Maruti Suzuki to launch A-Star in October, ramp up R&D capabilities despite dip in sales

The company said it sold 59,908 units in August compared to 65,968 units in the year-ago period, a fall of nearly 9.2 percent in sales - reflecting the single-largest decline in the past 2 and ½ years. A company official said MSIL's lineup of small cars like Wagon-R, Sen and the Alto saw their sales dip in August, though the Swift and Swift Dzire provided some comfort by finding many takers.

However, the company, which is 54.2 percent owned by Japan's Suzuki Motor Corp., said the figures are not upsetting as sales would pick up in October when the festive season begins. "The festive season has always been a good one for the industry as sales tend to go up and we expect the same to happen this year as well," said Maruti Suzuki India Ltd (MSIL) chairman R.C. Bhargava.

Despite the ongoing market slump, the company said it would launch the much-awaited A-Star on which it is banking to reverse its fortunes.

"Worldwide there seems to be no respite from increasing fuel prices. In addition, the commodity prices have also shot up manifold," Bhargava said.

However, it would not take the industry too long to bounce back, Bhargava said. "It won't take the industry long to recover and the market to stabilize. Certain external factors like rise in crude oil prices, the sub-prime crisis and inflationary pressure has hurt the auto industry just like any other industry and if the oil price stabilizes the entire affect will mitigate," he said.

Besides, in times of high inflation, the demand for small, light-weight, fuel efficient cars would grow and strengthen, Bhargava said, adding that the "trend is clearly visible in global markets and is likely to enter India as well."

According to Bhargava, the Indian government has also laid down policies that favor small cars. Keeping in mind the current market trend, he said the company would be launching its global compact car A-Star in October which would boast of the advanced K-series engine that is not only fuel efficient but also complies with Euro-V emission norms. Additionally, in 2009, the company would launch Splash.

A-Star, MSIL's chairman said, would be launched in India first and then introduced to the European and other markets. The company plans to exports over 2,00,000 units of A-Star by 2010-11.

"We are at an advantageous position because we have an expertise in designing small cars. With demand for small cars going up, we will quickly scale up our R&D capabilities to design cars that are best suited for the Indian market," Bhargava said.