Kinetic Testing Aixam Microcar Prototype

Indian scooter-maker Kinetic Engineering hopes to put the entire nation on wheels with a compact car it will unveil early next year targeted at the countrys lower middle-class.

Why should lower-middle-class people be condemned all their lives to travelling in buses? Let them have their little car, Kinetic chief Arun Firodia said.

Kinetic is testing prototypes of its 500-cc City Car, a version of the French Aixam microcar tailored to Indian conditions, and expects to launch it commercially sometime in the first quarter of 1998, Firodia said.

Aixam is a French microcar manufacturer which has a major share of the 11,000-unit-per-year European microcar market. But analysts fear Firodia will find it hard to beat the standards set by Indias largest-selling car, the Maruti, made by a subsidiary of Japans Suzuki Motor Corp, which has captured the lower end of the automobile market since its 1983 launch. The biggest challenge in the auto business is to position a car below the indomitable Maruti 800 that enjoys a low-cost sructure impossible to match, said Hormazd Sorabjee, associate editor of automobile magazine Auto India.

Analysts estimate there are 60 million people in Indias lower-income group, with annual incomes ranging from Rs 20,000 would be able to buy such a car. To extend into this niche and challenge Marutis dominance of the market, Firodia is lobbying the federal government to shave the excise duty on the car to make it more affordable.

Without the excise duty it will cost about Rs 125,000 ,he said. With the excise duty it will cost 140,000 rupees. Firodia said he expected to sell 10,000 units annually after the car becomes commercially available sometime next February. It will bring an annual revenue of about one billion rupees, he said. Of course, we expect to sell more in later years, but the initial plan is 10,000 units. He said the growing congestion of Indian cities would help to fuel demand. By the year 2005, Firodia expects to sell about 50,000 units annually. Year by year there will be an increase in demand, because the cities are getting congested, and there is no place to park, That brings the easy-to-park, easy-to-drive characteristics of this car into better focus, he said.

With automatic transmission that eliminates the need to change gears and light steering, the City Car can attain a top speed of 65 kmph, with a fuel efficiency of 25 km to the litre, Firodia said. Yet Firodia is keeping his fingers crossed.

Potentially the market is very, very large, he said. But what is the market reaction to this new concept, and how it accepts and appreciates and nurtures it only time can tell. Concerns that the vehicle was too small and fragile for Indian roads had also clouded the launch of the Maruti, he said.(Reuter)

Now people say that is the only correct concept, Firodia added. So it takes time for a new concept to get accepted, and the product has to prove itself also. Firodia has competitors lurking in the wings. Maruti itself plans to launch a new version in October. Korean players Hyundai Motor Co and Daewoo Motor Sales Corp, as well as Indias Tatas, all have small cars on the drawing board.

Sure, we see emerging competitors, Firodia said. Once the idea catches on definitely there will be others.