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December 23, 1999

BUDGET 1999-2000

Wagon-R is Maruti's Christmas offering; govt rules out divestment

Wagon-R is Maruti's Christmas offering; govt rules out divestment Neena Haridas in New Delhi

The Wagon-R, the 'tall boy' car from Maruti Udyog Limited, a 50:50 joint venture between the Indian government and Suzuki Motor Corporation of Japan, is to be priced between Rs 375,000 and Rs 425,000 (ex-showroom) in Delhi, according to some sources.

Although MUL managing director Jagdish Khattar refused to put a price on it today, a few others sources said the model will be priced between Rs 300,000 and Rs 333,000 -- the price range of the Hyundai Santro and Daewoo Matiz.

O Suzuki, president and chief executive officer, SMC, will launch the Wagon-R on Christmas.

Email this report to a friend Nicknamed ''the original tall boy'', the Wagon-R's price would be near that of Euro-II compliant version of the Zen VXI, which is available at around Rs 380,000 (ex-showroom) in Delhi.

While price rise to the tune of around Rs 21,000 to Rs 24,000 would be announced on the Zen VXI version next month, the impact of cost hike has been taken into account in case of WR, sources said. WR will be Euro-II compliant.

The Wagon-R is a 1061 cc vehicle with a 16-valve multi-point fuel injection engine. MUL will launch three variants of the 1.1 litre car on Christmas and would seek to sell 60,000 units of WR next financial year. All the three variants would be petrol-driven.

Just 27 days ago, the company launched the Baleno in the premium segment. It was in 1994 that MUL launched the Esteem. In 1993, it had introduced the Zen.

MUL chairman Suzuki, who arrived in India on Wednesday night, told mediapersons that the company will require an additional investment of at least Rs 3 billion to fund the massive expansion plans.

Suzuki, however, refused to give details on the route that the company will take to pump in the investment. He said, "I cannot comment on whether it will be in the form of debt or equity. But we plan to launch several new models in India and this requires considerable investment in machinery, plant, paint shop etc."

Suzuki did not specify the new models that his company is planning to launch in India in the coming months.

Meanwhile, Manohar Joshi, Union Minister for Heavy Industries and Public Enterprises, made it clear that the government has no plans to divest its stake in MUL.

Interestingly, Murasoli Maran, Union Commerce and Industry Minister, was conspicuous by his absence at the welcome meet organised for Suzuki by the Federation of Indian Chambers of Commerce and Industry. It may be recalled that Maran had preferred RSSLN Bhaskarudu to Jagdish Khattar for the post of MUL managing director, when relations between the venture partners were strained.

Joshi also reiterated MUL's expansion plans and said the company has already earmarked about Rs 12 billion for launching new models and upgrading old ones. As to how the government plans to raise additional resources, Joshi said, "The government is considering various forms of funding and we will make a suitable choice."

Asked if the government intends to divest its stake in MUL and enter into a joint venture with General Motors, Joshi said, "There are no plans for divestment, but I would rather not comment on the latter question."

Suzuki too denied any knowledge of the Indian government's plans to enter into an agreement with General Motors. He said, "We are not aware of any such talks and in any case, I don't think we have a comment on it. Besides, we are very happy with the 50:50 joint venture we have with the government. Hence there are no talks of buying out the government's stake in MUL."

Delineating his vision for the new millennium, Suzuki said there would be greater unification in the automobile industry that will bring about deep and qualitative changes.

"All automobile alliances will merge into four to five automobile groups which will be the driving force of the new millennium. This integration will happen because the automobile manufacturers will have to develop alternative source of energy. And such a project could cost as much as ten times the annual budget of the United States. No single company can afford this and hence companies will merge to share costs and will share information to save resources to grow."

Suzuki added, "Even as globalisation progresses, there will be greater emphasis on local needs. A basic car model will be developed by each group for global use, but it will have many derivatives to suit the specific requirements of different markets. Such a harmony between global scales and local needs will be made possible by the revolution in information technology. The world may have grown in its possibilities but the cyberage has shrunk it in terms of probabilities."

Suzuki said 'the car of the millennium' will have to upgrade the environment. "These cars will have to use new materials. These will be light, tough and recyclable with much longer life and efficiency. The definition of the used or the second-hand car will change. There will be a shift in the concept of automobile maintenance. Cars, like computers, could become easily upgradable. Cars belonging to different platforms and companies will have commonalties of parts to reduce costs. Above al,l cars will have to become cheaper."

Suzuki pinpointed the small car as the single overriding symbol of the future."The big car satisfies ego. A small car meets necessity. But both perform the same mechanical functions of transporting people. We think the future of the auto industry is the small car.

"Today, India is ready to meet the challenges ahead. The next millennium belongs to Asia and particularly India. I am waiting for the day my dream about India can be realised. And that Maruti, which is an Indian company, can sell its cars competitively in the world carrying proudly the 'Made in India' symbol.

''I can smell a changing India, an India poised to take on the world in the new millennium,'' he said.

Rohtash Mal, MUL chief general manager (marketing and sales), emphasised that the WR will not cannibalise the Zen.

With the launch, the company will have two vehicles in each segment of the car market. While the Maruti-800 and Omni are in the small segment, the Zen and WR would come under the Zen category. The Esteem and newly-launched Baleno fall under the top-end segment, he said.

Customers will get greater variety in each of these segments and there is no possibility of one car 'killing' the other, he said.

The company expects to take away customers from the rivals as well as through the growing market size.

The WR will face immediate competition from Hyundai Santro because of the tall boy design of both the cars, according to experts.

Euro-II compliant versions of the Santro are currently available in the price range of Rs 305,955 to Rs 3,74,649 (ex-showroom) in Delhi. Hyundai Motors India Limited would announce around Rs 18,000 price increase on the Santro early next month.

Higher prices of the WR is due to higher value that the car gives to customers, the sources said. The new vehicle will be the first one in the Zen segment to have 16-valve engine. At present, only the Baleno and the Honda City have 16-valve engines in the country.

The tall boy car has a flat torque at 82 neutron metres. The advantage of this will be that the vehicle will have a significant power reserve irrespective of speed, Rohtash Mal said.

The WR has been numero uno in the Japanese market for 15 consecutive months. SMC has sold 500,000 units of the WR in just three years in Japan.

The vehicle has built-in capability to analyse its breakdown, and will pinpoint towards the parts which are out of order, he added.

Seats are adjustable to give more flexibility to customers on interior space.

MUL expects to sell around 415,000 vehicles this fiscal compared to 333,000 during 1998-99.

The company is trying hard to achieve half a million mark the next fiscal, but has not set any target in this regard as yet, Rohtash Mal said.

Additional reportage: UNI


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