Business Today

The big battle for the small car

It's an inverse equation: Small wheels, big volumes. If you're in, consolidate. If you aren't, get in as fast as possible.

     Print Edition: June 13, 2010

BT, November 6, 1997
It's an inverse equation: Small wheels, big volumes. If you're in, consolidate. If you aren't, get in as fast as possible. Those are the principles on which the mega-marketing war of 1998 is likely to be fought. The challenger: The Rs 944-crore Daewoo "Ambitious" Motors.

The defender: The Rs 7,762-crore Maruti "Everycar" Udyog. The trophy, of course, is supremacy in the Rs 4,032-crore small car segment of the Indian market. Estimated to be worth Rs 10,300 crore by April 2000, the 183,295-units-a-year segment is obviously the "promised land" for automakers.

Just what is Daewoo's marketing strategy for its small car? Realising that breaking the price barrier of the Maruti 800 may not be possible, it is trying to play the value game to justify the probable ticket price of Rs 3.50 lakh. Says S.G. Awasthi, 53, CEO, Daewoo Motors: "When we launch the product, you will discover that it offers the best VFM equation."

The company is expected to play upon the new technology— the brand-new platform and clutch technology — the jellybean and wind-tunnel design, and customised features. On the surface, Maruti isn't worrying.

Says Jagdish Khattar, 54, Marketing Director, Maruti: "Will customers be ready to pay the price for additional features?" …Indeed, experts feel that Daewoo could use technology as a differentiator—and support a higher price with attractive financing schemes. The race for the small car buyer is going to be as exciting as a Formula One finale.

(NOW: Tata Motors' Nano, today, is the quintessential small car. Bajaj Auto plans to hit the market with a cheap car, one that will clock a mileage of 30 km per litre. And the small car race is as hot 13 years later.)

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