Trial production of the car, which would be powered by a 1.5-litre engine, is on, after which commercial production would commence, the official told PTI.
The official declined to comment on the pricing of thenew car and expected volumes. Honda Siel also plans to launch an improved model of its luxury sedan Accord in January 2004 with a 3-litre V6 engine.
The company makes the City at its plant outside Delhi, which can produce 30,000 cars in two shifts annually.
It also assembles the 2.4-litre Accord from completely-knocked-down kits and imports and sells the newly-launched Sports-utility-vehicle Cr-V.
The new vehicles would be launched as part of efforts by Honda Siel to achieve a nearly 32 per cent rise in turnover this fiscal to Rs 1,500 crore and boost profits by Rs 20 crore to Rs 70 crore.
For this, the company expects to sell 7,000 vehicles more than the 13,300 units it sold in 2002-03.