What has really hurt MUL is that the Koreans are chasing its bread-and-butter model Maruti 800 out of the market. Hyundai Motors Limited's small car Santro is giving M800 a run for its money.

Consider this: Hyundai recorded a 67.3 per cent jump in sales this May, while MUL registered a 24.5 fall in market share in May 2000.

Says BVR Subbu of Hyundai, "It would be unfair to compare us with M800 because we are not really playing in the same field. We are a 1000cc car, priced at over Rs 350,000, whereas M800 cost only Rs 275,000 for the deluxe version. However, we have clearly made a mark in the market with the second position, and if any particular brand feels threatened, it means we obviously have proved out mettle."

According to industry figures, Hyundai Santro currently has about 15 per cent of total small car market, which has stirred the MUL management. For, Hyundai Santro has also questioned Maruti Zens' supremacy in the luxury small car segment to a large extent. The sales figures of M800 and Zen together fell considerably by 32 per cent in May-June, while the Hyundai Santro's market share shop up by almost 63 per cent to touch 15 per cent of the total small car market.

Says SG Awasthi, managing director, Daewoo Motors, "Our product is totally different from any of the existing players in the market. We have made a considerable dent in the small car market with Matiz and we have been quite successful in the mid-car segment with Cielo, too. Matiz is in the premium end of the small car market and is not really aimed at M800. But we are not a 1000cc car. Hence, in that sense, we are playing in the M800 market."

Says Jagdish Khattar, managing director, MUL, "Our sales figures show a falling trend because the market itself was a on a downslide in May-June because of the increase in sales tax. However, with the reduction in prices of our M800 and Omni the lull should be lifted."

But why is it that the sales tax increase failed to hurt Hyundai and Daewoo? Says Khattar, "It has hurt the overall market. I don't know how much it has hurt every individual car marker. Besides, they play in a different market altogether. Our 800 and Omni are entry-level cars."

It is not just the small car market where Hyundai is closing in on MUL. With the launch of its Accent, the Korean chaebol has entered the mid-car car segment which was hitherto ruled by Maruti's Esteem. Ford Motors' Ikon, which has already clocked 9,556 units since the launch six months ago, is also hitting Esteem where it hurts.

Says Ravi Mangipudi, General Manager, Ford India, "Ikon has taken off well because we believe what Indians were looking for is a luxury car at an affordable price. Ikon is priced between Rs 500,000 to just over Rs 600,000. The target audience is really in the Esteem buyer looking for something more. And we have been quite successful."

With both, Ikon and Accent, taking on the Esteem, MUL launched its Baleno model which is its premium car competing with Honda City and Daewoo Cielo. However, Baleno is yet to make a major dent in Honda City's sales figures. MUL officials claim that the Baleno has "done exceptionally well since the launch."

"MUL's monopoly is over. There is a competing model for each of Maruti's model now. Daewoo Matiz and Hyundai Santro will give M800 and Zen. Matiz may not be able to pull out the entire crowd from M800 though they are of the same specifications because it is more expensive than M800," says auto analyst Murad Ali Baig.

"However, Zen's going is already tough with Santro entering the scene. Which brings us to Maruti Esteem -- this model has lost its glamour in front of Ikon and Accent. As for Baleno, it may do better than its cousins because it is not really playing in the same price levels as Opel Astra is. Besides, Daewoo's Cielo has already lost out in the market owing to image an problem," he adds.

Says RC Bhargava, former MUL managing director, "The market is evolving and MUL has to evolve along with it. It is not important to maintain the same old 80 per cent market share, what is important is to sell more number of cars. The dynamics of the market are different today -- one might have only 40 per cent of the market, but one might still be selling more number of cars today that five years ago. And that is what is important. Some of the models might be selling big number today because of novelty factor. But once the customer curiosity settles down and word of mouth gets around people will return to old loyalties. Now that may not happen either -- it all depends on how sharp MUL is in technology and marketing." Maruti certainly needs an aggressive marketing and technological strategy to recover some of its lost ground, even as foreign car-makers close in on it…..

Part I: Maruti hits the skids, sales plummet

Part II: Maruti aims to zoom ahead via price-cuts

Part III: It's unnatural to have 80% market share, says Khattar

ALSO SEE:

The Maruti Saga

Design: Lynette Menezes

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