With India increasingly becoming the production and sales hub for all major car manufacturers, international giants like Honda, Toyota and Volkswagen are pulling out their drawing boards for an all-new India-specific car model.
Cutting costs
The primary reason that manufacturers have opted for a new car model for India is to make use of low cost manufacturing expertise and also to qualify for small car norms.
One of the first to announce plans was Honda Siel Car India (HSCI), also the leading Japanese player in India. The company is working on a model which would derive the benefits of a small car. "Definitely, our aim with the small car is to qualify for the excise duty benefits," said
Masahiro Takedagawa, president and CEO, HSCI.
Homemade
Jnaneswar Sen, senior marketing manager, HSCI, said, "The company has the option of launching the next generation Jazz with a 1.2 litre engine or we can go in for a completely new model."
The idea of benefiting from the small car norms has attracted Toyota and Volkswagen, too. Toyota, which had restricted itself to the mid-sized sedan market, has decided to foray into small cars 2009. Sources say that the company is developing a completely new car code named 800L at an undisclosed facility outside India and Japan. The company proposes to launch a car having 1000cc petrol-powered engine for Rs 3 lakh.
The development of a completely new car model usually entails a cost in excess of Rs 1,000 crore if the design, styling and engineering involved are not sourced from another model.
Volkswagen, owners of luxury brands like Bentley, Lamborghini and Bugatti, too, has agreed that it is working on a small car for India. The company is already in the process of appointing autoparts suppliers to ensure uninterrupted supply of parts for its small car.
Wallet easy
Kevin Rose, executive director, sales international, Volkswagen, said, "There are products on the drawing board and we expect to have a car soon just for India. This car will be a completely new model." VW will launch its locally produced small car in India by 2009 when its green field plant will be fully operational in Pune, Maharashtra.
Honda's small car, to be developed in its new plant in Rajasthan having a capacity of 200,000 units per annum, will be strapped with a 1.2 litre petrol engine and will be upto 4000mm in length, thereby qualifying for the small car excise duty benefit. The company is independently working at its Japan R&D centre for the model.
Most of these companies do have a small car in the international market which carry a price tag of more than $14,000 (about Rs 6 lakh).
The lure of the huge emerging markets like India have forced global players to look for new models that complement the market sentiment and at the same time fall within the affordable price bracket of $8,500 (about Rs 3.5 lakh).
Ford India is also said to be working on the small car for the country but the company's plans remain unclear. With a small car in its portfolio, it will be able to target buyers on a much larger scale.
Korean car maker Hyundai launched the i10 in India last week. The company intends to make India the production hub for the i10.
Triggered by the buoyant small car market, the companies want to increase their market share to about 10 per cent by 2010 from the current 3-4 per cent. Toyota, Honda and Volkswagen have forecasted optimistic growth post their small car launches in 2009.
