Alto to get a fresh coat of paint as Maruti revs up to face newcomers

Saturday, May 15, 2010
This photograph of a Maruti Gypsy vehicle was ...

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Faced with a gaping hole in its entry-level portfolio after phasing out its old workhorse, Maruti 800, from top 13 cities in the country following the new emission norms that kicked in April, India's largest carmaker Maruti Suzuki is gearing up to give a facelift to its largest selling model, the Alto. The move comes in the backdrop of aggressive launch of new small cars by competitors.

Chairman RC Bhargava told FE just like WagonR, which Maruti refreshed recently with a new platform -- including engine, transmission and suspension -- even the Alto is due for an overhaul soon. Bhargava, though, refused to share details on Alto's makeover.

This is the first time Maruti has officially revealed its plan to alter the decade-old Alto model, which was last refurbished in July 2005. "Alto will be subject to a facelift and model change...for a long time it has not happened. Something has to happen now...but I don't know the time," added Bhargava.

Maruti sold over 2.5 lakh Altos last fiscal, making it the country's largest-selling car, ahead of WagonR. The Alto makeover was imminent, given that Maruti's hegemony in the small car market has seen an unprecedented attack of late. Whilst the Rs 1-lakh-odd Nano is slowly taking the mantle of India's entry-level four-wheeler, rivals Hyundai, GM, Ford and Volkswagen are snipping at its heels in the hatchback segment with competitively priced and better-looking models in i10, Beat, Figo and Polo.

GM has sold over 17,000 Beats since its launch at the Auto Expo 2010, and Ford Figo too is revving good numbers, 15,000 at the last count. Car analysts say Maruti sensed the rising threat from other carmakers and it is only natural for the company to keep refreshing its existing portfolio to compete with some of the new-age models. launched by global auto giants like General Motors and Ford. And the next 12 months will see new small car launches from Toyota, Honda and Nissan too. Shinzo Nakanishi, CEO of Maruti Suzuki, India's largest carmaker by sales, had told FE during Auto Expo in January, "Starting this year, there will be very high pressure on us from all sides, including pressure from (commodity) prices and from competition. But, we will do everything to defend our 50% market share. We will try to absorb the price increase as much as possible."

Last week at a Suzuki Motors vendors' conference in Macau and Hong Kong, Bhargava had said the company's overall capacity would be doubled to 2 million units in the next five-six years to keep its market share intact.

According to Vaishali Jajoo, auto analyst with Angel Broking, since Maruti's brand equity is strong, any minor change in Alto could help the company compete with new launches from competitors; "The recently launched newer models have better features than Alto, but they are in the same price band. Maruti had no choice but to alter it," she said. S Ramnath, another analyst with Mumbai-based SSKI Securities, said creating excitement was the key in the cars business, which is what Maruti was trying to do.

The decision to alter an existing model was in line with the company's broader strategy to offer its customers newer models for its existing products, said Bhargava. "Every model will have to go through a facelift every 2-3 years. Even Alto will go through this cycle...but it is not for competition. You don't just introduce a model. It requires a lot of planning," he added, while downplaying the perception that the carmakers hand has been forced by competitive heat in the small car segment, that still accounts for over two-thirds of all car sales in the country.

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