Encouraged by the strong success of India-made Ertiga in Indonesian market, Maruti Suzuki will start exports of the WagonR in a completely knocked-down (CKD) form to Southeast Asia's fastest growing car market by next month. WagonR, which is the fourth-largest selling car in India, will be offered in a 1-litre K-series engine under Indonesia's recently announced low-cost green car (LCGC) programme.
“It's a growing market, and the recently announced LCGC programme in Indonesia means that there will be almost zero duties on small cars. The company will start exports of CKD kits of WagonR in August-September. It is targeting substantial volumes,” an industry source in the know told FE.
Indonesia's LCGC programme is similar to tax breaks given to small cars in India and is lately the focus of nearly every global carmaker, especially Japanese players like Nissan, Suzuki, Mitsubishi and Toyota. Under the regulation, electric/hybrid cars, biofuel-based cars and CNG cars will get tax incentives, while luxury taxes will not apply to vehicles with engine capacities of up to 1,200 cc (petrol) and 1,500 cc (diesel) that promise a minimum fuel economy of 20 kmpl. Currently, new vehicles are taxed between 10 and 75% in Indonesia.
Maruti had also done a study towards launching the Alto 800 in Indonesia. Though Alto is a top-selling car in the domestic market, it did not find favours with Indonesian buyers, who prefer bigger vehicles like MPVs and premium hatchbacks. In fact, the four top-selling cars in Indonesia in Jan-June 2013 were all MPVs, with Toyota Avanza (smaller version of the Innova) leading, the Daihatsu Xenia and Toyota Innova coming in second and third, followed by the Suzuki Ertiga at the fourth position.
The Indonesian car market, which touched an all-time high of 1.12 million units in 2012, is significant for Maruti at a time when sales in India are sluggish on back of a depressed consumer sentiment and slowing macro-economic growth. Ertiga has also been a runaway success, since launch in April 2012. Maruti exported about 65,000 CKD kits of MPVs, and between January and June this year, sales were up four times at 32,447 units with about 5,600 deliveries pending till the end of July. This is in addition to exports of a further 15,000 units of the Ritz (Suzuki Splash)