Alto 800 to compete with Hyundai's Eon in mini car segment

India’s leading car marker Maruti Suzuki launched the new Alto 800 on Tuesday. The petrol variant of the new model is priced between 2.4-2.9 lakhs. Even before the price announcement was made, 10,000 bookings for the new Alto 800 were already in place.

The new Alto 800 is expected to revive volumes in shrinking mini car segment. "This segment has been shrinking for sometime, especially because it has very few diesel options and Alto can be a game changer for this segment," Shashank Srivastava, executive director - international operations, Maruti Suzuki said in an interview to CNBC-TV18. Below is the edited transcript of Srivastava’s interview with CNBC-TV18. Q: What are your expectations of what the Alto 800 might do in terms of a monthly run rate going forward? A: I will not be able to give forward numbers on expectations, because for all the new products that we have introduced in the past, the actual results have been much better than expected. We are just keeping our fingers crossed. It is a very important product for us. This segment has been shrinking for sometime, especially because it has very few diesel options and Alto can be a game changer for this segment. Q: From a production point of view, how many units are you geared to produce if demand really surprises you? A: Since this product is made in Gurgaon plant there is absolutely no problem as far as volumes go. Just two years back, the total Alto production for Maruti was 346,000. Last year, it was slightly lower because there was a drop in the petrol vehicle sales. Q: What are the pre-bookings telling you in terms of a gauge of early demand? A: I think the demand has been fairly good, because nearly 10,000 bookings were there even before the prices were announced yesterday and even before the vehicle was available for test drive or for display at the dealerships. Considering that, 10,000 initial bookings is a pretty good sign. This segment has been declining over the years, largely because there were very few multiple-fuel options in this segment. _PAGEBREAK_ Beat and Indica are the only cars that have shown growth this year and both of them have come with their diesel option. So, I think there has been dichotomy in terms of growth patterns for diesel and for petrol supply. One reason why this segment has not been showing much growth was that there was no new activity. We only had the Eon last year and besides that there has been no real activity in this segment for the past couple of years. The introduction of the new product is definitely going to enhance and boost the sales of this segment. Q: Do you see the CNG variant doing quite well? A: Yes. Actually there is one small problem with the CNG. As you know that there are only three major areas, NCR, Mumbai and Gujarat where the dispensing stations are sufficient in numbers and so the CNG sales of our products in these three areas have been pretty strong in the last one and half years. We are touching almost retails of 4,000 numbers in these, but the problem in CNG is the number of dispensing stations. For this we have been trying to persuade the government that if the number of dispensing stations could be geographically increased then probably the CNG sales could be very high. At the moment the cities where CNG is present, the CNG retails have been pretty good. So the one constraint is obviously the number of cities which have sufficient CNG stations for us to register large sales. Q: What are your expectations from the exports market including this product? A: For the exports we believe this is a very relevant product even in some countries like Africa, South America and parts of Association of Southeast Asian Nations (ASEAN) countries. I think we have been selling the Alto K10 as well as the Alto F8 which is the 800 Alto in many countries. In some countries it is doing extremely well, for example in Algeria or Egypt these are becoming more relevant. With this new product in the export market we will be able to jack up our numbers. It has got the modern design and great interior space for appealing not just Indian consumers, but also consumers from developing countries including Latin America, Africa and ASEAN countries. _PAGEBREAK_ Q: Do you think this is enough to arrest the volume de-growth that you have been witnessing in this segment? Do you expect the new Alto to grab significant market share from competitors? A: If you look at the H1 this year the industry has grown about 7 percent and we had problems in terms of production so we have been flat. Our H1 last year and this year have been same, but the industry has grown 7 percent. If you look at the A2 minus segment, its market share for Maruti is excess of 50 percent which is good. For last four years we have maintained market share in the range of 53-55 percent. There is a decline because petrol has de-grown, vehicles have de-grown by 20 percent whereas diesel has gone up by 50-55 percent in terms of growth. I think one of the reasons why there has been a decline in this segment is that there has been no innovation in this segment. Second, since there are no diesel options available in this segment, this could be one of the reasons for its decline. In terms of market share definitely we should see an increase, but in terms of the overall volume and how the segment itself will grow you should see the five year trend of this segment along with the small car from A1 segment which is the Nano and the 800 which use to be about 52 percent. But in H1 of this year the total segment is just 32 percent of the market so there has been a huge fall of almost 20 percent in this segment. Alto has been introduced with the CNG option and given its brand value we can see this segment rising. All this depends on how the consumers still react to the petrol versus diesel phenomena.