Daewoo upbeat about Matiz sales

By Our Special Correspondent

CHENNAI, AUG. 25. Confined to the medium and upper segments, the concept of value addition has inevitably spread to the small car segment as well, thanks to the no-holds-barred competition.

The latest to come out with value added products in the small car segment is Daewoo Motors India Ltd. Even as it rolled out two new variants of Matiz- SG and SA, it has consciously decided to leave the price undisturbed at the moment. Not surprisingly, it has chosen to take a serious look inwardly and cut costs wherever feasible. According to the Chairman, Mr. S.G. Awasthi, Daewoo had embarked on a belt-tightening exercise. This, he said, should see cost come down by 15 per cent across-the-board during the current financial year.

The ex-showroom Chennai price of Matiz SG, which has a power steering, is Rs. 3.54 lakhs. Matiz SA, on the other hand, has a power steering as well a factory-fitted anti-theft system. This is, perhaps, the first time that a passenger car in this class comes with such a device backed up by a three-year unlimited warranty. The ex-showroom Chennai price of Matiz SA is 4.08 lakhs.

Thd Daewoo chief had reckoned that ``everybody (car makers) has to absorb costs''. Nevertheless, he insisted that the company's ``margins are intact.'' ``Everyone is operating on low margins,'' he reasoned. He said the local content in a Matiz was around 78 per cent.

Daewoo's latest initiative in the small car segment comes close on the heels of Hyundai Motor India Ltd. (HMIL) hitting the market with Zip Drive Santros with prices largely unaltered.

To a question, the Daewoo chief agreed that the ``product life cycle is getting shorter by the day.'' In his reckoning, the life cycle of car model would not be more than seven years in India. World-over, it was in the vicinity of three to five years, he said. Given this, he felt the price to value relationship was far more important than just the price in the days to come.

Mr. Awasthi saw the car market growing at around 15-20 per cent over the next few years. His calculation was based on the fact that there were only four cars per 1,000 people in India. Daewoo had set itself a sales target of 80,000 cars this year, he said.

Daewoo's sales in Chennai has been around 200 cars a month. It hopes to sell 4,000 cars this year. The SG variant will be cheaper by nearly Rs. 50,000 compared to Maruti Zen (sans power steering). It will cost Rs. 12,000 less than Santro LSE2, Rs.68,000 than WagonR VXE2 (sans power steering), Rs. 6,000 than WagonR LXE2 and Rs. 14,000 than Indica LXE2.

Send this article to Friends by E-Mail

Section  : Business
Previous : 'Ford not to hike prices'
Next     : ZDNetIndia alliance with Caltiger