In talks concerning the automobile sector these days, gloom is obviously the predominant note. Because the financial crunch has definitely taken a heavy toll on the sales of automobiles in India. But we must take note that things are set to improve in the long term. By 2010-11, demand will certainly bounce back. That?s the year that many manufacturers have earmarked to release their small cars.

Considering that the dip in demand is a cyclical phenomenon in the auto industry, wherein the good and the bad phases alternate every 18 months on an average, one can be sure that players like General Motors India, Ford India, Toyota Kirloskar Motor and Renault-Nissan in association with Bajaj Auto can continue holding on to their promise to deliver small, new cars in 2010 and 2011. When these petite beauties debut on Indian roads, I predict that they will be well received by car enthusiasts who would hopefully no longer be reeling under the pressure of today?s liquidity crunch.

This explains why, despite the flat sales of passenger cars between April-December at 8,64,449 units, compared with 8,66,860 units in the corresponding period of the last fiscal, General Motors is going ahead with its plans, recently inaugurating its second plant at Talegaon, Maharashtra. The company is conceptualising a car in the 800-900cc segment, smaller than the Spark, which it plans to launch by the end of 2010. Such is the potential of small cars in the country that even Bajaj Auto has teamed up with Renault and Nissan. A two-wheeler manufacturer for decades, it now wants to turn out an ultra-low-cost car to compete with Tata?s Nano by 2011. Ford India has earmarked an investment of Rs 2,000 crore in India to set up a new facility for small cars, which will be rolled out in 2010. Not to be left behind, TKM has already laid the foundation stone for its second plant that will have a capacity of one lakh units.

Small car sales, which make up more than two-thirds of India?s domestic market, are expected to nearly double to two million units a year by 2010.

?yogima.seth@expressindia.com