Maruti unveils Nano rival to banks

For long, there has been a will-they-won't-they kind of speculation about how Maruti will protect its entry-level consumer base from the Nano, whose lowest variant is likely to cost Rs 1 lakh in some places and about Rs 1.26 lakh in some others. The higher variants may cost Rs 1.5 lakh or more.

According to sources in the consumer finance industry, Maruti plans to counter it with a stripped-down version of the Maruti 800, its best-selling car by far, which has earned the trust of more than 2 million buyers. The stripped-down car will cost Rs 1.2-1.5 lakh (ex-showroom, New Delhi) making it about Rs 75,000 cheaper than the existing price tag.

A Maruti spokesperson denied any plan to launch a stripped-down version of the Maruti 800, but a senior executive in a bank with a large consumer finance business swore it was in the pipeline. "I am 200 per cent sure. My source is Maruti," he said.

In addition, the chief executive of a leading carmaker confirmed that he had heard about Maruti's new car to take on the Nano.

"Even today the margin on the Maruti 800 is Rs 23,000-35,000. Cutting the price of a stripped-down version will not be a big challenge," he said.

The Maruti 800 was once Maruti's most popular car and even now sells 5,500-6,000 units, which is comparable with Tata Motors's early target for the Nano. Since the Nano was first showcased this January, the volume of the Maruti 800 has not changed significantly. Market analysts see this as strong customer sentiment in its favour.