Maruti bets big on new Alto

Maruti Suzuki, which posted a 20.3 per cent fall in profit in the first quarter, expects the refurbished Alto, its largest selling model, to help it maintain its share of the competitive Indian passenger car market.

The Alto, with a new 1,000cc engine, will be launched in the first week of August. "We hope to expand overall sales for the lower A-segment, comprising M800, Nano, Alto and the standard variant of Santro, by at least 25 per cent. Our expectation is to sell an additional 7,500 units of Alto every month. This additional volume will help us retain market share in the burgeoning passenger car industry," a senior Maruti official told Business Standard.

At present, 30,000 units are sold each month in the lower A-segment. The additional numbers from the new Alto, the company expects, will ensure an additional sale of 90,000 units a year.

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Maruti Suzuki India had last year sold 765,526 units in the domestic market and had a market share of 50.1 per cent. With additional 60,000 units of the new Alto in the remaining eight months of the current financial year, as well as an additional 30,000 units from other models if the company grows by 12 per cent, Maruti expects to clock close to 860,000 units in 2010-11.

This would mean its market share would be over 50 per cent as the overall market grows (as expected) by 12 per cent this year and touch 17,10,000 passenger cars.

There have been concerns in the past that with so many new products in the segment and considering the capacity constraint at Maruti, the company will lose its market share in 2010-11.

In fact, in the first six months, the company's market share had slipped to 46.5 per cent, with 418,196 units sold as compared to total passenger car sales of 898,991 units between January and June this year.

The new Alto will be priced a notch above our existing Alto and meet expectations of people who have been postponing purchase so far due to absence of an aspirational product in this category," the official added.

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The launch of the new Alto comes at a time when a bevy of Indian car makers have launched new products and are aggressively garnering market share.

The first half of 2010 saw at least six new launches, including Beat, Figo, Polo and the new WagonR. However, not many players have new products, especially in the small car category, to unveil during the second half of the year.

The new Alto is also being seen as Maruti's answer to the new and lower-priced products being developed by its competitors.

While Hyundai Motor India is working on a car smaller than Santro, Tata Motors is developing a car between Nano and Indica to cater to the lower segment where volumes had become stagnant till the time the Nano was launched.

Maruti had always maintained there would be no product below the existing Alto as the purchasing power and aspirations of Indian customers are rising.