The proposed small car will attract only 16% excise duty as the government has lowered levies on petrol-engine cars with capacities up to 1.2 litres. HSCIs new car will compete with Tata Motors recently launched Xeta, Hyundais Santro, and Marutis Wagon R and the proposed new Zen.
In April-September, the premium compact-car segment grew at 29.17% and now comprises around 70% of Indias car market. Analysts maintain this segment will continue to grow aggressively.
It is believed that the Honda small-car will be manufactured at the companys second plant, yet to be set up.
Honda is in talks with several state governments, including Tamil Nadus and Maharashtras, for the proposed plant, and a decision is expected shortly.
On Tuesday, HSCI launched the all-new, third-generation Honda CR-V with two variantsa 2.4-litre six-speed manual transmission version and a five-speed automatic version. The manual version is priced at Rs 17.7 lakh (ex-showroom, Delhi), while the automatic one carries a Rs 18.4-lakh sticker price.
The new CR-V will compete with other sports utility vehicles like the Suzuki Grand Vitara, the Ford Endeavour and the Nissan X-Trail.