NEW DELHI - India's biggest car maker, Maruti Udyog Ltd., cut prices of two compact models by about 2.5 percent in a bid to drive sales even faster in a price-sensitive market, a company official said late on Monday.
The price reductions apply to all variants of Maruti's Zen and Wagon R models and are effective from Monday, said the official, who declined to be named.
The base model of the Zen carries a showroom price of 335,867 rupees ($7,250) in Delhi, while the Wagon R is priced at 328,166 rupees. The official said the price of the base model of the Zen had been cut by more than 9,000 rupees and of the low-end version of the Wagon R by 8,000 rupees.
Maruti, 54.2 percent owned by Japan's Suzuki Motor Corp., has a dominating 51 percent share of the Indian car market but has faced intense competition in the past few years from the Indian unit of Hyundai and local firm Tata Motors Ltd.
It makes 10 models in India, including five small, low-price cars, and imports one fully built from Japan.
The official said Monday's move was a "price rationalization" and followed a 76 percent surge in the sale of Maruti's compact cars in April-July, the first four months of this business year.
"With this price cut, we hope sales would rise even faster."
In September 2003, Maruti cut the price of the Alto compact car, which led to an improvement in its sales. Demand for the Alto jumped even further when the company introduced a low-price version of the Alto in April.
Maruti in July also cut the price of its Esteem sedan.
India's car sales have surged in the past 15 months helped by robust economic growth, cheap finance schemes as well as discounts and freebies offered by manufacturers.
Maruti's total vehicle sales surged 30.3 percent in the past business year ended in March to 472,122 vehicles. Sales were helped by an industry boom and have risen 14.6 percent in the first four months of this fiscal year.