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New pricing plan revs up Maruti's Versa sales

01-July-2004
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New pricing plan revs up Maruti's Versa sales

Maruti Versa, the multi-utility vehicle, has seen its volumes grow nearly 41 per cent after the company launched a low-priced variant of the vehicle at Rs 3.27 lakh, which was nearly half its original price when it was first introduced in October 2001.

Maruti Versa's launch was accompanied with a high-profile advertisement campaign worth Rs 8 crore featuring top Indian movie stars but since then its sales limped along until Maruti's management stepped in to bail it out. It had earlier reduced the pirces of Versa in June, last year. Apart from the low-price variant, Versa Std, the model has three more which are DX, DX2 and the top end SDX. The low-priced variant Versa is a 5-seater with fewer frills than its other variants and it was also positioned as a vehicle for fleet operators.

Within two months of the price reduction, sales of Maruti Versa grew 41 per cent to 739 units in April and May. The numbers are expected to go up because of the exchange scheme. During 2002-03, Versa sold 1,950 units and during 2003-04, it sold 4,291 units.

Maruti's strategy of introducing low-priced variants to prop up sales has worked well so far. When it recently introduced a Rs 2.37 lakh Alto, the low-priced variant, its sales overtook that of its bread and butter model Maruti 800.

In May, this year, Maruti 800 posted sales of 10,016 units and was lower to Alto's 10,373 units, making it the first time in Maruti's 20 years' history where the 800 model was overtaken by a newer brand.

According to sources in the company, with the introduction of a low-priced variant, Maruti would have two entry-level products at price differential of a mere Rs 10,000 with Maruti AC variant priced at Rs 2.27 lakh. Though it would lead to cannibalisation, the customer could be retained because of the new strategy, sources said.

The customer will have also have far more choices if he wants to upgrade to a similar model or a slightly higher model in the same segment, they add.

Maruti's sales during May rose 13 per cent to 44,212 units (including 6,171 units of exports), up from 39,186 units in the same month last year.

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