Renault and GM enter India’s crowded car market

Renault and GM enter India’s crowded car market
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First Published: Tue, Mar 27 2007. 03 36 PM IST
Updated: Tue, Mar 27 2007. 03 36 PM IST
Reuters
Mumbai: Half a century ago, Renault and Mahindra & Mahindra Ltd. failed to get off the ground a venture to make a cheap car for the local Indian market priced at a princely $158 (Rs 7,110).
Today, in this amount all that you are likely to get, if you are lucky are a pair of branded new tyres. However, the interesting thing is that the two auto giants are back in partnership, vying with global automakers to grab a slice of an Indian car market that is forecast to nearly double to 2 million units by 2010, if not sooner.
The new $10,000 Logan Sedan, slated by Renault and Mahindra for launch early next month, will go up against similar small models offered by Ford Motor Co. Tata Motors and Suzuki Motor Corp.’s Maruti Udyog .
Small cars make up more than two-thirds of the Indian market, but spreading wealth among the 1 billion-plus population has also triggered growth in bigger models from manufacturers such as Maruti, Tata, Hyundai Motor Co. Ltd. Ford, Honda Motor Co. Ltd. and Toyota Motor Corp.
General Motors Corp. still the world’s biggest volume carmaker, is also getting in on the act, with the imminent launch of its Chevrolet Spark.
GM, which swung to a small profit in the fourth quarter, aims to shift 220,000 vehicles in India by mid-2008, up from just 65,000 last year, as it adds India’s fast-growth market to a global autos battlefield between U.S., Asian and European rivals.
That would give GM around 10% market share in India where small cars, upto 4 metres long and with a 1.2-litre petrol engine or 1.5-litre diesel engine get preferential tax treatment.
“GM clearly needs to make the Spark a success because this will be their big volume brand,” said Pradeep Saxena, a senior vice president at research firm TNS Automotive.
“For GM, India may not be as crucial to its overall restructuring, but it has huge potential. After all in how many markets do you see a 20% annual growth?”
The Spark will have a sticker price of around $8,000 (Rs3,60,000), analysts estimate, and will slug it out in dealers’ yards with Maruti and Tata’s Indica.
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First Published: Tue, Mar 27 2007. 03 36 PM IST
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