It won't be a smooth ride for the A-Star since the Hyundai i10 has been a big success.
India’s largest car maker, the Rs 17,936 crore Maruti Suzuki, actually produced fewer cars in August this year compared to last year. What’s more, volumes in October were flat. But the A-Star is probably what’s giving the management confidence to assert that production this year will not fall below last year’s levels.
If the trend at the Gurgaon-based firm is to change — production between April and October was up just 2.5 per cent — the new launch needs to deliver. Targets for the hatchback appear a tad ambitious—around 5,000 a month in the home market and twice the number overseas.
If the car hits the 20,000 mark by the end of March 2009, Maruti should be able to cross the 764,000 number which it reported in 2007-08. On the other hand, if it doesn’t find takers, it will be a big blow for the company.
On the face of it, the A-Star appears to match up to the Hyundai i10 which is its main competitor---the power and the mileage are more or less similar. However, the Hyundai i10 has been a big success, clocking sales of around 9000--10,000 a month, and it won’t be a smooth ride for the newcomer.
While the Swift and the DZire have both been runaway successes, the Alto and the Wagon-R haven’t been doing too well lately---volumes for models in this segment have risen just 2.4 per cent in the home market in April-October 2008, as compared with the 36 per cent seen in the corresponding period in FY07.
There is the slight chance, say industry watchers, that the A-Star could cannibalise the Wagon R or the lower version of the Swift. If that happens, the production target could be at some risk. The A-Star is expected to do well in the overseas market---boosting Maruti’s exports which grew 21 per cent between April and October.
Since the company has taken some price increase during the year, net sales are expected to grow at around 12 per cent in FY09. However, cost pressures will keep operating margins subdued and that could mean a flat bottom line.
