Indica's price challenge will, therefore, have to come in the diesel segment, where the basic diesel car has been priced at Rs 2,85,000 in Delhi. The semi-deluxe Indica version will sell for Rs 2,95,000 and the deluxe one at Rs 3,90,000. This compares favourably with the Zen diesel, whose price even after the price cuts works out to Rs 4.26 lakh.

The most stunning piece of news for the car buyer is the price cut of the Maruti 800 at Rs 1.85 lakh in Delhi, making it the cheapest car in the country. The Omni E eight-seater will, however, continue to be the best deal on four wheels with a tag of Rs 1.79 lakh. Its five-seatercounterpart will be Rs 1.98 lakh, which means Maruti has three models to offer at a price of less than Rs 2 lakh. These are, however, ex-showroom prices, which means the final cost at the consumer end will be above Rs 2 lakh taking registration and insurance charges also into account.

The cars wars are unlikely to end with just Maruti and Indica. A spokesman for Ind Auto, the joint venture of Fiat India Automobiles and Premier Automobiles, said that the company was "prepared for the price war". This means that the price of the Uno could be lowered if the need arises. The car has only of late begun to do well ever since Fiat took charge of Premier's Kurla (central Mumbai) plant early this year. But with Telco and Maruti announcing attractive prices, Uno's recent sales surge could halt suddenly.

The price announcements by Maruti and Telco will also affect the fortunes of the recently-introduced Hyndai Santro and the Daewoo Matiz, both of which may see the ground shift under them in the price-sensitive smallcar market. The 796cc Matiz, dealers say, is already overpriced at Rs 4 lakh (ex-showroom, Mumbai) and the response to the car has been rather tepid.

The Santro (Rs 3.19 lakh in Mumbai for the basic version) was, ironically, the first to begin the price war in the small car segment. It introduced three variants, two of which were cheaper than the Zen, with the third on par. Now, with Maruti introducing a basic version of the Zen to take on its Santro counterpart, Hyundai could have some serious rethinking to do.

The car had a fair share of bookings, which, in the opinion of its officials, was as per expectations. However, buyers are still taking time getting used to the car's unusual looks and its "tall boy" exterior. Auto enthusiasts say the "Santro is a great driving experience," but the Indian buyer is still to warm up to its contemporary "ugly-is-beautiful" looks.

The key issue now is who will be the winner in the price war. This is rather difficult to predict at this stage, but an analysis couldindicate some trends. For a start, the Tata Indica's petrol version will, in all likelihood, be a slow starter as it is more expensive than the three variants of the 800 (see table). In fact, even the new Zen LX is barely Rs 40,000 more than the petrol Indica, a factor that could tilt the scales in favour of the Maruti.

This would not be a disappointment to Telco as the company has already decided to have a lower output of petrol Indicas (30:70). This proportion could be reduced further to 10:90 on the lines of the Ford Escort whose diesel version virtually cannibalised its petrol sibling.

The diesel Indica, on the face of it, is a winner and there is no way the buyer can turn down such an attractive price offer. The fact that diesel is a cheaper fuel is another incentive and experts believe that in the initial stages, the semi-deluxe diesel version would literally sweep the market.

The top-end diesel version of the Indica could end up being the biggest threat to the luxury model of the Santro as thetwo are evenly priced. However, the Santro's drawback is that it does not have a diesel option, and this could create a complete shift to the luxury Indica diesel--assuming the Indica lives up to its quality billing.

The other casualty here could also be the Uno, whose keen pricing strategy for the petrol and diesel versions now fades into insignificance. The petrol version of the Indica could eat into the already small share of the Uno petrol, while the diesel Indica will be the bigger threat to its Uno counterpart. The ball is now in Fiat's court and if the Italian automaker decides to follow suit in the price war, there will be a keen tug-of-war in the months to come.

Insight

Car market to expand

Though Maruti has stolen Telco's thunder on its big day, the fact remains that Telco has kept its promise by delivering a quality product at the expected price of around Rs 2.6 lakh. This has set the cat among the pigeons, and the other players in the small car market will have to fight aprice war to stay in the business.

A price war will have far-reaching repercussions in terms of expanding the size of the car market on two fronts. The first is the replacement market, where buyers will now have the option of moving up the value chain simply owing to the sheer variety on offer.

But, perhaps more important in terms of market expansion could be the anticipated price crash in the second-hand car market, which could entice first-time buyers. The coming crash will make second-hand cars at the lower end price-compatible with the upper-end two-wheeler market.

Lastly, what these price cuts underline is the fact that in India "price" is still the predominant factor in finalising a purchase. In the more sophisticated markets of the west, buyers consider aesthetics, comfort and safety--not necessarily in that order--before the buy. Whatever be the outcome of the "price wars", one thing is clear: the Indian consumer is finally king.