We can't make a 1-lakh car: Maruti

With Tata’s ace the Rs 1 lakh car scheduled to be unveiled on Thursday, Maruti said it cannot make a Rs 1 lakh car and will not be able to help it if Tata takes over market leadership

Maruti has denied any plans of manufacturing an ultra low cost car that could compete with Tata’s car and squashed reports of a possible price cut on its flagship Maruti 800.

“We have arrived at a decision that with the current regulations on safety and emission, we are not capable of manufacturing a car which would cost as low as Rs 1 lakh. Further the Maruti 800 at its current price is the cheapest that we can offer right now and there is no room for us to discount this price,” said Maruti Suzuki India Ltd managing director Shinzo Nakanishi.

“We do not know what the Tata’s car is all about and it is too early to say how it will fare in the market. Our thinking is that a consumer who is looking to buy a Maruti 800 or Alto will never settle for the Tata car because of the difference in value propositions that the respective cars offer,” he said, “In any case the impact of the car will be felt more in the two wheeler segment and every Tata Rs 1 lakh owner will be a potential buyer of our cars.”

Ever since Tata Group Chairman Ratan Tata announced plans of a Rs 1 lakh car in 2004, industry reaction has changed from scepticism to enthusiasm. Maruti for the first time admitted that its sales could also take a hit by the Tata car.

“We have maintained an over 50 per cent market share for a long time now and with increasing competition this kind of monopoly is becoming a thing of the past,” Nakanishi said. “Even Toyota and GM cannot keep 50 per cent of a market. Our market share and sales may also fall as we would not be able to participate in a segment that has huge potential.”

The company for the time being has set its sights firmly on the target to ramp up its capacity to 1 million cars by 2010.