruti Suzuki has asked auto component firms providing parts to Tata Nano for customised cheaper components.
A person close to the development said the firm is seriously planning a car priced closer to Nano. This would take the price point well below the recently relaunched Maruti Suzuki Alto.
"The plan was there for a long time after it announced the phasing out of Maruti 800. However, it was closely watching and waiting for the economy to turn around. Now the plans are back on the front burner. As per the plans, the car will be priced below Rs 2 lakh," a company official told MAIL TODAY on condition of anonymity.
"Negotiations are already going on and the company has asked us to cut the prices of our parts by at least 15-20 per cent for one of their new models," an official of an auto component company told Mail Today . When contacted, a Maruti Suzuki spokesperson, however, denied any such plans.
Maruti's entry-level car Maruti 800, non-air conditioned, is priced at Rs 1,92,936. It was the cheapest car that earned the firm the image of the 'People's car-maker'. It sold the largest number of cars in the small car segment.
However, with the adoption of strict emission norms, the car had to be phased out in 13 cities in the country. The base model of Alto currently sells at Rs 2,29,055.
Meanwhile, Tata Motors' Nano has managed to establish itself as the cheapest car in the world costing Rs 1,23,361 (ex- showroom New Delhi).
Maruti plans to change this picture with its new model. During April-July, Maruti Suzuki sold 8,586 units of Maruti 800 compared with 23,779 units of Nanos.
"What the company is looking at is quality better than Nano so there would be little difference of margin. Talks are already going on with various auto component companies. The company is re-negotiating deals with component providers for Alto," the official added.
After the launch of Nano, the market was full of speculation about the company's next move but Maruti Suzuki made no official comments on its plans for a new car.
The company is also working fast to expand its assembly line capacity. The company expects to start its new assembly line at its Manesar factory nearly seven months ahead of its original plan.
"I am not aware of any announcement made so far but yes, making a car like Nano is possible and feasible as well.
Although not all can repeat the Nano story, Maruti has resources and expertise to come up with such a model at a cheap price without compromising on quality," Vinnie Mehta of Automotive Component Manufacturers Association of India ( ACMA) said.