Years ago, though it was best known for the compact cars it produced, Maruti Udyog Limited (as it was then known) started selling the Baleno at a loss of several lakh rupees per car. The reason it gave for this was that it wanted a complete product range; if Maruti-customers who wanted a bigger car than the Esteem had to move to another automobile firm, this might encourage them to try out even the lower-priced cars made by that company — for their family, for instance. That is, Maruti was willing to pay a price for keeping the customer in its fold, from the entry M800-level to the top-end Baleno, and later the Grand Vitara.
So, why does Maruti now want to vacate the lower-end of the market and leave it to the Nano? Using the same logic, those who graduate from the Nano in a few years will then be tempted to look at something bigger in the Tata Motors stable instead of looking at Maruti’s mid-priced range.
The tremendous response the Nano has got also shows that, contrary to Maruti’s thinking, there is a vibrant market for small cars — the reason why customers chose to desert the M800 was not because they didn’t want small cars anymore, but because the M800 was a quarter-century old, with just minor changes in design.
Maruti has been caught in the wrong lane once again, the first time around was when Hyundai introduced the Santro even before Maruti introduced the Wagon-R — the tall-boy concept, ironically, was first introduced in Japan by Suzuki.
Sanjiv Shrivastava, Gurgaon
Readers should write to:
The Editor, Business Standard,
Nehru House, 4, Bahadur Shah Zafar Marg, New Delhi 110 002,
Fax: (011) 23720201;
letters@bsmail.in