The Hindu Business Line : Price wars on fleet street

The gap between entry-level sedans and premium hatchbacks is narrowing rapidly, both in terms of price and features. The choice available in the cusp price segment has always been limited, but with last week's three car launches, those looking for a premium hatch will now face the confusion of which one to go for.

The three cars that we are talking about are the new Palio Stile 1.1 and 1.6, the Getz Prime 1.3 and 1.1, and the new Mahindra Renault Logan all launched last week.

While the smaller engine options in the Palio Stile and the Getz Prime will now mean more choice for small-car buyers, the bigger engines that have been carried forward into the redesigned, new variants will have to battle it out to attract buyers in the entry-level sedan segment.

More choice

Both the Getz and the Palio get new, smaller engines that have effectively been borrowed or reworked from existing vehicles or engines. While this increases the choice available to buyers in this segment and also promises to empower the two cars to deliver more mileage, more importantly, the new engines have also enabled the two carmakers price the vehicles more aggressively.

Both the Hyundai Getz Prime and the Fiat Palio Stile are about 3,800 mm long and both now sport 1.1-litre engines, which makes them eligible for the lower 16 per cent excise duty under the Government's small-car norms that require the cars to be less than 4,000mm in overall length and also be fitted with engines that are smaller than 1,200cc.

The Fiat Palio Stile's 1.1-litre engine option has three trim variants that have been priced between Rs 3.5-3.9 lakh and the Palio Stile Sport with the 1.6-litre engine costs Rs 4.3 lakh (all ex-showroom, Delhi). With the new engine option enabling a lower pricing strategy, the 1.1-litre has now brought the Palio closer to the small-car segment's leading sellers such as the Hyundai Santro Xing and the Maruti Suzuki Wagon-R.

The Hyundai Getz Prime 1.1, though priced aggressively at Rs 3.9 lakh, reflects Getz's premium positioning which has been retained in order to separate it from the other small cars. The existing 1.3-litre engine that has been carried forward into the redesigned Getz Prime has got a price tag that goes all the way up to Rs 5.25 lakh (both ex-showroom, Delhi).

Enter the Logan

But the most interesting launch of last week was the high profile rollout of the Mahindra Renault Logan. The entry-level sedan's shockingly attractive price tag was in the news all of last week and has led to the competition scurrying back into the boardrooms for reworking their strategies.

The Logan has been launched with two petrol engine options (1.4- and 1.6-litre) and a 1.5-litre common rail diesel engine option. The prices for the Logan's variants range from Rs 4.35 lakh to Rs 5.76 lakh for the petrol engine options, and from Rs 5.54 lakh to Rs 6.5 lakh for the different trim variants of the diesel engine option.

The Logan's package as a whole and its aggressive pricing will lead to a speeding up of the shift in buyer preference from the premium small car segment into the entry-level sedan segment for both petrol and diesel engine options.

However, while it is a fact that Mahindra & Mahindra and Renault, the joint venture partners, have only set a relatively modest sales target of 50,000 Logans per annum, the going will not exactly be easy.

The mindset of the customer in this segment is pretty much similar to that of the small-car buyer. So, issues such as the spread of the company's sales and service network, the fact that the engine is imported and as a consequence the availability and affordability of spare-parts are points that will weigh in buyers' minds at the time of making his purchase decision.

Maruti gearing up

Further, with Maruti trying to hurry up the launch of the Suzuki SX4 sedan, its answer to the Logan, buyers are likely to wait to see what is in store for them. M&M's production constraints as it ramps up to full capacity at the dedicated Logan line in its Nashik facility and the company's phased launch of the Logan around the country will work against it and provide Maruti with a time cushion, as the latter pushes towards the launch of the SX4 sedan.

Maruti is expecting to launch the SX4 sedan by the third week of May, well within M&M's planned delivery schedules for buyers from the major metros. We will bring you comprehensive reviews of both the cars within the next four weeks. Our advice for buyers in this segment — Stop, Read, Proceed.

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