You are here: Home » Companies » News
Business Standard

Global compact cars' India catwalk

BS Reporters  |  New Delhi 

India today set the stage for global car giants Toyota, Volkswagen and Honda to unveil to the world their strategy and models for the high-growth small-car market. The platform was the 10th Auto Expo being held in the national capital.

Small cars, which range from Maruti 800 to Hyundai i20, constitute over 78 per cent of the total car sales (1.5 million) in the country. India is one of the four key markets for global car makers’ small car manufacturing and exporting hub. The others are Brazil, Japan and Thailand.

TOYOTA  ETIOSBangalore-based Toyota Kirloskar Motors (TKM) today showcased its small car concept christened Etios, which would be launched in India by December this year. It would be available both in a hatchback as well as sedan version, and expected to be priced below or at par with Maruti Suzuki Dzire, the largest selling (over 8,000 per month) sedan in the entry-level segment. The entry price for a Dzire is Rs 5.5 lakh.

Hiroshi Nakagawa, managing director, TKM, said, “The car is not a copy of any European model. This is a newly developed car and the world has seen it first in India. This has marked the beginning of a new era for Toyota in India.”

TKM plans to produce over 70,000 Etios in the first year of its operations, which will help the Japanese giant to become a volume player in the Indian market, selling over 140,000 cars every year. The company has invested Rs 3,200 crore to set up a plant in Bangalore, which will produce the small car. It has taken 2,000 TKM engineers four years to build the Etios.

Taking them on is Europe’s largest car maker Volkswagen (VW). Unveiling the Polo 1.2 litre hatchback today, which is expected to commercially hit the roads in March, VW said it is working on a model that will be priced lower than the Polo. It could probably be its concept car Up, which was showcased two years ago. VW has picked up a 19.9 per cent stake in Suzuki Motor Corporation and is also looking at joint development of small cars.

VOLKSWAGEN POLOJochem Heizmann, member of the board of management at Volkswagen AG, said: “The Polo will give us the volumes to make Volkswagen a mass market player. We expect to have a market share of 10 per cent in six years. We are also looking at a car below the Polo in the near future, which could be the Up or some other cost-competitive model.” Heizmann said the Polo would not compete with group company Skoda’s small car offering, the Fabia (which is available for Rs 5.5 lakh).

While price was not divulged, the Polo would be pitched against Maruti’s Swift and Ritz and Hyundai’s i10, which are available for Rs 4-5 lakh. The company expects to sell 7,500 Polos every month. Commercial production of the model has begun in Chakan plant near Pune. In order to be price competitive, VW is trying to increase the use of locally manufactured components in both cars to 75 per cent, from current 52 per cent.

Honda Siel Honda Siel Cars India (HSCI), too, joined the small car race today. It unveiled a concept car on which the company plans to build an ultimate production-ready vehicle and hit the showrooms early 2011. The car code named 2CV would run on a petrol engine of 1.2 litres and is expected to be priced below Rs 5 lakh. This five-seater, five-door car would be the cheapest in the HSCI line-up, which currently offers five models ranging from Rs 7.5-22 lakh.

General Motors yesterday launched the 1.2-litre Beat from its Chevrolet stable, with an aggressive price tag of Rs 3.34 lakh. US car maker Ford is also believed to be planning to launch the Figo. It was not showcased at the expo.

The rush for global giants to tap the Indian market is understandable as the small car market is growing faster than the overall market.

Says Neeraj Garg, member of the board and director, Volkswagen Passenger Cars, Volkswagen Group Sales India, “We expect a compounded growth of 18-19 per cent in demand for compact cars over the next five years. This robust rise in demand has attracted us to this segment.” The overall market is estimated to grow by 10- 12 per cent.

Commenting on global car makers’ increased focus on small cars and Nano expansion plans, Tata Motors’ Chairman Ratan Tata said, “We ignited in people’s mind that India is a market for small car. It is heartening, therefore, to see that the small car is in the focus for global brands. All efforts have been made to add capacity for Nano. We continue to work at addressing the needs of the market place.”

On plans to launch Nano in the US, he added, “In the domestic market, demand has exceeded supply. But we are recognizing the demand for Nano not only in the regional developing market but also in the developed market. Therefore, we may launch Nano for the US market. But the US-version of Nano will require larger engine and some additional crash tests and modification. It is still three years away.”

Incumbent players Maruti Suzuki and Hyundai Motors, which control over 72 per cent of the car market are not keeping quiet. Maruti Suzuki has formulated a twin strategy. It would double the capacity of its Manesar plant from 3 lakh to 6 lakh per annum and work on new small car models, which includes a re-engineered Alto. It would offer customers more value addition.

Says Shinzo Nakanishi, managing director of Maruti Suzuki, “We will do everything to defend our 50 per cent market share by increasing our volume sales dramatically”.

First Published: Wed, January 06 2010. 00:54 IST