Maruti cuts prices of Esteem car model

Maruti Udyog Ltd, India's biggest car maker, introduced a new-look version of its ageing Esteem sedan on Monday and cut its price by nine percent to boost share in the rapidly growing mid-size car segment.
Maruti, 54.2 percent owned by Japan's Suzuki Motor Corp, has a 47 percent share of the hotly competitive Indian car market owing to its dominance of the mini and compact car segments but only a 12 percent slice of the mid-size car pie.
The New Delhi-based auto-maker said the three petrol versions of the Esteem, - that now sports a new bonnet, bumper and a chrome grille - would be available between 425,000 rupees ($9,287) and 490,000 rupees, compared with 467,000 and 540,000 rupees earlier.
Rates of two diesel models remain unchanged.
"Our initiatives on the new Esteem are in line with Maruti's increased focus this year on the A3 segment (mid-sized) of the domestic passenger car market," Jagdish Khattar, Maruti's managing director, told a news conference.
A cost reduction programme launched two years ago that aimed to cut production cost by 50 percent in three years allowed the firm to slash prices, Khattar added. He declined to comment on the impact of the price cut on profit margin.
Maruti officials said the price cut would help the Esteem compete with the Indigo sedan, the segment leader, from local firm Tata Motors Ltd and the low-end version of the Ikon from Ford's Indian unit.
The mid-sized segment contributed 20 percent of India's domestic car sales of nearly 700,000 units in the past business year ended March 2004, having expanded by 51 percent in the year.
Maruti sold about 10,500 units of the Esteem in 2003/04 and said it expects the eight-model segment, where the car is positioned, to expand 15 percent this year.
Khattar said the Esteem's re-design was the third model upgrade Maruti had carried out in India that set the firm on course to become a research and development hub for new Suzuki car models for Asian countries, not including Japan.
The auto-maker, which makes 10 models in India and competes with 10 other companies, reported a 30.3 percent rise in vehicle sales in the past business year to March helped by a product tax cut 16 months ago, low interest rates and robust economic growth.Its sales have grown 18.8 percent in the first fiscal quarter ended in June to 123,624 units.