The Manesar plant of Maruti Suzuki which is engulfed with labour conflicts since June 2011 is now contemplating rolling out a compact sedan in order to benefit from lower taxes on vehicles that are built less than four meters lengthwise.
The labour unrest at the strike-hit Manesar plant which was again started on August 29th has cut down production of cars. Maruti’s Manesar plant has been producing Swift hatchbacks and now is looking into developing a small car less than 4 meters, the platform of which is based on the Swift. They are planning to introduce the compact car at the Auto Expo in Delhi or even much earlier.
The Manesar unit is also responsible for manufacturing SX4 sedan and A-Star hatchbacks with a production capacity of 1200 units a day.
The new compact sedan is called as ‘Swift 3.99’ according to sources who work in the company. The total investment going for the car’s development is Rs. 500 crores. This compact car is speculated to target the recession-struck European markets that believe in small, fuel-efficient vehicles with many in Europe suffering from low income due to slowdown in global economy.
At least 20 to 25 compact cars were seen parked inside the facility including some left-hand driven cars meant for markets abroad.
Another official says they have begun trial runs for the compact cars. No other details were given and the name of the car is also unknown at this time.
Both I.V. Rao, MEO, Engineering, Maruti Suzuki and Chief GM, Shashank Srivastava, Sales and Marketing were tight lipped when questioned about rolling out the compact car.
The car is speculated to run with an engine that churns out 90 bhp and would be coming in both diesel and petrol versions. The major difference with Swift Dzire and the new compact car would be reduction in boot space. The new car’s interiors looked similar to that of new Swift.
Maruti is contemplating on introducing a short version of Dzire, 4.16 meters long, in order to benefit from lower taxes and also be price competitive when selling in the markets. The current Dzire attracts 22% of excise duty when the shorter version would attract only 10% provided the car is sub 4 meters long.
The price of Dzire at present is 4.94 lakhs while the new compact car would more or less be priced at 4.49 lakhs.
The idea of developing this new compact car in a way would be benefitting Maruti when it faces stiff competition from Toyota’s Etios and Tata’s Indigo sedans during a time the interest rates have peaked up on loans that has presently created a drift among buyers when going for an optimal car to suit their demands. Nearly 70% of the cars bought in India are on credit.
All these current developments in manufacturing smaller cars less than 4 meters are based on P. Chidambaram’s (Finance Minister) announcement to curb tax for smaller cars in an effort to up production locally and take India to newer heights as a global auto hub.