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Small cars big at Indian show

2009-12-29 12:03
Mumbai/Tokyo - Keen to boost sales, global automakers will unveil a slew of cheap, compact cars at India's Auto Expo next week as they turn to one of the few remaining growth markets to keep their engines humming.

Car sales in India, the world's second-most populous country, are set to jump about 16 percent this year to 1.4 million vehicles, buoyed by robust economic growth and government incentives, in contrast to a slump in many developed markets.

That, and the abundance of important new models waiting to make their world premiere has industry insiders talking for the first time of a Delhi auto show that could rival or surpass the annual Detroit auto show in importance.

"The Indian auto industry and the Indian auto market have become internationally very important and therefore, no one can ignore this market," said Mahindra & Mahindra's automotive chief, Pawan Goenka, who is also the president of industry body Society of Indian Automobile Manufacturers.

"Full participation" from manufacturers

"Even though the Detroit auto show immediately follows the Delhi auto show, there is full participation from all international companies and they are bringing in concept vehicles as well as launching brand new products."

The Auto Expo, held every other year in the capital city of New Delhi, first grabbed global headlines in 2008, when Tata Motors (TAMO.BO) showcased its $2,500 Nano with the promise of bringing motorisation to the masses.

Next week's show will have no shortage of rivals - from Toyota Motor Corp to General Motors Co - looking to debut their own compact cars as they seek a larger presence in one of the world's few healthy auto markets.

India is also expected to become a strategically crucial base for producing small cars for global automakers, many of which are looking to ship their cheap cars and components overseas.

Indian ratings agency CARE has forecast domestic passenger car sales to rise 14.5% annually to 2.4 million units in the fiscal year to March 2014, with growth led by small cars.

The U.S. market is expected to total around 10.4 million vehicles this year, the lowest tally since 1982. This year, China is due to surpass the United States as the world's largest auto market with about 13 million vehicles sold.

Small is big

The long-awaited unveiling of Toyota's compact car concept, code-named EFC for Entry Family Car, will be among the highlights at the Delhi show, which runs from Jan. 5 to 11.

Toyota has not announced a price, but the model is due to become its cheapest offering, likely putting it well below $10,000. The world's biggest automaker plans to start building the car at its factory in Bangalore from late 2010, followed by Brazil in 2011 or later.

Automakers have identified such low-cost cars as key to gaining a foothold in emerging economies, where small sedans such as Toyota's Corolla or Honda's City are considered a luxury item.

"In any country, the base of the (income) pyramid is the biggest group," said Osamu Suzuki, chief executive of Suzuki Motor, parent of top Indian carmaker Maruti Suzuki India.

"Starting at the entry-price level was a successful strategy for us," he said.

Maruti Suzuki commands half the Indian market with cut-price hatchbacks such as the Maruti 800 and Alto. The mini and compact segments of cars shorter than 4 metres account for three-quarters of India's car market.

10 tiny cars

Among the more than 10 tiny cars to be launched at the show will be GM's Chevrolet Beat, a compact hatchback designed for the Indian market and due to hit showrooms in 2010.

Honda Motor will make a splash with the "New Small Concept" to occupy the space below its Jazz/Fit model.

Volkswagen will display the Polo, local production of which began this month near Mumbai.

Ford Motor will showcase Figo, introduced by CEO Alan Mulally earlier this year.

Market leader Maruti Suzuki, meanwhile, is working its way up the product line-up, with plans to debut a compact multi-purpose vehicle concept called Concept R3.


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