Small car segment reving up

Besides Ford, the other companies which are planning to make small cars before the end of the century are: Telco with its Indica, Daewoo8217;s De8217;Arts, Kinetic Engg with its Citycar model and Korean car giant Hyundai. These models are set to hit the Indian market within two years. The market is presently dominated by Maruti Udyog, which is targeting to sell about two lakh units by the end of the fiscal 1998.

Due to economies of scale, it would be difficult for the new entrants to match the aggressive pricing of Maruti which is selling its Maruti 800 model for as little as Rs 2 lakh. quot;The new small cars, both in terms of pricing and engine capacity would be competing with Zen and Fiat8217;s Uno, instead of Maruti 800. Nevertheless, we have already geared for competition by re-designing our small car,quot; Maruti MD RSSLN Bhaskarudu recently said in Mumbai.

The small car segment is extremely price sensitive. Usually, the customers are graduating from two-wheelers to cars. Any small car with a higher price tag than Maruti 800 will face difficulty to make a dent in the market, analysts said.

Despite the current slowdown, the total sales in the Indian automobile market from the car segment is expected to touch one million by the end of the current century. Availability of cheap loans, rising middle-class income, and competition among the manufacturers to give more discounts will fuel the demand.

Though other global car majors like Mercedes Benz, Renault and Peugeot already have small cares in their stable, they would be unable to price it in the Rs 2-3 lakh range in India. Hence, these companies are keeping their small cars away from India.