Maruti Expecting tough competition in 2011-2011

Discussion in 'Indian Automotive Scene' started by Dhillon, Aug 6, 2011.

  1. Dhillon

    Dhillon Administrator Staff Member

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    Competitive pressure will be "most intense" in this financial year with rivals launching new models and overall car market slipping into a slowdown due to rising interest rates and high petrol prices, feels Maruti Suzuki.

    The market leader's sales growth dropped to 3% in the first quarter of this fiscal compared to a 30% growth in 2010-11. And the going looks tough. "Rapidly rising interest rates are the prime worry for the industry as well as for Maruti. Bulging EMIs are keeping customers away from showrooms and if interest rates go beyond the current levels, the industry will have major problems," Mayank Pareek, Maruti Suzuki's managing executive officer (sales & marketing), told TOI here. He expects Maruti's sales to grow by "small single digit" this fiscal. "And it can slip into degrowth if the interest rates rise further."

    However, the slowdown is not the only worry for Maruti. Rising competition in bread-and-butter small car segment has started to worry the company as it has the potential to eat into its 45% market share. Volkswagen, Toyota, Ford, Honda, Renault and Hyundai are launching small cars, most keeping Maruti as the benchmark when developing them or pitching them in the market. "We are aware of the rising competition," Pareek said.
    Models like Ford Figo, Toyota Liva and Volkswagen Polo have managed to create a space for themselves. And more are coming, including the Brio compact from Honda, to be priced around Rs 4.5 lakh. The most worrying new launch for Maruti will be a rival to Alto from Hyundai (codenamed HA), which is expected to hit the roads in the coming months.

    The Alto accounts for nearly one-third of Maruti's sales and Hyundai's plan is a cause for concern for the segment leader.

    Pareek said the company was taking a number of initiatives to beef up brand Alto. It has already launched the refreshed Alto K10 that is powered by K-series 1,000cc engine. The 800cc Alto also exists. Maruti hopes the new version will help Alto get higher sales in the big towns. "Entry-level customers had a tendency to go for tried-and-tested models that have low operating and maintenance costs. It is a critical parameter and we score here," he added.
     

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