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Maruti admits base model is lifeline
P Vaidyanathan Iyer in New Delhi |
May 05, 2003 14:13 IST
For the Rs 9,080 crore (Rs 90.80 billion) Maruti Udyog Ltd, its smallest car, the Maruti 800, continues to be its lifeline.
By the company's own admission, the car that is priced below Rs 3 lakh (Rs 300,000), will continue to determine its future success.
In the draft red herring document filed with the Securities and Exchange Board of India, the company has said it depends on the Maruti 800 substantially. The car comprised 42.5 per cent of Maruti's domestic sales in 2002-03.
Maruti also anticipates that its 800 model will continue to dominate the car segment and account for a substantial portion of its sales.
It pegs its future success, to a large extent, on the continued demand for the Maruti 800.
The success will also depend on the company's ability to enhance and develop the Maruti 800 to meet the evolving needs of its customers.
Maruti is also betting on its ability to find another model that will generate similar sales volumes in a similar price range following the end of the product life cycle of the Maruti 800.
A change in consumer preferences, technological change or other factors could reduce the demand for the Maruti 800, which could adversely affect our business and results of operations, Maruti said in the internal risk factors enumerated in the red herring document.
The company's overall market share, in terms of the number of passenger cars sold in the domestic market, declined from 83.1 per cent in 1998-99 to 57.6 per cent in 2001-02 and increased to 58.6 per cent in 2002-03.
Maruti's marketshare for passenger cars in the B segment--priced between Rs 3 lakh and Rs 5 lakh--increased marginally from 36.9 per cent in 2001-02 to 40.3 per cent in 2002-03.
The company claims to be the only car major offering an A segment car, with a price tag of less than Rs 3 lakh.
The A and B segments comprised 95.4 per cent of the company's domestic sales volumes in 2002-03.
Driving force
- The Maruti 800 comprised 42.5 per cent of the company's domestic sales in 2002-03.
- Maruti anticipates its 800 model will continue to dominate the car segment and account for a substantial portion of its sales.
- Maruti is also betting on its ability to find another model that will generate similar sales volumes in a similar price range.
- The company's market share, in terms of the number of passenger cars sold in the domestic market, declined from 83.1 per cent in 1998-99 to 57.6 per cent in 2001-02 and increased to 58.6 per cent in 2002-03.
- The A and B segments comprised 95.4 per cent of the company's domestic sales volumes in 2002-03.
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