Financial Daily from THE HINDU group of publications
Sunday, May 12, 2002
Corporate - Announcements
Marketing - Strategy
Diesel Zen takes Indica head-on with price cut
NEW DELHI, May 11
MARUTI Udyog Ltd has cut the price of the Zen-Diesel (Zen-D) by a maximum of about Rs 46,000 to directly take on the hitherto monopoly-like domination of the `Indica' from Tata Engineering and Locomotive Co Ltd.
"We are planning to give a fillip to the sales of the Zen-D by this price rationalisation. The price of the car has been made more or less same across India with the New Delhi price as (more or less) a benchmark," Mr Ravi Bhatia, General Manager (Marketing) of Maruti, told Business Line.
The price cut would benefit most for a buyer of the car at Kochi, an Indica stronghold, where the sticker price of the Zen-D is now lower by about Rs 46,000.
The average cut in price has been about Rs 25,000 across the country and the average price now veering around Rs 3.5 lakh.
Even after the price rationalisation, the Indica is still cheaper in most markets by about Rs 5,000 or so, but the smaller price gap would help Maruti take on the competition head on, say company officials.
A 1,527-cc TUD-5 engine of French auto giant Peugeot Citroen SA powers the Zen-D, which was launched with much fanfare in August 1998.
To date it is the only diesel offering from Maruti and also it is the only car from the company's stable that is powered by an engine that is not from the company's technical and equity partner Suzuki Motor Corp.
Japan's Suzuki Motor holds 50 per cent equity of the country's largest carmaker, with a market share of about 60 per cent, while the Indian Government holds the rest and a very minute percentage held by a worker's trust.
"Although the car (Zen-D) is available all over the country, it was selling the maximum at Andhra Pradesh and to a lesser extent in some other southern States. What we have done is to peg the car at more or less the same price across India," Mr Bhatia said.
Zen-D now sports a price tag of about Rs 3.5 lakh in New Delhi showrooms while a power steering version has a price tag of Rs 3.75 lakh.
With the price rationalisation and after witnessing the success of the Indica diesel car, Maruti has decided to issue advertisements comparing the two cars and claiming the Zen is more powerful and fuel-efficient.
A 1.4-litre engine powers the 1,005-kg Indica to deliver a 53.5 brake horse power (bhp) at 5,000 rpm while the Peugeot engine in the 830-kg Zen gives a 57 bhp at the same rpm.
About 85 per cent of the 65,000 cars sold by Tata Engineering in 2001-02 had diesel engines, according to company officials.
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