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Home > Business > Business Headline > Report

Maruti says it can launch Daewoo saloons

Partha Ghosh in New Delhi | May 14, 2003 13:10 IST

Maruti Udyog has the option of launching mid-sized saloons originally built by Korean car maker Daewoo Motors to augment its share in the growing C-segment, the company's management has told analysts and merchant bankers at recent meetings.

The company recently filed its draft red herring prospectus for its initial public offer, which is expected to hit the market in June.

Maruti's parent Suzuki has acquired the Daewoo vehicles following its investment in the Korean company last year along with General Motors.

Suzuki has now a few Daewoo models under it's own banner, some of which like the Magnus and the Nubira (which are now called Suzuki Verona and Forenza, respectively) have been showcased in recent international auto fairs.

A top company executive, however, said there are more such vehicles, which can fit Maruti's business model.

General Motors, on the other hand, too may launch some other Daewoo models under brands such as Chevrolet and Opel, industry sources added.

Maruti, a dominant player in the entry-level A and B segments, has maintained it will continue to focus on the small car segment, which comprises more than 80 per cent of the total car market in the country.

The segments for cars priced above Rs 500,000, which together constituted about 14 per cent of the Indian passenger car market in 2001-02, are significantly more fragmented than the small car segment, with several players competing for what has been a relatively small share of the passenger car market in terms of sales volumes.

Of this, however, there is more activity in the C-segment. Maruti has three offerings in the C-segment -- the mid-sized Esteem, multi-purpose vehicle Versa and the larger sedan Baleno.

Though Maruti does not expect the small car segment to shrink in favour of larger vehicles in the near future, its position in the market will be strengthened if it had more vehicles to boast of in the steadily growing C segment.

"We understand there is a concern. But as we told analysts and merchant bankers recently that if required we will launch some of these 'rebadged' Daewoo vehicles in the country. These vehicles are relatively new for India and have made a name worldwide," the executive said.

He added that Maruti is looking at models, which can augment its share in the low-end of the C-segment.

"We are a volume player. And the customer expects us to deliver high quality products at low costs. That will be our intent," the source added.

Maruti already has excess manufacturing capacity-- its current installed capacity is 350,000 vehicles per year, which includes the third plant which was started around 10 days ago.

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