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Maruti Suzuki Celerio effect: Now, carmaker to launch Alto ‘automatic’

Maruti Suzuki's plan push for automatic cars follows strong response for Celerio compact hatchback.

New Delhi |
March 7, 2014 3:02:46 pm
Maruti Suzuki India plans to launch an automatic version of the country’s top selling model, the Alto (K10), by end of this year. Maruti Suzuki India plans to launch an automatic version of the country’s top selling model, the Alto (K10), by end of this year.

Call it the Celerio effect. Now entry-level car buyers with a budget of less than Rs 4 lakh can look forward to buying an automated manual transmission (AMT) car. Maruti Suzuki India plans to launch an automatic version of the country’s top selling model, the Alto (K10), by end of this year in a bid to bolster Alto’s popularity in urban areas where buyers look for attractive features at low prices. The company feels the move would help revive sales of the Alto, which declined 3% to 2.08 lakh units in April-January FY14.

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The plan to push automatic cars follows the strong market response Maruti witnessed for its new Celerio compact hatchback, for which over half the 26,000 bookings since launch on February 8 have come from the auto gear variant.

Comparison: Maruti Suzuki vs Alto

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Mayank Pareek, Maruti’s COO for marketing and sales, said that currently automatic cars account for a 5% share where available, but for the Celerio the share is over 50%. “I had expected around 35% of sales to come from the auto gear option. I was very confident of the response, but others had said I was expecting too much. AMT was a completely new technology and untested yet in this market. Now we are trying to increase supply. The demand has been very satisfying,” he said.

Improvements in the Alto will help the market leader — it currently enjoys a 50% share of the mini car segment — fend off rising competition. Hyundai will soon expand the Eon range with a 1-litre engine option (it currently comes with an 800cc power plant), while Nissan has launched the Datsun Go. Tata Motors is also positioning the Nano a bit more upmarket with automatic and diesel engine options, while Honda is also planning a new model below the Brio to compete with the Alto.

Company and industry sources told FE that the car market leader has speeded up its plans to progressively launch automatic variants for its entire product range in a bid to protect its market share of around 40% of India’s 27-lakh-unit passenger vehicle market by being the first mover towards automatic technology. After the Alto, the WagonR will also be offered with AMT technology in 2015. Larger car models, like the upcoming Honda City-competitor Ciaz mid-size sedan, will get a different automatic transmission technology called CVT (continuously variable transmission).

Maruti currently finds itself in a sweet spot. The waiting period on the Celerio automatic is up to over six months because of the high demand, reversing fortunes for the company at a time when the overall car market is witnessing slowest volume growth in a decade — total industry passenger vehicle sales in April-January FY14 are down 6% at 20.5 lakh units. Maruti is producing around 5,000 units of the Celerio a month, and now plans to increase output, but the challenge is that the AMT kits are imported from Italy-based supplier Magneti Marelli. Maruti’s volumes in April-February FY14 were up 0.90% at 9.51 lakh units.

While officials confirmed plans to add an additional AMT variant to the Alto, a spokesperson said in an official response, “We do not comment on future product plans.”

The Celerio, which has seen a successful launch, is a major test bed for Maruti. Not only is it introducing the AMT technology in the market, it will also be the first car for Japanese parent Suzuki to globally debut its self-developed diesel engine. The Celerio will also be launched with an 800cc diesel engine option by end-2014, though the diesel model will not offer an AMT option at first.

The AMT technology is the new rage in the car market because while it offers the convenience of an automatic transmission by doing away with a clutch pedal or having to change gears, it also comes at a much lower price than other automatic technologies. At R4.14 lakh, the Celerio is now the cheapest automatic car in the market, though the Alto will take that crown when it is launched later this year. Meanwhile, Tata Motors is also are preparing to launch AMT variants for the Nano, Indica and Zest models.

(Roudra Bhattacharya)

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