Maruti Suzuki not to launch a car below Maruti 800

* Focus on World Strategic Models to drive growth

New Delhi, February 5, 2008: A section of the media has reported today that Maruti Suzuki is ready with a small car with a 660 cc engine, positioned below the Maruti 800 and priced at Rs 1.5 lakh.

The company, through this press release, is denying the report. As announced earlier, the company has no plans to launch a car like the one mentioned in the report. The Project "Under A" mentioned in the report refers perhaps to the "A Under", the earlier code name for the A-Star model.

To give a clear and transparent picture on this issue, we are sharing below some information about Maruti Suzuki's future model strategy, and our reasons for choosing it.

Various manufacturers have made public their plans to develop and offer low cost cars for India. Like the rest of the country, Maruti Suzuki is delighted that some of these efforts have met with success, and at least one such car in this segment is now only a few months away.

While Maruti Suzuki commends these various initiatives, the company has no plans whatsoever of developing or offering a car in the segment below the Maruti 800.

Maruti offered the first People's Car, Maruti 800, about 24 years ago. Since then, India's middle class and Maruti's customers have grown in every facet of their lives. Their incomes have gone up significantly. Their lifestyles have improved in ways that were hard to imagine a decade ago. Within the space of a generation, the "People" who bought "People's Cars" have transformed almost beyond recognition.

With that, expectations from a car have evolved considerably. Car customers now generally settle for nothing less than contemporary styling, international quality and latest features that enhance their safety and convenience, while expecting performance and fuel efficiency like their parents did before them.

These changing preferences are reflected in the sales data for existing segments in the car market: models and variants that promise only economy and low acquisition cost are increasingly losing out to models and variants that are rich in features and style. We find this trend holds true across segments, including among entry level cars.

In our experience, our entry level car customers nurture a high degree of aspiration, both in new cars as well as pre-owned. They want more from their cars in terms of features, performance, safety and versatility.

Maruti Suzuki has been able to notice and understand this transformation, largely due to its close relationship with customers throughout the period of their car ownership.

Suzuki and Maruti's approach of "World Strategic Models", which includes cars like Swift, SX4 and Grand Vitara, ensures that Indian customers get international quality and style at the same time as customers in markets like Europe and Japan. The success of these cars in the market has endorsed our view, and we want to pursue this strategy with greater vigour in future.

In future, the company plans to launch World Strategic Models like Splash and A-Star, as part of the same conscious effort to offer international quality and design to Indian customers at an attractive price.

Our view is that as Indian middle class families move up in life, they should continue to receive a range of cars from Maruti Suzuki that offer superior quality, international design and rich features. That is where our focus will lie.

Maruti Suzuki reiterates that we have no plans of developing or offering a new car below the Maruti 800.