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Mr Rajiv Dube, Vice-President - Commercial, Tata Engineering, inside the Tata Safari's limited edition SUV in Mumbai on Tuesday.

MUMBAI, Feb. 18

A YEAR of modest growth but severe market competition may have muted the upcoming Union Budget's ability to impact the automobile industry. Unless, proposals contained therein are of big-ticket dimension.

Over April-January this fiscal, total domestic sales of passenger cars grew by six per cent. "A lot of this was earned by sales-push, less by demand-pull," Mr Rajiv Dube, Vice-President (Commercial-Passenger Car Business Unit), Tata Engineering, said on the sidelines of today's press preview of the Tata Safari's 2003 limited edition.

For the industry, that sales-push included discounts and competitive financing packages, which automatically makes manufacturers and customers seek something sizable in duty cuts, if the budget is to catalyse vehicle sales. Simply put, for the next discount-trigger to capture interest, it must exceed the available ones in scale.

Adding to competition in the market is higher raw material costs for manufacturers, the price of steel, for instance, being revised many times over this fiscal. Rise in input costs forces manufacturers to be tight-fisted when it comes to a potential price reduction for vehicles.

Last year's budget had effected an eight per cent cut in excise duty, bringing it to 32 per cent for passenger cars and utility vehicles (UVs). "A reduction of another four per cent or so may not have an impact on the market. For the budget to have a real impact in today's times, the scale of duty reduction must be of a bigger order," Mr Dube said.

While overall UV sales have grown so far by five per cent, sales on their commercial application side was sluggish. Growth was mostly at the premium end. To a great extent, this was due to stress in the agricultural economy in semi-urban and rural markets, where UVs find commercial use as people carriers.

Beset with such circumstances, focus at UV manufacturers has been to enhance vehicle affordability with suitable financing packages and generate enthusiasm in models offered at the premium end. In Tata Engineering's own case, UV sales grew by 10.3 per cent in January to 2,613 units, registering alongside a one per cent growth in sales this fiscal to 19,225 units.

But its premium sports utility vehicle (SUV) brand - Tata Safari - grew by 30 per cent. Shadowing market trend, the Safari while preserving its original off-road abilities has moved on to a "lifestyle platform."

The vehicle's 2003 limited edition is in tune with this trend, sporting facilities ranging from a Sony Playstation that doubles up as a DVD player (screens embedded in the rear side of front head rests) to a 12-litre refrigerator-cum-food warmer and reverse guide system with a rear camera and a LCD screen on the centre console.

The company will roll out 600 units of this Safari edition, though its last limited edition model of 2001, found demand in excess of the 250 units initially manufactured.

The 2003 limited edition costs ex-showroom in Mumbai, Rs 11.35 lakh for the 4x2 version and Rs 12.21 lakh for the 4x4 version.

According to Mr Dube, a petrol version of the Safari fitted with a 135 bhp, 2-litre engine having four valves per cylinder is slated for introduction later this year. Also on the cards from the company, are the Indica Sport and the Indigo Estate.

Premium not for off-roading

WHILE the emergent positioning of select domestic UV models as lifestyle statements is only in line with earlier trends in developed markets, what intrigues is the absence of similar market fancy for models emphasising UVs' off-roading abilities.

Industry officials say these days the off-roading side of premium UVs appeals to customers by way of indulging their need for a youthful image. But otherwise, feedback from the market is for these vehicle types to offer enhanced comfort and luxury inside.

Premium UV prices also don't fall in the league where a customer would be willing to risk damage through strenuous off-roading.

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