Maruti Suzuki has recently dropped plans of launching its ‘K’ cars (660cc) into the Indian auto market. This is because the company has a feeling that pricing of the cars will not be in lines with the financial plans of most Indians. The ‘K’ cars are going to be displayed at the 2012 auto expo. These cars will not have the pricing that could make them compete against the Nano – the very reason for their bringing the vehicles to India. Therefore, due to the high prices of the 660cc ‘K’ cars, Maruti has taken the decision of scrapping its launch.
R.C. Bhargava, Chairman, Maruti Suzuki stated that the ‘K’ cars are not going to be launched as they have turned out too costly for the Indian market.
In Japan, these ‘K’ cars have been made available to consumers after receiving incentive on tax policies, which enabled a price setting of 1 million Yen (Rs.6 Lakh), MD and CEO, Shinzo Nakanishi has said. Palette and MR Wagon, the two scheduled ‘K’ cars, have been stopped from hitting the production lines. They would be restricted to being only displayed at the auto show, said Nakanishi.
Maruti Suzuki is posing questions to customers on the amount they would be willing to spend for getting these cars, said Bhargava. This is because the Indian market normally worked on the principle that the smaller a car engine was, the lesser its price would be. Bhargava also added that these cars did not resemble the Nano and had greater sophistication as well as higher technological levels including aluminium engines. The entry-level variant of the Nano is priced at 1.36 Lakh whereas the cheapest car from Maruti, the 800 comes at Rs.1.98 Lakh.
Angel Broking auto analyst, Yaresh Kothari feels that Maruti does not have any significant reason for launching a car to compete with the Nano. This is because the volumes achieved by the Nano have not been to the satisfaction of Tata Motors itself.
The Nano has not been able to match the expectations of the company that it would achieve gross sales around 25,000 units per month. In fact, in the current financial year, the Nano has just managed sales of 6,000 units every month. On the contrary, Maruti 800 still displays its capabilities by selling 2,500 units per month, even though the company has stopped selling it in 13 cities.
The ‘K’ cars have been designed to offer optimum fuel economy. The cars have a mileage of 30.2km/liter, ranking them amongst the top list of petrol-operated cars in the world. The Nano also offers good mileage at 25km/l. Hyundai, which hold the second position in the Indian auto segment, has chosen to stay away from the segment of ‘basic’ cars like the Nano. They have instead opted to come out with good cars like the Eon, which have additional features. The sentiments of Hyundai were also echoed by General Motors who felt that the non-commercial success of the Nano was reason enough for them to stay away from that segment.
In this present market situation, the decision of Maruti to withdraw the plan of launching its K-car in the Indian market, seems to be well justified.