Auto News

Auto cos focus on cheaper small cars to rev up slowing sales

By Motortrend India Staff   |   05 June,2011

Faced with a slowdown growth after two straight years of record growth, carmakers are preparing to bring forward planned launches of cheaper small car models, once again placing their faith on a strategy that helped them ride out of their difficulties two years ago. It is a part defensive and part opportunistic move by the industry, which expects a bevy of new small car models may tip wavering buyers, keen to buy a new car but scared off by rising fuel and finance costs, into making purchases.

The Indian units of South Korea’s Hyundai and US carmaker General Motors are leading the pack among companies looking to launch new small car models ahead of schedule.

Hyundai’s small car, code-named H800, is undergoing final testing ahead of a commercial launch in the next few months, much earlier than the planned launch in 2012, company officials say.

Hyundai confirmed it was working on a new car, but declined to reveal its specifications or its launch timeframe. “We are working on a product that would be best packaged to offer highest fuel efficiency and power in its class,” said Hyundai director for marketing and sales, Arvind Saxena.

At General Motors India, the plan is to have a new entry-level car by the end of this year. The General Motors car, due to be pitted against market leader Maruti Suzuki’s top seller Alto, was originally scheduled to hit the roads in 2012. “We will bring another small car that will cater to the needs of entry-level customers,” said P Balendran, General Motors India’s vice-president for corporate affairs.

GM is refocusing its efforts on smaller cars after the 2008 slowdown triggered a shift away from fuel-guzzlers. GM’s portfolio of small cars now include the Spark, the Beat and the Aveo U-VA.

Indeed, some of it is visible in recent auto sales data. Sales of the Tata Nano have surged in recent months. It sold 6,515 units in May, down from 10,015 the previous month but up sharply when compared with 509 units it sold last November.

At Maruti Suzuki, the country’s biggest carmaker, the Alto remains its bread-and-butter offering. The Alto sold 3.46 lakh units last year, the largest selling car worldwide. The shift in favour of small cars is an international trend spawned by the global economic crisis of 2008 and since bolstered by a runaway rise in fuel prices.

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