Tata Engineering has launched an upgraded version of the Indica petrol -- the Indica V2 petrol -- at the same price as its original version, the Indica 2000. The company has decided to absorb the upgradation costs incurred in refining the V2 petrol, thereby taking a further hit on the operating margins of the Indica.
During fiscal 2000-01, when the company had sold 44,545 units of the Indica, its operating margins on the car were as low as two per cent.
Rajiv Dube, general manger (commercial), passenger cars business unit of Tata Engineering, said: "We have taken the profitability into consideration before deciding on the price of the V2 petrol."
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Auto analysts, however, said that even a small increase in costs would erode the Indica's margins, "which already are wafer thin". "However, since the sales are on the rise this fiscal, the margins on the Indica would also improve," an analyst at a domestic brokerage firm said.
Company officials are confident of selling more units of the car in the current fiscal, largely due to the improved response to the upgraded version. There has been a significant increase in the company's sales of the Indica following the launch of Indica V2 diesel in February this year.
During the April-August period of this fiscal, the company has sold 22,130 units of the Indica, a 3.5 per cent increase over sales in the same period last year. The company attains cash break-even for the Indica at 58,000 units, senior company officials said.
In fact, the company has registered a growth in Indica sales consecutively for the last three months. Tata Engineering is also hopeful of making a dent in the huge market for petrol cars, with the V2 petrol. So far, almost 85 per cent of Indica sales were comprised of the V2 diesel sales.
"The launch of the Indica in December 1998 changed our perception as only a truck manufacturer. With the V2 petrol, we want to change the perception that we are only capable in the diesel engine segment," Dube said.
The Indica currently has a 11.2 per cent market share in the domestic passenger car segment, and a 19 per cent share in the small car segment, and is priced at Rs 3.42 lakh (ex-Mumbai).
Further, the company today re-launched the Sumo Deluxe, a utility vehicle for the urban market, which will compete directly against the Toyota Qualis FS and Mahindra & Mahindra's Bolero GLX. The vehicle is priced at Rs 5.98 lakh (ex-Mumbai).