Maruti launches new sedan Ciaz to take on Honda, Hyundai

  • Reuters, New Delhi
  • Updated: Oct 06, 2014 15:07 IST

Maruti Suzuki India Ltd, the nation's top car maker, set an aggressive sales target for its first new sedan car in seven years, in a bid to break into a segment where it has previously had little success.

Sales of mid-size sedan cars in India, the world's sixth largest passenger vehicle market, fell nearly 23 percent to 155,089 in the fiscal year to end-March from 200,176 a year ago, industry data showed, as high inflation and interest rates deterred customers.

But car makers, including Maruti, are betting on a revival in growth in Asia's third-biggest economy after a new government led by Prime Minister Narendra Modi took power in May.

Maruti aims to sell between 60,000 and 80,000 of its new Ciaz cars next year, at prices starting from 699,000 rupees($11,359) ex-showroom in New Delhi for the base gasoline variant, Chief Executive Kenichi Ayukawa said at a launch event.

With the Ciaz, Maruti will take a second stab at a segment in which its SX4 sedan, launched in 2007, has faced tough competition from rivals, including Honda Motor Co and Hyundai Motor Co, and lagged in sales.

"We have to enhance our quality. Not only with the car, but with our sales," Ayukawa said when asked why Maruti, which sells nearly one in every two cars, has struggled with premium cars.

Maruti pitched Ciaz as a classier, roomier, European-styled fuel efficient car, targeting India's aspirational drivers who want to upgrade to a mid-sized sedan. It will be available in both gasoline and diesel variants and in seven colours.

The company received 10,000 bookings for the car before it announced the price, Ayukawa said.

Analysts said Maruti has a better chance of success with the Ciaz than it did with the SX4, but some saw the sales target as ambitious.

"It is a competent model but I am not sure of the sales target," said Anil Sharma, a senior analyst at IHS Automotive, which has estimated full-year Ciaz sales of about 26,000.

Maruti's SX4 sales fell 40 percent to 4,029 in the fiscal year to end-March. By comparison Honda sold 35,844 City sedans, 17 percent higher than the previous fiscal.

"There is a lot of learning they have achieved from the SX4," Deepesh Rathore, an analyst at Emerging Markets Automotive Advisors, said before the launch.

A comparatively inferior quality was one reason why Maruti's SX4 could not compete with Honda's City or Hyundai's Verna sedans, Rathore said, adding that Ciaz would make up for that.

The Indian car market is also looking up, Ayukawa said. "After three years of slowdown, some signs of growth are visible," he added.

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