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Our Bureau

Kolkata , Feb. 4

SUFFERING from sharply dropping sales of the Lancer and lukewarm sales of the Pajero, which in turn has led to poor utilisation of capacity at its Chennai plant, Hindustan Motors is currently busy working out a short-cut strategy to tide over the crisis.

One result of this is that it has lined up a launch of low-priced variants of Lancer and Pajero and is aiming to launch another Mitsubishi product to fill the price gap between the two.

The new car, which will be launched in the next year in the D segment and will be priced around Rs 12 lakh, will need an additional investment of Rs 50 crore.

"It will give another option up on the value chain to our Lancer customers," the Company Vice-President, Mr S.C. Gupta, told reporters here on Friday. "We hope the repositioning as well as the launch of new products will lead to better utilisation of capacity".

Mr Gupta said that launches in the A and B volume-segments were ruled out because "it would require large-scale investment".

HM initially sold 12,000 Lancers a year though its Chennai plant is capable of producing 24,000 cars five years ago. The cars were priced at Rs 12 lakh. Sales had dropped as soon as the competition intensified; in 2003-2004 the company could sell just 3,000 Lancers. In 2004-05 so far, the company has sold around 2,000 lancers and that too in a market (C segment), which is as large as 40,000 cars per annum.

"We were a market leader five years back," Mr Gupta told reporters. He admitted: "We could not launch new models or products as quickly as our competitors did."

HM has tried to fight dropping sales by reducing prices, the latest such measure resulting in the cheapest variant of the Lancer being available at Rs 6.93 lakh across the country. Mr Gupta said: "We are not slashing the price but removing expensive fancy items and passing on the benefit of indigenisation to our customers." The hope, of course, was that sales would increase from as low as 200 units per month to 500.

According to him, the company has attained 72 per cent indigenisation proportion and has reduced the price of 93 spares by an average of 56 per cent.

As regards the Pajero, he said: "It is operating in a price bracket of Rs 22 lakh plus with a market size of 100-125 per month." Initially launched in the Rs 33-lakh bracket, HM has already reduced its price and is now planning to launch a variant in the range of Rs 17 lakh to take advantage of a 600 unit per month market.

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