Date:14/06/2005 URL: http://www.thehindubusinessline.com/2005/06/14/stories/2005061403180100.htm

Back Maruti cuts M800 prices by Rs 16,000

Our Bureau

New Delhi , June 13

THE price war in the Indian car market seems to have intensified further.

Firing the latest salvo, market leader Maruti Udyog Ltd today said it had slashed prices of the Maruti 800 by Rs 16,286.

With this price cut, the entry level (BS III complaint) M800 model is available for less than Rs 2 lakh.

After the price reductions, a Maruti 800 Std (BS III compliant) costs Rs 1,99,350 (the earlier price was Rs 2,15,636), while a Maruti 800 A/C (BS III compliant) can be bought for Rs 2,22,254 (earlier price being Rs 2,38,540).

The company said it had cut prices in order to cater to entry-level customers and to expand the market.

Analysts, however, add that the price cut on the Maruti 800 could also be a move to boost the model's sagging sales. Domestic sales of the Maruti 800 had fallen by 30.6 per cent in 2004-05 to 1,16,262 units.

"Price cuts on Maruti 800 are likely to create a better impact in small cities. To an urban buyer, an Alto would be more aspirational as an entry-level car. On the flip side, for two-wheeler owners in small towns, Maruti 800 is still aspirational; and in the aftermath of the price slashes is likely to see an increase in offtake," Mr Anang Dev Jena, Head, Synovate Motoresearch, said.

The announcement, meanwhile, comes within days of Hyundai announcing a Rs 16,000-19,000 markdown on a few variants of the Santro Xing and the launch of a Rs 2.79-lakh non-A/C variant as well.

The move, analysts point out, may have been aimed at increasing the price gap between the Hyundai Santro and Maruti's new premium compact car, the Swift, which has managed to notch several thousand bookings since its launch on May 25.

Further, the price cut on the Santro Xing also widens the price difference between it and competing compact car models from Maruti's stable, namely, the Wagon R and the Zen.

"It will not be surprising if these two models are at the forefront during the next round of price deductions," points out an auto analyst.