General Motors shelves small car project in India

US car maker General Motors today said it has shelved plans to launch small car in India that was planned to take on Tata Motors' 'Nano', citing viability issues.

"It (small car) was under discussion when the Rs 1 lakh car (Nano) came in. We have reached a decision point that it is not right for us," General Motors India (GMI) President and MD Karl Slym told reporters here.

The small car was looked to be positioned below the company's existing entry level compact car 'Spark', he added.

"We did have a plan (to launch a smaller car than Spark), but no longer now. We have shelved the plans to get into that segment," Slym said.

There is no decision now to go below the segment where 'Spark' is present and GMI's all future models in India will be positioned above this car, he added.

Slym said when the 'Nano' came, there was much talk about the Rs 1-lakh price but it is no longer the case as the price has already gone up.

The flagship small car 'Spark' comes with a 1,000 cc engine in both petrol and LPG options. As per GMI's website, the car is priced between Rs 3.01 lakh and Rs 4.31 lakh (ex-showroom, Delhi).

When asked if the company would introduce a smaller engine in the 'Spark', Slym did not commit himself but said: "We have a powertrain facility that can produce different types of engines."

The company has now geared up to launch the diesel variant of its another small car 'Beat' in next month.

"This is going to be one of the most fuel efficient cars. As per ARAI standards, the car will give a mileage of 24 km for every litre," Slym said.

The carmaker, which has two production plants at Halol in Gujarat and Talegaon in Maharashtra, is investing $500 million (over Rs 2,200 crore) by the end of next year to increase its capacity and consolidating R&D activities.

It will also hire about 1,000 people by 2012 in line with its plans to expand the current production capacity by over 80% to 4.1 lakh units per annum at its two facilities.

The company is expanding the capacity in order to roll out its Chinese partner SAIC's commercial vehicles (CVs) in India. The first of a series of five vehicles will be launched during the Auto Expo in the National Capital in January 2012.