Toyota and Honda have said that fuel efficiency, passenger safety and emission norms should be the criteria to define the small car rather than the length of the car. Currently, lower excise benefits are available on compact cars that have length between 4100 mm to 4450 mm along with engine capacity of 1200cc in petrol and 1500cc in diesel engines. This new stand has led to a drift in the auto industry in India, since a 'small car' has tax and excise benefits.
SIAM has so far asked the government to define a small car based on the length of the car rather than the engine size. It further says that fuel efficiency should also not be included to classify a small car.
Presently, Toyota intends to step up its operations in India. It has already announced investment worth Rs. 3800 crores to make India as its small car manufacturing hub. In a presentation to the Prime Minister’s principal secretary, TKA Nair, TMC’s senior managing director and member of the board Akira Okabe said, “Our basic philosophy is start small and grow big. We are looking at the small car to grow volumes in India and the criteria of 4-metres of vehicle length should be removed from the small-car definition.”
Honda has also insisted that a good car should be defined on the basis of performance rather than its length. Ideally there should not be any regulation on the length of the car in India as any good car will be based on performance and global safety standards. "We are launching a new small car in 2011-12 which will confirm to Indian government’s current small car definition, but following global automotive standards would help India emerge as a real hub to make cars for the global markets,” said Honda official.
