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Suzuki’s Alto-ego

Shooting low: Suzuki says it aims to sell 3000 Altos a year - or more.

Small-car specialist Suzuki has big plans for first affordable sub-light model

21 Jul 2009

SUZUKI has officially forecast it will sell just 3000 examples of the Alto micro-car in Australia in 2010 – its first full year of sales – but intends to find up to 10,000 homes a year once supply restrictions ease for the nation’s cheapest new vehicle.

Launching the $12,490 Alto this week ahead of its August 1 showroom arrival, Suzuki Australia general manager Tony Devers said strong European demand and limited supplies from the Manesar plant in India, where the Alto is built, will restrict sales to about 1000 units this year.

But he conceded the Japanese small-car specialist’s official sales prediction for the Alto, which sets a new low-water mark for a new car in Australia, is deliberately conservative in the face of a potential influx of new sub-light models from China, India, Malaysia and Korea.

“We aim to do far more than 3000,” Mr Devers said. “Suzuki will be the first company in Australia to offer a car with outstanding fuel economy, ultra-low emissions, high levels of safety, legendary reliability and all at a price within reach of every new-car customer.

“We are pioneering the segment but we know Hyundai is coming out of India and are looking very closely at us. We have to be smart. We know the car is right and is positioned right. It’s always nice to be the first, so they’ll be chasing us.

30 center image Left: Suzuki Splash. Below: Suzuki Kizashi Concept.

“The biggest challenge is to get bums in seats, but the (small-car) segments are growing and Australian psyche is softening. We have 12 to 18 months to make hay.”

Hyundai is believed to be leading the charge to join Suzuki’s pioneering Alto in the inexpensive sub-light category, with the Indian-built i10 hatchback expected to follow this year’s Getz-replacing i20 on sale here.

Malaysia’s Proton has committed to launching a sub-$13,000 sedan based on its domestic market’s Saga and Chery’s first passenger car, which is known in China as the Florid, is also due here in 2009.

The world’s biggest car-makers in Toyota, General Motors and Ford will also be watching the Alto’s sales performance in Australia, which could provide an indication of the potential success their respective iQ, Spark and Ka models could achieve here.

For Australia’s first Indian-built passenger car, Suzuki will target the same 45-year-old-plus customers that currently comprise about 60 per cent of those who purchase light-cars, including its own Swift hatch, which is priced from $16,790. Suzuki’s smallest model attracted almost 13,000 buyers last year – more than four times Suzuki’s full-year sales estimate for the Alto.

It says the Alto’s primary target market will include older couples and empty-nesters who are conservative, rational buyers who make smart choices.

Its secondary target market will be 18 to 23-year-old singles, university students, new professionals or those whose vehicle purchases are funded by parents. Both groups are expected to comprise commuters looking for a public transport alternative, while the older group may be in the market for a second vehicle and the younger group will comprise second-hand car buyers.

According to Suzuki, research shows that 54 per cent of 18-25-year-olds regard themselves as environmentalists, rising to 80 per cent for those aged over 45, with a respective 66 and 71 per cent believing that “environmentally friendly products are over-priced”.

Suzuki’s nationwide Alto launch campaign kicks off this week and will combine television, newspaper, magazine, online and outdoor advertising – including billboards at train stations – urging consumers to choose to be economical, safe and ‘green’.

Indeed, rather than highlighting the fact the Alto is now Australia’s cheapest new car, which Mr Devers believes would simply lead to heavy discounting and a driveaway pricing push from rival brands, Suzuki’s Alto campaign will be headlined by the claim that it is Australia’s most fuel-efficient (five-door) petrol car.

With average combined fuel consumption of 4.8 litres per 100km (5.5L/100km for the auto), the Alto is less efficient than only Toyota’s new Prius hybrid and the two-door Smart ForTwo coupe and convertible (4.8L/100km), plus the diesel-powered Mini Cooper D manual (3.9L/100km) and Fiat 500 1.3 JTD (4.2L/100km).

All Altos come standard with six airbags, ABS brakes with electronic brake-force distribution (EBD) and brake assist (BA), plus seatbelt pretensioners and a four-star ANCAP crash test rating. The Alto also meets Europe’s latest end-of-life requirements by being 85 per cent recyclable.

Answering criticism that electronic stability control (ESC), which comes standard on the premium-grade Alto GLX ($14,490 manual), was not standard across the range, Suzuki says ESC is not available from the factory in the base GL model and would have pushed the Alto’s entry price beyond its sub-$13,000 target price.

Swift buyers must stretch to $24,490 Swift Sport flagship to gain the safety of ESC, but Mr Devers said he did not expect a backlash from Swift buyers.

