Business Today

Small wonder

Alto is the world's largest selling hatchback, no mean feat for a car in its 10th year.

twitter-logo Sunny Sen        Print Edition: April 3, 2011

It might be a decade old, but the Maruti Alto has been setting the sales charts alight. Last year, Maruti Suzuki rolled out the next generation version of the Alto with a new K-Series engine, the Alto K10. The result: Alto's monthly sales numbers grew 66 per cent from 21,000 units to 33,000 units, making it the largest selling hatchback globally. This year, analysts expect the Alto to maintain the pace or move even faster, selling over 400,000 units. So, what makes this car so popular?

Maruti says all it had to do was split the Alto into a sub-segment and create more options for the buyer. "Not many people understand that splitting the market creates a lot of demand," says Mayank Pareek, Maruti's Managing Executive Officer for Marketing and Sales.

Alto K-10 ex-showroom Rs 3.03 lakh;
Alto base model: Rs 2.31 lakh
Alto's success also rebuts the argument that India is a purely pricedriven market. Tata Motors' Nano, currently the cheapest car, sells only about 6,000 units a month, after a 16.5 per cent year-on-year growth in the quarter ending December 2010. So, has Maruti stolen the thunder from Ratan Tata's idea of the mass car? Darius Lam, Senior Market Analyst at JD Power and Partners, a market research firm, believes the Rs 1-lakh tag touted by Tata Motors has become been a millstone around the brand's neck, instead of helping Nano's sales. "Possibly there is a perception of the Nano being too 'cheap' and buyers see the Alto as more of a proper car," says Lam, adding: "It is still early days for the Nano and you have to remember that Tata Motors has faced production problems."

Pareek also maintains that there is enough headroom in the Alto sales for further growth as 45 per cent of car buyers look for purchases in the cheapest, small car segment. Apart from Hyundai Santro and Tata Nano, there are not many players to address the Rs 2.5 lakh to Rs 3.5-lakh market.

Some analysts feel Nano buyers are those who do not have the means to maintain a car and it will be difficult for Tata to market the product. "A car is not a one-time buy. There are running costs involved like fuel," says Pareek. It is important for a buyer to be able to afford this segment. Experts say that the Alto buyer is an already upgraded buyer who can afford a car.

Also, after the much-hyped booking of the Nano, Tata's marketing left much to be desired. "Thirty per cent of the bookings got cancelled after a year. It is only recently that they have started to market themselves," says Deepak Jain, an auto analyst at Sharekhan, a brokerage firm. There is a Rs 96,000 price difference in exshowroom prices between the Nano's and Alto's base models in Delhi.

Analysts like Jain believe that Nano will continue to sell no more than 6,000 to 7,000 units. As the Alto turns the car of choice for young Indian drivers, it looks poised to become the next Maruti 800.
 
-Sunny Sen

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