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N. Ramakrishnan

CHENNAI, Aug. 13

FROM A to B to C... This is what the car manufacturers in India are hoping will happen to the car market in the country as purchasing power increases and aspiration levels go up. The manufacturers are convinced that the passenger car market in the country is undergoing a transformation with competition expected to be intense in the already crowded B segment.

For almost two decades now, the Maruti 800 has signified the aspirations of millions in the country. That no longer appears to be the case if Maruti Udyog's competitors are to be believed, while Maruti itself is convinced that the 800 still has life in it.

Most manufacturers believe that the Maruti 800 is on its way out, and that Maruti itself would like to replace it with the 800 cc version of the trendier Alto as the entry-level car.

As it is, the sales of the Maruti 800, the only car in what is known as the A segment, have been dropping. This is what forced Maruti Udyog to drop prices of the 800, an attempt, in the eyes of its competitors, to push up sales.

"It is a desperate attempt by Maruti to shore up the fortunes of their flagship brand. I do not see this helping Maruti much because there is a fundamental customer shift away from the Maruti 800 as an entry-level car. Customers today have become more discerning and are increasingly choosing new or used B segment cars as their first car," was how Mr B.V.R. Subbu, President, Hyundai Motor India Ltd, reacted to Maruti's announcement of drop in prices of the Maruti 800.

At a recent news conference in Chennai, Mr Jagdish Khattar, Managing Director, Maruti Udyog Ltd, would not commit himself on how long the dropped prices could be sustained nor was he willing to talk about the future of the 800. "It is not for you or me to decide," was all he would say in response to a question whether the 800 had a future.

According to industry sources, the passenger car market grew by just 0.6 per cent in the first half of 2002 over the same period last year. In this, the share of the A segment - - now exclusively made up of the Maruti 800 - - dropped to 24.4 per cent from 30.3 per cent, while the B segment went up to 56.3 per cent against 52.4 per cent earlier.

The argument being given by those who feel that all the action will hereafter be in the B segment - - made up of the Zen, Alto, and the Wagon R, all from Maruti Udyog; Santro from Hyundai; Indica from Telco; Matiz from Daewoo, and the Palio at the upper end of the segment from Fiat India - is that aspiration and awareness levels are rising.

This was articulated in a recent news conference by Mr Subbu, who said that a used B segment car in good condition was available for the price of an A segment car or slightly higher than that, and that consumers would rather go in for a second hand B segment car, which was technologically superior to an A segment car, with hopes of upgrading later than go in for a new A segment car.

In an interaction with journalists recently, Mr David E. Friedman, Managing Director and President, Ford India Ltd, made the point that in the West, an entry level car meant a used car.

According to some manufacturers, while the overall growth in the passenger car market may be just about 10 per cent, the B segment is expected to drive the growth in the industry. That probably explains why the B segment is set to witness a slew of launches in the next year and a half.

Maruti will seek to strengthen its position in this segment and is expected to launch the Suzuki Ignis, while the Liana is also slated to come in later. Hyundai is believed to be toying with the idea of bringing the Getz, which will be pitted against the Palio, a car that has helped Fiat India carve a niche for itself in the upper-B segment.

According to industry sources, Ford India is expected to bring in the Ford Fusion, a product that is scheduled for launch in Europe later this year. The Ford Fusion, based on the Fiesta platform like the Ikon, has been described as an "Urban activity Vehicle" and is supposed to combine the interior space of a family-sized car with a small car footprint.

Hyundai Motor India, the second largest car manufacturer in the country, has been aggressive in both introducing products and its pricing strategy. After the recently introduced 1.1 litre version of the Santro, Hyundai will shortly launch a five-door Accent, followed by an automatic transmission version of the Santro, a CRDI fitted diesel Accent, and a multi purpose vehicle, probably the Carens.

Not to be left behind will be General Motors India, the Indian subsidiary of the world's largest car manufacturer. GM India, through GM's global alliances with companies like Fiat and Daewoo, plans to introduce at least five vehicles before December 2003. This includes the Vectra, GM's product in the D segment through the completely built unit route, the Zafira compact van, a vehicle under the Subaru label, a new passenger car probably from the Daewoo stable, and the Panther utility from Isuzu. Market sources also say that GM is likely to relaunch the Matiz and bring in the Nubira, a mid-size sedan from Daewoo. These product launches, GM hopes, will take its total volume to the 50,000 mark by 2005. Along with the launches, GM India is also looking to revamp all its dealerships so that they display all the labels owned by GM rather than just the Opel brand name. The dealerships are also to be renamed as GM AutoWorld.

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