GM to launch second small car in India

General Motors today said that it will launch a second small car in India in the next two years as it looks at emerging markets to make up for sluggish sales in the US.

A late entrant in the country's small car market, GM sells the Chevrolet Spark at around Rs 300,000. "We need something lower than what we have got now," GM Group Vice-President David Reilly said today, adding: "I think if we could find a vehicle for less than that, it would not only benefit India but could benefit other places also."

Reilly did not disclose the targeted price of the new model but said that it would not compete against the Tata Nano. Tata Motors had unveiled the Nano, the world's cheapest car at Rs 100,000, in January and had said the new four-seater would roll out later in the year from its West Bengal factory.

Helped by a lower excise duty of 12 per cent (against 24 per cent for bigger cars), small cars make up almost three quarters of car sales in India. The market leader in this segment is Maruti Suzuki.

General Motors, which had launched the Spark last year, has a three per cent share. It sold around 2,800 units of the car per month. The company has a manufacturing plant in Gujarat and is building a second facility near Pune in Maharashtra. The company also plans to build an engine plant in India, but Reilly would not share details.

"We are still in some negotiations ... We absolutely intend to go ahead with it," he said, adding that the company would give further information within the next two months. Reilly said sales growth in emerging markets would outpace any softening in established markets like the United States and would help maintain the firm's total global sales expansion. "I don't predict a slowdown, but this year, the US would be tough," he said.