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|October 24, 1997||
Maruti launches new model in bid to retain market lead
The public sector Maruti Udyog Limited has hiked the prices of its Esteem model by a range of Rs 5,000 to Rs 11,500 with the introduction of new models, the 1998 Esteem, in the luxury car segment in an attempt to retain its leadership against the new foreign car manufacturers in India.
Maruti Managing Director R S S L N Bhaskarudu told reporters on Friday that the Esteem was India's best selling luxury car since its launch in 1994 and it has improved in the areas of styling, comfort, safety and performance following introduction of the 1998 models, with a modest increase in prices.
"We have not passed on our entire upgradation to the prices," he said.
Currently, the Esteem enjoys a market share of 34 per cent in the luxury car segment with cumulative sales exceeding 84.000 units. The closest competitor to Maruti in this segment claims a market share of 20 per cent. Maruti has manufactured about 175,000 vehicles in the first six months ended September 30, with a sales turnover of Rs 40 billion as compared to Rs 30. billion during the same period in the previous year. It is expected to achieve a profit of Rs 8.5 billion at the end of current fiscal year.
Asked about capacity upgradation programme, Bhaskarudu said the company would increase its capacity by about 100,000 vehicles with its ongoing expansion plan at the present factory site, which would later increase to 500,000 vehicles capacity by the year 2000-2001 with an investment proposal of Rs 15 billion.
The managing director explained that most of the investment funds would come from internal accruals and borrowings. In the current year, the company does not have any plan to borrow funds or to hike the prices of any car model.
Though it enjoys about 91 per cent indigenisation in technology, Maruti recently signed a memorandum of understanding with Peugeot of France to import diesel engines for its Zen and Gypsy models.
Without revealing the details, Bhaskarudu said, "We were preparing ourselves for greater competition and would retain our leadership in the Indian car market."
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