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Analysts expect another round of price war

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Newswire18 New Delhi
Last Updated : Feb 05 2013 | 12:50 AM IST
Mahindra & Mahindra's aggressive pricing of its first car, Logan, may trigger a price war in India's highly competitive passenger vehicle segment, analysts said today.
 
This, however, brings some cheer for the customers, who are currently reeling under the impact of high interest rates that have pushed up equated monthly instalments and made car financing expensive.
 
Mahindra Renault, a joint venture of Mahindra and Mahindra and Renault of France, which today launched the `Logan', has priced the petrol version between Rs 4,28,000 and Rs 5,69,000 in Mumbai.
 
The diesel version will come with a price tag of Rs 547,000-644,000.
 
While the petrol version will be available in 1400 and 1600cc, the diesel variant will have a 1500cc engine.
 
The company, however, said these are 'introductory' prices, and would be revised if and when the input costs go up.
 
Mahindra & Mahindra and Renault had in Feb 2005 decided to join forces to produce Logan in India. The joint venture is a 51:49 partnership between Mahindra & Mahindra and Renault.
 
Analysts feel the 'Logan' would surely bring about a churn in the industry and make a dent in the market share of the more established players like Maruti Udyog and Hyundai.
 
The car is pitted against rivals' offerings in the B and C segments, which have sales of about 900,000 cars a year, growing around 17 per cent a year, said Mahindra Renault Managing Diretor Rajesh Jejurikar.
 
"At these price levels, the 'Logan' would be competing with a host of models including Maruti's Swift, Hyundai's Santro, Getz and Verna, and Ford's Ikon and Fiesta," said an analyst with a domestic brokerage.
 
Hyundai Getz for example, which comes in two variants of 1100cc and 1300cc, starts at a price of Rs 389,000. Maruti's Swift, on the other hand, has a 1300 cc engine sporting a price tag of Rs 399,000.
 
"For a little more money, customers are now getting a sedan in place of a hatchback," an industry expert said.
 
Logan is also going to give competition to Hyundai Verna that comes in two variants of 1600 cc petrol engine and 1500 cc diesel engine.
 
"The base model of Verna is priced at Rs 624,999 and it offers the same engine capacity as Logan," the analyst said.
 
Maruti would probably feel the maximum heat, as 'Logan' would compete with the 'Swift', 'Zen Estilo' and 'Esteem'.
 
"Maruti would now even have to rethink on the pricing of its (new sedan) SX4," an analyst with a large foreign brokerage said.
 
India's largest carmaker plans to launch the new sedan in May and is likely to price it in the range of Rs 700,000-800,000.
 
M&M is also claiming a fuel efficiency of 14-18 km/L in diesel engine and 10-13 km/L with petrol engine, which is normally a key concern for Indian car buyers.
 
The Logan will roll out from M&M's plant at Nashik, which has been upgraded with an installed capacity to produce 50,000 units of the new car annually.
 
Meanwhile, Renault is likely to buy automobile components worth a "few hundred" million euros from India by 2010, Patrick Pelata, executive vice-president, product planning, said today.
 
Pelata also said that Renault has undertaken studies for launching European variants of its Logan car in India, like the 7-seater Logan.
 
To a query about Mahindra & Mahindra Ltd., Renault, and Nissan Motors' joint venture manufacturing plant in Chennai, Pelata said they are looking at producing 400,000 cars per year by 2014.
 
Today, Mahindra & Mahindra shares closed at Rs 726.10 on the National Stock Exchange, up 1.79 per cent from Monday.

 
 

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First Published: Apr 04 2007 | 12:00 AM IST

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