General Motors' second small car to be cheaper than the Chevrolet Spark

The Tata Nano may well have set off a small car revolution in the country, with General Motors joining the bandwagon of major manufacturers looking to build small cars in India. Almost a year after it introduced its smallest model Spark under the Chevrolet badge, General Motors announced its intention yesterday to build another mini car in the country.

Nick Reilly, GM Group Vice President and the company head in the Asia-Pacific region, said, ''We believe there is space for us to have another entry in the mini car segment in India'', adding that such a car will not be a competition to the Tata Nano. even though it would be substantially cheaper than the Spark that the company makes.

However, Reilly freely admitted the radical change that the Nano had brought about in the automobile manufacturers' strategic decisions. ''The Nano has definitely opened discussions in the automobile industry all over the world about the sales potential of such low-cost cars. Many companies, including ours, are looking at what we can do with our own cars to lower cost from some of the existing categories that we currently have'', he said.

Marking a deviation from the usual company line of introducing GM products in India under the Chevrolet badge, the new vehicle may come under a different brand. He said that the new car would be built at the company's new facility at Talegaon in Maharashtra, and is expected to be on the roads in two years.

Reilly said that exports of the mini car from India might also be considered at an appropriate time.

Small cars constitute more than 75 per cent of all cars sold in India, and the government's favourable tax regime vis-à-vis bigger vehicles support this. Reilly feels that such a situation is going to exist in the near future, and this necessitates GM's presence in this segment, especially when the market leaders Maruti Suzuki and Tata Motors have so many offerings in this segment. GM's earlier entrant in this segment, the Spark, which had been released with much fanfare by GM CEO Rick Wagoner in April last year, had contributed substantially to the company's sales volumes. The Spark forms almost 40 per cent of the GM factory's output in Halol, Vadodra in Gujarat. Other products in the company's portfolio include the U-VA, Aveo, SRV, Tavera, Optra and Captiva – all under the Chevrolet badge.

GM is quite enthusiastic about its growth prospects in India. Reilly feels that Asia-Pacific currently constitutes about 7 per cent of the total market share of GM's global operations, and India, with its huge growth potential, will definitely help in increasing this share. He also spoke about a major capacity addition with the new Talegaon plant ready for trial production from tomorrow.

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