Maruti – expected to give a bumpy ride to Nano?

By Ruma Dubey

Talk small cars and the first thing which comes to mind is but obviously Maruti. And then maybe a niggling thought goes out to Tata Nano too. And when we talk of serious competition to Nano, then again, its just Maruti which comes to mind.

It’s been some time since Tata Motors decided to launch its small car, and since then, there has been a total churning of the entire automobile sector. And the one question which all have been asking is – how will the market leader of small cars, Maruti, be able to beat the competition now? Though Maruti announced that it would not be surely launching any small car to beat the competition from Tatas, it now looks like it might have to eat its own words and indeed take note of this rising new competition and launch an offensive soon.

News is that Maruti is now planning to relaunch the most successful car from its stable – the Maruti 800 but with a price cut to the tune of Rs.75,000. Usually, the margins are in the range of Rs.23,000-Rs.35,000 per 800 car, it would thus be relatively an easier task for Maruti then to offer a Rs.75,000 price cut. Though there has been no “official” statement about this from the company, this news has come in from some of the leading dealers and auto financiers.

This would indeed be a very strategic and rightly timed move from Maruti. Tata plans to launch its Nano by October, timing it with the festival season. There is a lot of curiosity surrounding Nano, people are more eager to know how it looks like and how it would be able to function. But that’s about it. Given the past track record of Tata’s other cars – Indica and Indigo, which are still struggling to get a foothold, people first want to see how this Nano functions and then take a call. But when it comes to the Maruti, people already know that quality wise, it is amongst the best cars in India today and light on the pocket too. The vast and widespread network of dealers and after sales services, lower maintainance costs and better mileage are some of the things which have made Maruti into a household name. Now this is something which the Tata’s have not managed to achieve. So given this huge brand equity and brand loyalty which Maruti enjoys, Tata would have serious competition and there is no denying that Maruti would be its biggest threat.

It now all depends on when Maruti decides to launch this lower priced Maruti 800. Also the current scenario is not very conducive to the entire automobile sector. The soaring price of fuel has acted as the pin, pricking the balloon. And making matters worse is the rising interest costs. Currently people are not in any mood to buy cars, and with talk of crude price expected to touch $150 per barrel soon, talk has even started about more fuel price hike. No doubt there will be a slow down in overall consumption but the biggest impact of this would be felt by the automobile sector.

But like all things, this too shall pass. All that which goes up has to come down and vice versa. The only question is – WHEN? For now, it’s good to know that Maruti is making attempts to reinstate its position of leadership in the small car segment. The Tatas had better watch out as this is serious competition which could give a bumpy ride to its Nano.