GM plans new small car in India by 2010

Thursday 21 February 2008, 00:00 AM by Satish

The world’s largest car maker, General Motors Corp. (GM), is mulling producing a compact car with an engine of less than one litre to take on rival Maruti Suzuki India Ltd’s leadership position in small cars in India, said a vendor familiar with the matter.

GM is conceptualizing a car in the 800-900cc segment that it plans to produce in India and launch by the end of next year or early 2010, one of its global vendors told Mint. He did not want to be identified because the talks are confidential. Launching its small car, the Chevrolet Spark, in April, the Detroit-based GM said it had plans for another car.

“We intend to introduce a second mini into the market,” D. Nick Reilly, president, Asia-Pacific for GM, had said at the time. “When we say new cars (for India), that’s referring to a second mini and potentially another vehicle in a completely different segment.”

According to the vendor, GM’s top brass in the Asia-Pacific region is already working on putting together the concept of the car that will likely be developed at GM Daewoo in South Korea. General Motors India Ltd vice-president P. Balendran did not reply to an emailed query specifically on the new car programme.

The car maker is also simultaneously gearing up to introduce a new range of engines in various sizes ranging from 1 litre to 1.4 litres that it will make here towards the end of next year, the vendor said.

The engines will go into a line-up of cars from its global portfolio, which it plans to launch in India even as it works towards its target of getting 10% market share here, this person said. GM India imports the bulk of its engines, adding to vehicle cost.

GM India, meanwhile, is set to commence trial production of a new car in the same category as the Spark, in April. It plans to start commercially producing the car from its new plant at Talegaon in Pune in the third week of August, Balendran said.
“We suffer from capacity constraint at the Halol (Gujarat) plant which currently manufactures 85,000 cars. The Talegaon plant will allow us to manufacture the Spark in volumes,” he said.

India’s huge appetite for small cars has resulted in global heavyweights such as Volkswagen AG, Nissan Motor Co., Ford Motor Co. and Toyota Motor Corp. betting their money in this market for small car making.

The launch of the world’s cheapest car, the Tata Nano, by Tata Motors Ltd has further fuelled interest in the industry with many of these companies, including India’s No. 2 motorcycle manufacturer, Bajaj Auto Ltd, now aspiring to make cars that will be cheaper than the existing products.

For GM, which is on a turnaround path this year, the launch of a small car programme in the region could offset a slowdown in sales in the US market, fuelled by a recession and rising fuel and raw material costs. The company’s chairman Rick Wagoner recently outlined the priorities for it this year and this included programmes to tap the potential in emerging markets around the world.

Car sales in India are expected to cross 22 lakh units in 2010 according to the Society of Indian Automobile Manufacturers. The small car segment here is expected to notch up sales of over 8.8 lakh end of this fiscal as against the 7.8 lakh units sold in 2006-07.

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