Saturday, December 29, 2007

Suzuki - 'from denial to price reduction' reaction to Tata 1 Lakh car

Tata's seem to be the flavor of the month in terms of the media coverage and news. This is media attention is only going to increase in the coming days with the Jan 2008 launch of its 1- lakh car at the Auto Expo in Delhi. As it had happened with Indica, competitors and other auto manufactures were in a state of denial that an Indian company could come up with a world class car, now the same is happening with the 1 Lakh car, Suzuki initially denied that it was possible to manufacture a car at $2500, and then a few weeks back questioned the ability of Tata's to produce a car at the price with adequate safety and emission norms. Now the news is that Suzuki is planning to slash the prices of its iconic 800, some are even saying that it might try and match the prices . To quote the managing director Shinzo Nakanishi "We will have to do at least that,”.

From the consumers point of view it is a new year gift from Suzuki and Tata Motors, and the reinforcement of the belief that competition is good for consumers. With the coming of the world's cheapest car the dynamics of the auto industry might change forever. But then what would happen to consumers who have brought Maruti 800 for so many years, will they not feel cheated? Would it lead to a similar reaction as happened with iphone? Maybe one of first reactions would be that consumers would postpone their purchase decision till dust settles down in the low priced car wars............



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