Small car market readies for 10 new models, variants

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SummaryLED by diesel models, at least 10 compact cars are expected to hit the streets in the next 12-18 months, spoiling car buyers for choice. Given the large price gap with petrol, diesel cars already make up 50% of the 2 million-unit Indian car market.

LED by diesel models, at least 10 compact cars are expected to hit the streets in the next 12-18 months, spoiling car buyers for choice. Given the large price gap with petrol, diesel cars already make up 50% of the 2 million-unit Indian car market.

Apart from new models of Hyundai i10 and i20, the Korean carmaker is expected to unveil the much-awaited 1.1-litre diesel i10. The company is investing $300 million in Tamil Nadu in a plant which will also build diesel engines. Hyundai will run into competition from Tata Motors, which is readying an 800-cc diesel Nano. The company, which recently overhauled its top management and hired ex-General Motors India chief Karl Slym as its new MD, is aiming to unseat Hyundai from the No.2 spot in India.

Meanwhile, market leader Maruti Suzuki has lined up one model. The company is planning to replace the Zen Estilo with a brand-new car, codenamed YL7. The Swift, Ritz and Alto were updated last year and the next revision is still a few years away.

Even as rising aspirations and income levels boost compact UVs and entry-level sedans, companies are focussed on small cars measuring less than 4 metres and priced at R2.5-6 lakh, thanks to large volumes and the cost-efficient vendor base.

“Companies are looking to expand their portfolio in the core of the market and add diesel options. Also, product life cycles for some like Hyundai are coming to an end; so, they are replacing older models with new ones. This is also an opportune time for new manufacturers to enter the market, as existing options have become dated,” Deepesh Rathore, MD at IHS Automotive India said.

Utility vehicle segment leader Mahindra is expected to launch its first small car —the Verito hatchback — by mid-2013, to be followed by the NXR electric car. The latter is ready, but is awaiting government policy on electric car subsidies. Meanwhile, its former French partner Renault is reportedly localising the Modus compact for a price point below Rs 5 lakh.

Ford too is working on a small car, to be positioned below its successful Figo. This could be named the ‘Ka’, though ‘B-Max’ is also touted as a candidate.

Nissan is expected to debut the Datsun brand in India, with an entry-level hatchback, an entry-level sedan and a compact utility vehicle. Skoda too has a new Fabia planned for 2013-14, priced much below the current model.

Industry insiders say Skoda, scouting for volumes, is aiming to distance itself from parent Volkswagen’s prices.

“Maruti dominates the small car market, thanks to its large network and the best value in the segment. Rivals feel these things are easily achievable and they want to nibble away some market share. Even a small percentage gain is huge in volumes,” Rathore said.

Many others are working on small cars too, though they will come in later. Volkswagen is said to be working on modifying the Up compact for India and is set to unveil a new low-cost brand for emerging markets while Tata Motors is planning a new model to fit between the Nano and the Indica.

Year 2010-11 saw the last big surge in small cars, when the Honda Brio, Toyota Etios, Nissan Micra and Volkswagen Polo hit the streets and boosted the premium hatch segment. Following this, existing models like the Maruti Swift, Honda Jazz and Hyundai i20 were either replaced or saw aggressive price cuts.

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