Logan may not spawn price cuts for now

At the launch of Mahindra Renault's Logan in Mumbai, the seating in the makeshift arena - about half the size of a football field - was made up of the car's rear seats instead of the usual chairs. The novelty was designed to give a first-hand feel of the space in the backseat of the car.

The company hopes that the wide-bodied car, with its space, boot and aggressive pricing, will be able to wean customers away from premium hatchbacks (Maruti Udyog's Swift, Hyundai Motors India's Getz) as well as the cheaper sedans (Maruti's Esteem, Tata Motors' Indigo).

The two petrol models of the Logan are priced between Rs 428,000 and Rs 644,000, while its diesel model's price range is Rs 547,000 to Rs 651,000. The range overlaps the pricing of the premium hatchbacks as well as of mid-size cars.

Still, while the usual discounts (Rs 5,000 to Rs 20,000), continue in the market, there is no portent yet of a price reduction or urgency of response by rivals.

"We are already very price-competitive and there is no question of any reduction," says Ankush Arora, vice-president, sales and marketing, General Motors India, the maker of the Aveo sedans.

Asks a Maruti insider: "Why talk about a cheap car in a country full of aspirations? Will you say at a cocktail that you have just bought a Logan? We never called the Esteem a cheap car. We call it a big car."

Points out Scott McComark, Ford India vice-president (marketing and sales): "Maruti Esteem and Tata Indigo are not the leaders in the A3 segment despite their slim prices."

An analyst says that the price is the fifth consideration for a car buyer in this segment after style, manufacturers' reputation, performance and the cost of ownership, including spares and service.

Industry observers do not like the month's gap between the launch and the time when the Logan will enter showrooms. By that time, Maruti may well put its new sedan, codenamed SX4, in the market. The car's diesel variant may be fitted with the Swift Diesel's 1.3 litre engine, which will make it eligible for the lower excise duty of 16 per cent (it will be 24 per cent on the 1500cc diesel Logan).

Besides, many sedans, mainly old warhorses such as Ford Ikon, Hyundai Accent and Esteem, are already going for throwaway prices.

The Tata Motors spokesperson declines to comment, but an insider points out that the showroom price (without octroi) of the diesel Indigo with Dicor engine and power steering is Rs 569,000. The top-end Logan diesel's is Rs 651,000.

"I do not feel the urgency of a response in the company," he says.