Manufacturers gear up for the next round of car wars

01 December 2006

With almost 50 new models and variants expected to hit the Indian market over the next year or so, auto makers are betting heavily on the Indian car market emerging among the fastest growing in the world. By Rex Mathew

Having expanded at a brisk clip in recent years to touch an annual output of 1 million units, the Indian car industry is all set for its busiest ever period of new launches. It is estimated that nearly 50 new models or variants of existing models would be launched over the next year or so, taking the total number of models and variants available to nearly 250, a far cry from the days when consumers had to choose from just two or three models.

As more foreign car manufacturers enter the country, India is poised to retain its position as one of the fastest growing markets in the world. Annual production is forecast to touch 2 million units by 2010 and the country is fast becoming a production hub for small cars.

The country now produces more compact cars than the whole of Europe. If the current growth rate in compact cars is maintained, India would beat Brazil to become the second-largest manufacturer of small cars behind Japan over the next few years.

Apart from the fast growing domestic market, the maturing domestic auto ancillary industry is another factor, which is encouraging global auto companies to look at India. Most global auto companies are now looking at India as a major source of low-cost but high quality components. The government has also done its bit by reducing excise duty on small cars to expand the domestic base.

Entry level and beyond
Tata Motors is all set to redefine the entry-level market with what has been dubbed 'Rs1-lakh car'. Expected to be launched by 2008, the car promises to be a 'disruptive product' incorporating technology and materials. Company officials have already stated that the final price of the car would be above Rs1 lakh though it would be substantially cheaper than the current low-priced warrior, the Maruti 800. Such a product would very likely encourage two-wheeler users to buying a car.