“Not really,” he said. “There’s always got to be a balance between price and spec. Swift is a different segment. We’ve got it in the Sport and we’ll phase it in in the next model change. The demand for six airbags is higher than it is for ESP.”

Suzuki says the Alto is profitable at its $12,490 “introductory” price, but admits that number could increase in six months or so depending on exchange rates.

“The exchange rate is solid for us – we buy in US dollars - but we’re making a statement with that price. Some would have been tempted to put up the price when supply exceeds demand,” said Mr Devers.

“We will sell as many as we can get in 2009. Demand will exceed supply this year. We’re launching at the price we think it should be.”

Suzuki says the Alto compares favourably with the (larger-engined) Hyundai Getz 1.4 S three-door, which at $13,990 was previously Australia’s most affordable new car. It points out that, for $500 more, the Alto GLX manual adds two more doors, four more airbags, ESC, alloy wheels, foglights and lower fuel economy and emissions.

Suzuki says that, previously, the cheapest car in Australia with six airbags as standard was the Nissan Micra City Collection ($17,990), while the most affordable with ESC was the (larger-engined) Getz 1.6 SX ($15,340).

Further, it highlights the fact that the cheapest car to match the Alto’s 4.8L/100km fuel economy average is Peugeot’s 207 XT HDi ($28,990).

Suzuki says it is not concerned that some Alto sales could be substitutional for sales of the Swift, which returns 6.3L/100km in 1.5-litre manual guise.

“We think the Alto will bring new buyers in who might have bought a Swift, but I think Swift will hold its own,” said Mr Devers.

Mr Devers defended the Alto’s requirement to run on 95 RON premium unleaded petrol, saying: “Do the sums and the extra four to five cents per litre at 4.8L/100km won’t bother anyone.” He said the Alto would have had a limited life cycle had it been imported without a Euro IV-compliant engine, which requires high-grade fuel.

The Alto, which requires service intervals of 15,000km, will come with a three-year/100,000km new-car warranty, but will not be supported by a roadside assist program, which Suzuki Australia ceased to offer two years ago.

“This is a Suzuki. We did have roadside assist but took it off two years ago. There’s a cost for everything. We believe we don’t need it,” said Mr Devers, who said the base GL variant would account for 60 per cent of Alto sales, with automatic versions commanding a similar majority – despite the $2000 transmission premium.

Japan’s number-three car-maker points the fact that light cars overtook large cars in terms of popularity in 2008, while small cars overtook large cars in 2004 to become Australia’s biggest single vehicle segment. Driven by increasing fuel prices that it expects to reach $1.60 per litre by the end of 2009, it says Australian car buyers will continue to downsize.

But it admits it faces a challenge in convincing Australians to embrace A-segment vehicles like the Alto, which have long been favour by European buyers.

“The A-segment is already established in Europe but for us is a challenging segment,” said Suzuki Australia managing director Tak Hayasaki.

“The Alto is designed to take advantage of a growing desire to be economical and environmentally friendly. We were making green cars well before it became popular. The challenges in Australia are obvious, but I’m confident the time is right for Alto in Australia,” said Mr Hayasaki.

He said the company’s departure from the World Rally Championship and other motorsport programs last year allowed Suzuki to remain profitable in its 2008 fiscal year, when it went against a global trend to post a $350 million profit. Suzuki says it has recorded a profit every year since 1950 and last year increased its market share in Japan to 13.5 per cent, overtaking Honda, Mazda and Mitsubishi to lie third overall.

The local Suzuki boss said the cancellation of its motorsport programs allowed Suzuki to invest funds in projects like the Alto, which he described as the high points of Suzuki small-car development and a new chapter in Suzuki Australia’s history.

Maruti Suzuki’s Manesar plant, which has been top-ranked by independent quality analyst JD Power in India for nine consecutive years and ships 56 per cent of its export production to Europe, will expand its capacity to 300,000 vehicles in 2010.

Suzuki has no plans to produce diesel or three-door versions of the Alto, but Mr Hayasaki said the five-seater Splash, which is slightly larger than the Alto, remained on the menu for Australia despite the Alto’s release here – pending European demand.

Suzuki says it continues to aim for a four per cent overall market share in (up from 2.2 per cent currently), and will expand its national dealer network from 76 to 79 retail outlets in 2009.

“We maintain our aim of achieving four per cent market share and Alto provides us with the next crucial plank in our product-led revival,” said Mr Devers.

Suzuki Australia’s next additional model will be the Kizashi – the brand’s first mid-size sedan – which remains on target for a mid-2010 local introduction.

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