IT'S spanking new. But the air-conditioning doesn't work. And on a hot early-October afternoon in Delhi, that should be deterrent enough. Ashok Sachdev's 5,000 square feet Hans Hyundai showroom in west Delhi, though, is teeming with potential Santro customers. "Ever since my showroom opened its doors on September 24, my staff of nine has had its hands full dealing with anywhere between 200 and 300 enquiries a day," says he. And while bookings hadn't officially opened then, customers couldn't resist handing over cheques to Sachdev.
Cut to Daewoo Motor India's 208-acre factory in Surajpur, UP, where workers in the plant are working overtime to rev up the assembly line to its optimum of 72,000 Matiz cars a year. Bookings for the first lot of 5,000 cars open on October 17, and deliveries commence in the last week of October, or early November. The last of the 5,000 cars should be delivered within six weeks. "We should be able to manufacture 6,000 cars a month by April next. By then, there should be 12,000 Matiz cars on the roads," says managing director S.G. Awasthi.
Hyundai Motor India's marketing director B.V.R. Subbu sounds equally gung-ho: "We should sell 20,000 Santros by March next; for the next fiscal, the target is 65,000 units." Brave words these, especially since Indian car sales have been shrinking this fiscal. Subbu, though, believes the new cars—the Tata Indica included—should see the market revive. "Any new entrant expands the market. This time round, there are three of us. In fact, if the economic situation improves, double-digit growth won't be surprising."
But that's not where this Korean combine is stopping. They're daring to take on God-zilla himself—the Rs 8,454 crore Maruti Udyog Ltd. That too, in its strongest segment—the small car. That's where Maruti enjoys a virtual monopoly with an 87 per cent market-share (in 1997-98 it sold 1,84,904 Maruti 800s and 60,727 Zen cars). "None of the other foreign automakers in the country have matched our commitment. We believe we can take on Goliath. That's why we're here," says Subbu. He has a point. While Daewoo has invested Rs 3,500 crore in India, and Hyundai should invest about Rs 2,500 crore, other car makers have a far lower exposure to India: Honda—Rs 850 crore; General Motors—Rs 318 crore; and Ford will be investing Rs 1,500 crore.
But there's more to strategy than the mere pumping of money. Both the Santro and Matiz have set a new benchmark with their contemporary technology. That's apparent both in their styling and in the engine that purrs under the hood. Both come with a multi-point fuel injection system, meeting the year 2000 emission norms. While the 800 cc Matiz gives an output of 52 hp, the Santro's 1,000 cc engine delivers 55 hp. In contrast, the Maruti 800 and Zen manage a horse power of 39.5 and 50 respectively.
Then there's the pricing. By pricing the Santro at Rs 3,15,079 (on road in Delhi) for the basic air-conditioned model, to Rs 3,92,000, it has taken over the vacant slot between the Maruti 800 and the Zen. That makes it a competitor to both the Maruti models. And though Daewoo has officially refrained from announcing the price of its car as yet, indications are the basic model will be priced at around Rs 2.80 lakh.
The price competition for Maruti could get even tougher in the future. "Maruti is expected to bring in a new 800 cc car model next year. But Maruti's cost structures will have to be realigned at that time. And if the chaebols can hold on to their price lines, then their pricing will appear even more attractive," says an industry source.
That the Korean chaebols will taste some success is an admission even the top brass at Maruti make. "We have an obscene marketshare. Nowhere in the world does a single car company monopolise the market as we do. I'd be happy if our marketshare stabilises at around 70 per cent," says a senior Maruti official. Market leaders in Japan and the US, Toyota and GM enjoy a 39 per cent share of their respective markets.
But don't expect Maruti to take an immediate beating. That's because Hyundai will manufacture only 2,000 Santros in October; Daewoo has only just begun Matiz's production. With the Indica launch still some way away, Maruti should enjoy the benefit of providing customers with the Maruti 800 and Zen almost on demand. That, when Santro and Matiz customers have to wait for their cars to be delivered. "Maruti sales won't be hit before July next. That's when the new players will have their production capacities running full steam," says a senior executive with an automobile company. Will Maruti utilise the breathing space? Well, throughout the fortnight since Hyundai made Santro public, Maruti top brass have been huddled together in a series of meetings. And no one's talking.
