HM's marketing pitch for Lancer in the non-metro cities is paying rich dividends with smaller centres accounting for over 35 per cent of sales, said company officials. The company sold 671 vehicles in May this year.Hindustan Motors launched Lancer in the Indian market in October 1998 through a technical collaboration with Mitsubishi Motors of Japan.

Speaking to The Financial Express, Hindustan Motors executive vice-president R Santhanam said the company will go for phased increase in production over the next few months. In the first phase, the company will step up production to 800 vehicles a month by September this year, up from the present level of 700, said Santhanam.

The company's Chennai plant has a capacity to roll out 24,000 vehicles in a year, working on a two-shift basis. The plant presently works on a singleshift.

Lancer will reach the 70 per cent indigenisation level by middle of next year, said Santhanam. The models rolled out presently have around 60 per cent indigenisation.

Demand for diesel and petrol versions have been almost the same with customers not being too particular on the fuel-type, said Santhanam. It may be noted that the ex-showroom price of the diesel-propelled Lancer is around 13 per cent higher than its petrol counterpart.

The number of Lancer dealers is also set to go up from 18 to 24 by end of the year. The company will soon appoint dealers in Calcutta, said officials.The company would continue with its direct and personalised marketing efforts, with special focus on non-metro cities, said Santhanam. The smaller cites have responded very well to the model and the Lancer brand name has made inroads into the semi-urban and rural markets, he said.

The number of reference sales have shown a steady growth in recent months, said company officials. Hindustan Motor's direct marketing teams,equipped with lap tops and CD-ROMs, have reached out to over 11,000 potential customers in the last one year spread over 20 locations across the country. The Lancer home shows, targetted at specific high net worth individuals, have received positive response from potential customers, officials said.HM actively involves its dealer network for other models to undertake studies relating to potential market size and undertake market development efforts before introducing the Lancer in a particular city, officials said.The Lancer models are India 2000-compliant and have recently passed tests for meeting the Euro-II norms, officials added.