Maruti hasn't given up on its small car love

MUMBAI: Maruti Suzuki is developing two car models that will be priced below Rs 5 lakh, expanding its offerings in the entry-level segment where competition is easing with the introduction of new safety and emission regulations.In the works are an all-new 800cc car and another model to be powered by a 1-litre engine, said people in the know. The local unit of Japan’s Suzuki Motor currently sells the Alto with an 800cc engine and the Celerio with a 1-litre option.Managing director Kenichi Ayukawa confirmed that the company was working on an 800cc car among multiple models, but didn’t talk specifically about the second car.The challenge in developing a small car is keeping the cost low, he said. “We have to comply with new regulations on safety and emission which spike the cost by 10% on entry level and makes it challenging,” he told ET, adding: “We have to still find a solution on the same.”The nation’s largest carmaker is developing the products when Hyundai Motor India and Tata Motors have given up on the entrylevel space, as they believe increased cost to comply with new regulations would make these mini cars non-viable.The market for the minicar segment is shrinking too — it now accounts for less than 8% of India’s automobile market compared with 25% in 2010. But Maruti Suzuki feels it will remain sizeable, being the stepping stone for the millions who aspire to graduate from two-wheelers to four wheelers. Its rival in this segment is Renault with the Kwid.Entry cars are largely a hinterland phenomenon and Maruti understands that game very well, said automotive forecasting firm IHS Markit’s associate director, Gaurav Vangaal.The sub-Rs 5 lakh segment would continue to maintain sales of almost half a million units annually over the next two to three years, driven mostly by new launches from Maruti Suzuki, he said.The first of the two new cars is expected to hit the roads by the end of 2020, said the people in the know.74450325 Spike in PricesTo be strapped with a 1-litre engine, the compact car, code-named YNC, will likely replace the existing Celerio, which is now available with both 1-litre and 1.2-litre engines. The new 800cc car, code-named Y0M, will be launched by the festive season of 2021. The company is likely to take a decision on whether to continue with the Alto closer towards the 2021 launch of the 800cc car. India is a large country with diverse needs and in rural areas, high priced vehicles are not in demand, Ayukawa said. A spike in entry car prices by about 10-15% in the last 12-18 months on account of new insurance, safety and emission regulations has had a negative impact on the segment. Between April 2019 and January 2020, or the first 10 months of the ongoing fiscal year, the mini car market shrank over 40% to 2.45 lakh units. Maruti Suzuki wants to ensure that its products remain affordable even in the new regulatory regime and it keep the over 50% market share, and that is why it is developing the new cars in the entry segment, said an industry executive.

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