Friday, February 07, 2014
By Kamal Swami
Indian Auto Expo: Compact cars emerging as major sellers due to low price
The big seller of the Indian auto mart seems to be the "compact" car. From the fl ashy SUV to the gleaming sedan, carmakers are following one mantra — crunch the boot, shave off a bit from the nose. A flurry of new launches — many at the Auto Expo — has seen the industry stick to this new crunch-the-size winning formula. It works both ways, for the automaker and the inspirational buyer eager to upgrade from the small car, but at affordable prices.
Several new vehicles have been going with this design brief — from the already-launched Ford EcoSport SUV and the Renault Duster to the under-preparation off-roaders from Fiat, Hyundai, General Motors, MarutiBSE 1.50 % and Volkswagen. The list is equally long for sedans where the likes of Maruti Dzire and Honda Amaze will soon be joined by vehicles from the Ford, Tata and Hyundai stables. The visual characteristics may be different — aligned to a brand's design philosophy — but almost all these are similar in technical parameters - length, engine size etc.
Why the rush to manufacture such cars? Any sub-4 metre car with an engine below 1,500cc in diesel and under 1,200cc in petrol is categorized as a compact. How does that help? The government allows major duty cuts (half the bigger sedans and more than half for fully-bred SUVs) for compact cars. While the original concession was made to make India a low-cost manufacturing hub for compact cars which could be exported, companies have been quietly using this window of opportunity to push these products in the domestic market.
Ford, for instance, shaved off some centimetres from the EcoSport months ahead of its India launch to bring it under meters. This helped it price the vehicle at an astonishing Rs 5.59 lakh (ex-showroom Delhi). Renault became an established player in India with the Duster, another such compact. Mahindra too jumped in with the Quanto. At the Expo, Ford and Tata have showcased sedans with similar characteristics, and Fiat's Avventura SUV is another example.
These cars are now within the reach of a large section of buyers who wanted to upgrade to a bigger car or dreamt of owning an SUV, but couldn't because of the prices. "In the Indian market, a sedan is a status symbol and the SUV makes a bold lifestyle statement," Jnaneswar Sen, Sr VP (sales & Marketing) at Honda Motor Cars India, said. The trend is here to stay, Arvind Saxena, MD of Volkswagen Cars India, says. "People can get the experience of bigger and inspirational at affordable prices. The demand for such cars will continue to be there."
Source: Economic Times