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Daewoo to hike Matiz output, mulls Leganza roll-out - Views on News from Equitymaster
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  • Feb 14, 2000

    Daewoo to hike Matiz output, mulls Leganza roll-out

    Daewoo Motors has firmed up plans to hike production of the Matiz in response to growing demand from the export and domestic markets. It also plans to introduce the Leganza in the premium car range.

    Daewoo of South Korea has a presence in the country through its subsidiary Daewoo India. The 'Cielo', 'Nexia' (mid-car segment) and 'Matiz' (small car) are Daewoo's flagship brands in the Indian market.

    At current level, Matiz production stands at 4,500 units per month. The company plans to increase production to 7,500 units. It will introduce another shift to make this possible. This was reported by a leading financial newspaper.

    The objective behind the production hike is to remove the backlog so as to ensure that the Matiz is available more easily. The Matiz is also being exported in a big way so the second shift will ensure that delivery schedules are met without any delays.

    Small car manufacturers, Tata Engg. (Indica), Daewoo (Matiz) and Hyundai (Santro) are witnessing robust demand for their small cars. The demand is so strong that manufacturers are finding it difficult to keep up supply at current production levels. They are being forced to introduce another production shift so as to sell cars on demand. They have realised that the impatient consumer may migrate to a competitor for a small car as he may not want to wait beyond a point. Pressures from the export market is another reason why companies are increasing production.

    Another report in a business daily revealed that Daewoo was mulling a launch in the premium car segment and planned to launch the Leganza to this end. As a matter of fact, at Rs 1,200,000-1,500,000 the Leganza is targeted at the super premium segment. However for the time being, the company plans to focus on the Matiz given the strong demand for the small car. It will concentrate on Leganza's launch only after it has reached a decent production level for the Matiz. Consequently the Leganza may be released only after 2 years.

    Although, currently demand in the premium car segment is weak at sales of about 300-400 units a month., industry sources feel that this could increase to over 1,000 units in future. As demand in the small car and mid-sized segments firms up, the demand growth will then spread to the premium segment. It is with this anticipation that auto majors like General Motors, Tata Engg. and Daewoo have firmed up plans to break into the premium segment.



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