Esteem costs Rs 42,000 less

Jagdish Khattar

MUL's aggressive pricing strategy puts car prices in reverse gear.

Carrying forward its aggressive pricing strategy, Maruti Udyog Ltd (MUL) today slashed the price of its compact sedan, Esteem, by Rs 42,000. Esteem Lx, the car's basic model, will now be available for Rs 425,000 (ex-showroom, Delhi) compared to the earlier price tag of Rs 467,000.

This is the latest in a series of similar price cuts announced by MUL, the leader in the Indian car market, in the recent past.

It had recently come out with a non-AC version of its compact car, Alto, at Rs 25,000 less than the base model, launched a stripped down version of Versa for Rs 328,000 and introduced Baleno Lxi at Rs 560,000.

MUL Managing Director Jagdish Khattar told reporters that the price cut was a result of the successful cost-cutting exercise the company undertook two years ago. "Incremental sales volumes will also take care of any loss in margins," he added.

Reacting to MUL's initiative, rival car companies said it was unlikely they too would drop prices, though the mid-size car segment might "see more action" in the near future. Vinay Piparsania, vice-president (external affairs), Ford India, said that since mid-size was one of the fastest growing segments, all auto manufacturers were trying their best to grow their marketshare.

"In the last six months, this segment has grown by more than 50 per cent. There is a large pool of small car-owners who are willing to upgrade to a mid-size sedan," he said.

MUL has also given the Esteem a new look by redesigning the rear and the front styling. The car now has multi-reflector clear headlamps and a new bumper with chrome grille. Its 1,300 cc MPI engine has been developed in India.

"The performance and fuel efficiency of the Esteem is widely acknowledged. Now, with a new external look and pricing, Esteem will be even more attractive," said Khattar.

In 2003-04, MUL sold 10,800 Esteem cars, and it has a 10 per cent marketshare in the compact sedan segment, where it competes with Ford Ikon and Tata Indigo.

Today's cut, according to MUL officials, is encouraged by the sharp increase in Alto sales ever since the new price was announced.