An 'A-Star' Launch

The launch of Maruti Suzuki’s latest car, the ‘A-Star’ is an important event in the history of the company. There are obvious questions being asked about the timing of the launch, whether it would have been wiser to introduce a new vehicle sometime next year when economic conditions could be better. Nonetheless it’s a bold move that is being backed by the company. The A-Star is significant to the fortunes of the Maruti Suzuki group because it’s an India centric car aimed at going global.

And going global is the #1 priority for the company as far as this model is concerned. The A-Star will be pushed heavily into overseas markets in the coming quarters .Maruti Suzuki will be doing what many other Indian auto makers have also started to do and that’s to sell Indian vehicles abroad under an Indian company’s name.

Most Indian companies till now only marketed foreign-made vehicles abroad. In a sense they were re-selling vehicles. But things have changed since Tata Motors started to sell their vehicles. Slowly Mahindra and Mahindra got into the act. The Indian two wheeler companies like Hero Honda and TVS were already selling their units abroad.

Maruti’s A-Star is designated to be a direct rival to Hyundai’s i-10 model. The i-10 has done well in India and abroad. The A-Star should do well at least in the southern and eastern parts of Asia where the Suzuki group has a stronghold. The problem arises when the model starts to be pushed westwards into Europe and beyond.

Europeans have almost gone cold turkey on automobiles during the past few months. Not only are the consumers revolting against a line of old and inefficient models from traditional auto houses but the financing for the same even if one wanted to buy an automobile has become a lot more difficult because getting even a car loan has become difficult. The same is true in the United States.

The A-Star is bound to face the same problems but is an interesting experiment nonetheless. It will be manufactured exclusively in India in the group’s Manesar plant and exported from there.

As far as the domestic demand for the vehicle is concerned, Maruti are excited about the A-Star’s excellent fuel management which is honestly quite impressive. The vehicle will deliver a mileage of almost 20 km/pl.It’s also fitted with a 998cc engine which is ideal for Indian roads. Maruti hopes that the car will be a sort of a bridge between the 800 series and the sedan sector but still has enough features to not be eaten by compatriots like the Alto.

However, the pricing of the model is baffling. The entire range of the A-Star is priced between almost Three and a Half Lakh to 4.12 Lakh Rupees. The high cost has been attributed to the increase in manufacturing costs and margin pressures compounded by an increase in import rates of raw materials.

If the pricing proves to be a deterrent and it looks like it will, then the company will most certainly go the way it has previously and cut prices, but by then the damage could have been done.