NEW DELHI: Maruti Suzuki, India's leading car maker, has no plans to enter the Nano segment even though it expects the world's cheapest car to have a marginal impact on sales of its small car model.
Tata Motors' Nano is due to hit the market in July. The base model has been priced at around 123,000 rupees ($2,400) in New Delhi, much below Maruti's lowest-priced 800 cc small cars which start at around 187,000 rupees.
"It may have a marginal impact on the 800 cc sales," Maruti Chairman R.C. Bhargava told reporters on Thursday. He said the company was not planning to reduce prices to tackle the Nano, and reiterated Maruti would not enter the ultra-cheap car segment.
"We have to see whether it will expand the market size. That ultimately will benefit the entire car industry. In the short term, it will have an adverse impact."
Car sales in India rose nearly 22 percent in February from a year earlier, but have fallen in six of the past eight months, hit by tight financing and an economic slowdown.
In the first 10 months of fiscal year that started in April 2008, car sales rose just 1.35 percent in from a year earlier.
Maruti, 54.2 percent owned by Japan's Suzuki Motor Corp, increased sales by nearly a quarter in February, and Bhargava said March sales were up to the company's expectations.
He said sales for the March quarter "seem to be going reasonably well", but the outlook was uncertain.
"Certainly car sales this quarter have been much better. But who can predict that every thing would continue in the same manner for the whole of next year? I can't," Bhargava said.
Shares in Maruti, which has a market value of more than $4 billion, rose 5.1 percent to 771.15 rupees, its strongest close in nearly 10 months, in a Mumbai market that rose 3.5 percent.