Global car giants on Wednesday announced ambitious plans to grab a bigger slice of India's fast-growing market as they geared up for a vehicle show featuring the launch of the world's cheapest car.
Germany's Volkswagen said on the eve of the show it would ramp up Indian output, Japan's Suzuki Motor unveiled its new A-Star car — its first global model designed with Indian unit Maruti — while top Indian vehicle maker Tata announced a new passenger range.
Suzuki's A-Star combines “distinctly European design with Indian cultural cues” such as Indian paisley fabric, said Shinzo Nakanishi, managing head of Maruti Suzuki, India's number one carmaker, standing next to the sporty hatchback.
But the biggest buzz surrounded the launch of the world's cheapest auto — the 2,500-dollar “People's Car” by Tata Motors — part of the sprawling tea-to-steel Tata Group — that will kick off the eight-day fair Thursday.
The four-door rear-engined auto is aimed at drivers in India and other emerging markets trading up from motorbikes to cars. It has sparked a race among automakers to come up with ultra-cheap vehicles to appeal to this new lucrative market segment.
Suzuki, Japan's second-largest minicar producer which through its Maruti unit makes half of all new cars in India, also said it would launch one new model in the country annually in a bid to retain its market stranglehold.
The stakes are high for Suzuki and other auto players as car sales in India are forecast to nearly double to two million units by 2010.
Suzuki's A-segment one-litre engine, the fifth global car from the Suzuki stable, will target Indian and European car buyers, said Nakanishi.
Suzuki, an early entrant into India, teaming up in 1983 with the government to set up Maruti and which now controls the company, aims to make in India nearly 30 percent of the three million cars Suzuki aims to sell globally.
“Maruti is ready to play a global role in Suzuki's global operations,” said Nakanishi, adding the company would “launch more world strategic models (from India)… boost exports to Europe and the rest of the world.”
The Japanese company and other global car makers are seeking to exploit India's low wages and tax changes aimed at spurring foreign sales of small hatchbacks and turning the country into an export hub.
Auto heavyweights such as Korea's Hyundai Motor, Ford and General Motors of the United States and Volkswagen have been looking towards India and other emerging markets to offset sluggish Western sales.
India's market has been spurred by an economy growing at an annual nine percent that has created a new prosperous breed of car buyers. The government is targeting a quadrupling of automotive sales to 145 billion dollars by 2016.
Volkswagen said it would boost its Indian presence, introducing two new models this year in the country, and expects to sell 110,000 cars annually starting in 2009 when a new plant in western India opens.
“We're in a starting phase for India,” Volkswagen India president Joerg Mueller said. It also said it aimed to introduce a small car in India in 2010 based on its Polo mini-car.
India's second-biggest motorbike maker Bajaj Auto said Tuesday it would produce a cheap, highly fuel-efficient small car within four years in a tie-up probably with French carmaker Renault. The French firm has said it is looking to produce a 3,000 dollar car in India by 2010 with Bajaj.
Ford announced on Wednesday plans to invest 500 million dollars in India to double its output capacity in the country and begin building a cheap small car.
GM is constructing a second plant in India as it steps up output.
India's car market is a huge draw because car penetration is just seven per 1,000 people compared to 550 per 1,000 in countries such as Germany, said industry official Dilip Chenoy.
