Small Cars Make Big News

After Tatas gave a clarion call to set up small car manufacturing plant at Singur, West Bengal other car manufacturers have jumped to the bandwagon. (See the post 'Small Is Beautiful').The front-page story in today's financial newspaper Economic Times titled 'Maruti to try its lakh with 800' makes interesting reading. The intended pun on 'lakh' (which rhymes well with luck) has not been lost. In my previous post 'Is Small Car Project A Big Dream', I had mentioned what was this entire buzz about 'lakh'. Reproduced an extract from the same:"One has to understand the psychology of middle class customers in India to appreciate the compulsion to keep the price below the one lakh barrier. Today every Indian first dreams to become a ‘lakhpati’ (one who is worth more than one lakh or$2200) and then a ‘crorepati’ (one who is worth more than ten million rupees or $220000)". ...
Perhaps seeing the writing on the wall, Maruti the undisputed market leader in auto business in India is sitting up and taking notice. As per the story in Economic Times, Maruti is considering to bring down its price of '800' (the cheapest of all the models) by Rs 50,000 to Rs 60,000 ($1100 to $1350) to Rs 1.3 lakh ($3000). It will still be above the psychological barrier of Rs1 lakh ($2200).
The future battle between Tata's People's car with a tag of $2200 and Maruti's 800 with a tag of $3000 is expected to be fierce but interesting for the customers. Both sides are formidable giants. On the one side is Suzuki the Japanese carmaker which brought revolution to the Indian auto industry. On the other side is Tatas - the homegrown corporate icon having experience and goodwill spread over more than a century.Ultimately, the small car customers will be the real winners.
Is it not?