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Cielo Tag Slashed By Rs 1.3 Lakh

Daewoo Motors India yesterday slashed Cielo prices by 15-21 per cent the largest price cut ever announced by any company in India in the automobile sector. The price of Daewoos standard Cielo GLE model (manual transmission) has been reduced 21 per cent from Rs 6,20,000 to Rs 4,90,200, effective yesterday.

The price of the GLX (manual transmission) has been reduced 16 per cent from Rs 6,79,565 to Rs 5,66,220. The automatic transmission variants of both these models will cost Rs 5,000 more.

The company has also decided to refund the difference to all customers taking delivery of their vehicles on or after January 5, 1998.

With one single move, Daewoo might have set off the first price war in the history of the Indian automobile industry.

The Cielo GLE model will now be priced Rs 45,351 less than the comparable Esteem VX, Rs 1,56,717 less than the Ford Escort 1.3 LX and Rs 2,62,128 less than the Opel Astra.

With the price cut, Daewoo expects to take away marketshare from market leader Esteem, which has about 38 per cent of the mid-segment car market at present.

Daewoo is targeting a 43 per cent marketshare by the end of this year through increased Cielo sales, double its present marketshare of 22 per cent. However, Maruti has a cheaper model in its Esteem LX which is priced at Rs 4.69 lakh, nearly Rs 21,000 cheaper than the cheapest Cielo. Daewoo has no presence in this segment as it has phased out the comparable model, the Cielo GL, which lacked features like power steering, power windows and central locking.

Daewoo is calling a meeting of all its dealers today to have them stop all discretionary discount schemes which were being run by the company and the dealers. Daewoo dealers were offering discounts of Rs 60,000-Rs 85,000 on the marked price of the car till last month.

While certain industry watchers said Daewoos price-cutting strategy has merely institutionalised the discounts which were being offered by dealers, competitors have adopted a wait-and-watch approach. The company has been able to leverage a relatively low fall in the basic production price of the Cielo into a higher drop in the showroom price through savings on excise duty and sales tax.

Small car launch slated for 1998 2nd half

Daewoo is now gearing up for the launch of its much-awaited small car in the second half of 1998. The company expects to price its small car against the Maruti 800cc, while offering features comparable with the 1000cc Zen. Thereafter, Daewoo intends to bring in a luxury car in the first half of 1999, targeting the premium segment of Rs 8 lakh and above. Worldwide, Daewoo Motors is replacing the Cielo with the sportier Lanos. The Korean major also plans to launch a bus and a truck under its own brand name in India by end-1998.

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First Published: Tue, January 06 1998. 00:00 IST