Maruti's prosaic 800 is on a comeback trail

Rivals and analysts had almost written off the entry-level offering of the country's largest passenger car manufacturer, Maruti Udyog Ltd.

They had a point -- monthly sales of Maruti 800, after touching 14,320 units in March 2002, had dipped sharply to below 10,000 in the subsequent months.

Industry analysts felt that consumers would levitate towards the racier B segment offerings such as Hyundai's Santro, Tata Engineering's Indica, Fiat's Palio and Maruti's own Zen, Alto and WagonR.

Jagdish Khattar, managing director, MUL, however, begged to differ.

"I never believed them then and I do not believe them now. There are enough people in this country who need a car such as the Maruti 800," Khattar had said in an interview with Business Standard.

His optimism is paying off. Sales of the car was close to 18,000 units in March 2003, the highest monthly sales for the entry-level car model in the last three years.

Khattar expects sales to be higher in the ensuing months as well.

Several factors have contributed to a revival in the fortunes of the M-800. The Union Budget lowered excise duty by 8 per cent from 32 per cent to 24 per cent, making cars cheaper by 5-8 per cent.

The M-800 became cheaper by around 5 per cent, from Rs 212,000 to Rs 201,000. The company also reportedly stopped manufacturing the DLX version, thus widening the gap further between the A and B segments.

Company sources said that sales of all car models spurted at the beginning of March following the cut in prices the company announced immediately after the Budget 2003. However, there was no official comment from the company.

Though sales in March improved primarily because prices crashed after the Budget, sales in February were significantly lower since consumers had postponed their purchases in anticipation of an excise duty cut in the Budget. Hence, several prospective customers may have made their purchases in March instead.

Another reason for the spurt in sales could be that the price differential between the Alto 800 and the Maruti 800 has widened from around Rs 20,000 (after discounts) to around Rs 50,000, making the M-800 seem a more value for money vehicle vis-a-vis B segment cars.