NEW DELHI: A price war is in the offing in the entry-level sedan segment with Maruti Suzuki looking to downsize the Dzire to under four metre to fit the car in the small car definition and avail lower excise benefits, a move that will give it elbow room to be more price-competitive .
The Dzire, leader in the entry sedan segment , is a hot seller for Maruti and accounts for about 8,000-9 ,000 units monthly. However , the entry of Toyota Etios at a highly competitive price (Delhi ex-showroom price just under Rs 5 lakh for the basic model) has prompted Maruti to go for this rejig.
While company officials refused to comment , it is believed that the Maruti's R&D team is working on reducing the length of the car to under four metre. In its present avatar, the Dzire has a length of 4.16 metre that puts it in the category of a big car, thus attracting excise duty of 22%.
The length reduction will cut excise by more than half to 10%. The Delhi ex-showroom price of the car is between Rs 4.88 lakh and Rs 7.07 lakh and industry analysts said the duty reduction could result in a benefit of approximately 8% or between Rs 40,000 and Rs 56,000. However, it is not clear how much of this benefit the company will pass on to the consumer.
When contacted, a spokesperson for the company said, "We do not comment on future products and refreshments."
The Dzire is currently available on 1200cc petrol and 1250cc diesel engine, both of which are appropriate to give it lower excise duty if the length gets reduced.
In reducing the size of the Dzire, Maruti seems to be following the industry trend of downsizing vehicle size to avail of lower excise duty. Tata Motors was perhaps the first one to do this when it reduced its Indigo sedan to under four metre to make the Indigo CS, a car that looked like a sedan but came around the pricing of an upper compact car.
Mahindra is also believed to be doing the same with the Logan sedan and the multiutility Xylo. Maruti is also doing it for competitive reasons. The runaway success of the Etios would be a concern for the company's marketing bosses as it hits directly at the Dzire.
While low production numbers of Etios (currently 35,000 annually) means that the model may not be an immediate threat to the Dzire, it could impact the model in the long run once Toyota starts churning out more units.
Source: TOI and ET