Maruti pins hope on cheaper Alto

Maruti Udyog Ltd (MUL) launched a non air-conditioned variant of its premium small car "Alto" to boost sales in the small car segment.

The 800cc car has been priced at Rs 230,000 (ex-showroom Delhi), around Rs 35,000 less than the existing base model, the Alto LX.

The new Alto variant also costs just Rs 3,000 more than the Euro-II air-conditioned variant of Maruti 800, Maruti Udyog's largest selling car.

Industry analysts maintain that the launch of the new model is part of Maruti Udyog's strategy to position Alto as an entry-level car alongside Maruti 800 and boost sales through aggressive pricing.

Company executives, however, refused to comment when asked if such a move could cannibalise on Maruti 800 sales.

"The new Alto variant is targeted at individuals who are keen to own an A2 segment car and plan to buy one over the next year or so. It will end their wait and urge them to purchase now," a Maruti Udyog spokesperson said.

It is worth noting that this is the second time in the past few weeks that the company has come out with a lower-priced version of an existing model.

The new Alto comes close on the heels of the introduction of a non-air-conditioned variant of the multi purpose vehicle, Versa, at Rs 327,000.

The spokesperson said the new model has the provision to retrofit an air-conditioner with a cost of around Rs 20,000.

The new variant, he added, was likely to give a push to Alto sales, which clocked a 135 per cent growth, at 60,629 units, in the domestic market during 2003-04. Exports of the variant jumped 53 per cent to 36,436 units during the last financial year.

Alto now accounts for one-third of Maruti's total compact car sales. According to the spokesperson, the ratio is expected to rise further with the roll-out of the new variant. Maruti's strategy of introducing low-priced variants comes at a time when most car companies have indicated that they could hike prices in view of the rising steel prices in the country.