Auto firms gear up for small car launches

Toyota and Honda of Japan, and the US auto major Ford are ramping up their sales and distribution networks as they gear up to launch small cars.

While the companies were earlier reluctant to get into this segment, surging sales growth in this segment - 31 per cent last financial year - has resulted in a rethink in the strategy of auto majors.

The share of small cars has remained stable at 70 per cent, at 752,916 units from the total 1,076,408 units sold last year.

Honda Siel Car India, a subsidiary of Honda Motor Corporation, is currently looking to expand its dealership and service network in the country ahead of the commercial launch of their premium small car in 2009-10.

The company will be expanding their dealership network to 80, up by 24 centers, from the current 56 by March 2008. The company will also expand its presence to about 55 cities from 41 at present.

Jnaneswar Sen, senior GM-marketing, HSCI, said, "We are currently expanding our dealers base to achieve more feasibility for the small car launch. As an initiative towards assisting our customers and making ourselves more closer to the markets, we are expanding our dealership base from 56 to 80 in a year."

The company will also set up a spare parts warehouse near Mumbai for easier shipment of items to dealers surrounding the city. It is also looking to set up a similar centre in the south of the country.

Toyota Kirloskar Motors, which has a 4.76 per cent market share as on March '07, is planning to set up a regional spare parts centre in the capital followed by another centre in the western part of the country, possibly in Pune, before the year-end. The Delhi centre will cater to the metropolitan and the adjoining areas.

"Since it takes about seven or more days at least to ship out a spare part from our Bangalore centre to any of our service centres in the country, we are initiating an effort to launch regional centres across India starting with Delhi", the company spokesperson said.

Company sources say that Toyota is trying to consolidate its position in the spare parts market before they introduce their small car in 2010.

Currently, the company has no presence in the volume market and have a dismal share of the industry pie.

The company's car would have a 1,000cc petrol engine and would cost around Rs 300,000. The sticker price of below Rs 300,000 would pitch it against Maruti Alto, Hyundai Santro and Tata Indica Xeta.

The company is aiming to grab a market share of 10 per cent by 2010 by when India's car market is expected to grow to more than 3 million units, three times the size of today.

Ford India, which owns brands such as Fiesta and Ikon, is also on the expansion mode with the company planning to launch 20 new dealerships across India by the end of 2007.

Currently, Ford has 115 dealerships in 75 cities, which will increase to a total of 135.  Further, the company will extend its global Quality Care Certification, operational now in 38 dealerships, to 20 additional services.