Move over Maruti 800. The Auto Expo predicts 1998 to be the year of the small car. Four other companies agree.
The interest in the Indian market is evident from the enthusiasm over India's internationally recognised automotive show—Auto Expo—which begins in the capital this week. Putting behind last year's recession, the Expo has attracted the attention of not only companies which are already in India or have India plans but also those who are thinking about taking the plunge.
As is customary, the Expo will see several new models on show which are slated to hit the Indian roads in the near future. However, if 1997 was the year of the luxury car, the current year sure belongs to the small car—a segment which has been monopolised by the Maruti 800 for one-and-a-half decades. This segment is expected to see a flurry of activity with at least four different companies throwing their hats into the ring to fight it out with Maruti in the small segment.
The Kinetic City: The strangest among the small cars about to be launched is from first-timer Kinetic Engineering which is making a foray into passenger cars from scooters. The company is launching its 480 cc automatic car, Kinetic City (not to be confused with the Honda City which will also be launched in 1998) at the Expo which would probably be the smallest car on the Indian roads.
The Kinetic City (which, when it finally hits the roads, will almost definitely have a different name to avoid confusion with the Honda model) is aimed at expanding the car market downwards to overlap the upper end of the two-wheeler one. Everything about it is minimal: based on the French microcar Axiam, it has a 486 cc engine, a continuously variable gear system like in the Kinetic Honda scooter, two doors and a rock-bottom price tag of around Rs 1.25 lakh. Will it work? Doubtful, considering the low power and a maximum acceleration of only about 65 kmph. Aren't cars about image too?
The Korean Challenge: The more serious challenges in the small car segment come from the Koreans. Daewoo Motors will be launching its 800 cc car, currently code-named d'Arts, at around Rs 3 lakh. The d'Arts was on show at last year's Frankfurt Show, but the final looks and specifications may be changed slightly for the Indian market. Right now, it's very hush hush, though there have been reports that Daewoo has been extensively testing its model in the mountains of North India.
The other big Korean carmaker Hyundai too wants to get into Maruti 800 territory with its Atos. It has a larger engine (999 cc) and more space inside, but will be priced on par with the Daewoo's d'Arts. All three new small cars are expected to hit the roads by mid-1998.
The Next Mid-Size Car: The second half of the year will see the arrival of the Mitsubishi Lancer, product of the Mitsubishi-Hindustan Motors joint venture. The Lancer, which will be available in both petrol and diesel versions, will compete with the Opel Astra and the Ford Escort. At 94 bhp, the petrol version will be more powerful than either the Opel or the Escort, and could be the car to watch out for in this range.
State-of-the-Art from Merc: At the top end, Mercedes-Benz will be launching its new E-class model: W210. At Rs 26 lakh or so, this is a model that Mercedes is currently selling in the West. It is roomier than the model currently being sold in India, and also looks different from the front, since for this model, the company's designers have reverted to the 1950s-style oval headlamps, which have a classy timeless feel about them.Very non-nouveau riche. The new Merc will possibly be on the roads by the end of this month.
A At Last, a Sports Car: An unusual car from a first-timer, to be launched at the Auto Expo, is the San Storm,manufactured by Bangalore-based locomotive-maker San Engineering. A small sports coupe designed in France, the San Storm has a light fibreglass body, a powerful Renault engine, and could be the first successful sports car in India. With awesome acceleration and a very reasonable price tag of around Rs 450,000, the Storm could be a neat car for the speed enthusiast.
The Indian Pajero: Also hogging a lot of limelight will be Telco's off-road sports-utility vehicle Safari, India's answer to Mitsubishi's Pajero. The 1,948 cc turbocharged vehicle, which was displayed at the third Auto Expo two years ago, has been developed in association with IAD of the UK, which helped with styling, and Miyazu of Korea, which made the dies. With every possible feature you can think of—from rear wash and wipe to an adjustable steering column—the Safari could turn out to be a very significant car both for Telco and for the Indian automobile industry. It even has a headlamp wash as an option, and a cooling system that can be adjusted separately for front and back seats. Could Telco have actually built a car of truly global abilty and comfort standards? If it has managed to do so, it will surely make all Indians proud. But if it has promised more than it can deliver, the customer's verdict could be scathing. After all, the Safari will need around Rs 7.5 lakh to acquire.
Also waiting in the wings are Fiat with 900 cc Cinqueocento and Punto, Daihatsu with its 500 cc Mira, Subaru with its 658cc Vivio and Honda-Siel's 600 cc Today. Although most of these companies are not in India at the moment, they have been studying the Indian market for possible future launches. Their displays will feature prominently at the Expo.
And Finally, The Car Everyone Has Been Waiting For For Years! The car that is being eagerly awaited by every automotive enthusiast in India is the all-Indian small car from the Tata stables, code named Telco Indica. The specifications, design and image of the car are veiled in secrecy. Powered by Chairman Ratan Tata's dream of making an Indian car at the price of a Maruti 800, with the space of an Ambassador and the driving efficiency of the Zen, The Indica will be on show for the first time at the Auto Expo. There has been tremendous speculation already about what the Indica will look like and how it will perform, but no one has really been able to go beyond slightly-informed guesswork.
Though opinions expressed in the media that Ratan Tata is betting the future of Telco, India's largest private sector company, on the Indica may be an exaggeration—the Indica's failure will certainly hurt but not cause really serious damage to the company—it is true that the stockmarkets are also waiting with bated breath for a glimpse at the mystery car. Opinion about the Indica will certainly have an effect on Telco's share prices in the coming months. Foreign institutional investors especially will take a decision on their position on Telco after the reports on Indica start coming in.
If the Indica fulfils the promise Ratan Tata made, it will provide far stronger competition to the Maruti 800 than any of the Korean challengers. For, only Telco has a distribution and service network that is comparable in its reach and size to the one that Maruti Udyog has. It has a brandname—Tata—that is unmatched in its power and credibility in this country. The Indica will come in both petrol and diesel versions, and is expected to be in the market in early 1999.
The Rise of Diesel: An extremely interesting development of 1998 will be the launch of diesel cars by companies already operating in India, a number of which would be announced and launched at the Expo.Prominent among these are the Maruti Zen diesel, the Fiat Uno diesel, the Opel Astra diesel and the all-new Mahindra Voyager with the Zen being the most awaited one. Since Suzuki specialises in petrol engines and is not known for diesel technology, the engine for the diesel Zen comes from French carmaker Peugeot. While the petrol version uses a 993 cc engine, the diesel car uses a substantially big 1,527 cc 58 bhp diesel engine from Peugeot. And if you thought the petrol version was overpriced at Rs 3.9 lakh, the diesel version comes even costlier at Rs 4.8 lakh.
However, all said and done, the question remains: Does India have a market or demand for more cars, especially when 1997-98 proved all estimates wrong? With industrial growth declining, the automobile industry saw its fortunes tumbling in 1997. Demand was at its lowest, sales recorded a negative growth and most new launches bombed. The industry's overall growth fell from 11 per cent in 1996-97 to 4.7 per cent in 1997-98. Although there is much enthusiasm and interest around the Auto Expo, the demand and sales figures do not paint a very rosy picture.
In October 1997, passenger car production declined by 35.17 per cent while sales declined by 36.65 per cent. Daewoo's Cielo which saw a drastic drop in sales from 12,000 in the first six months of 1996-97 to only about 2,000 in the corresponding period in 1997-98 was forced to slash prices of its cars last week by a whopping Rs 1.4 lakh. The fate of most other companies has been somewhat similar.
For most companies, India has proved to be a much tougher market than what they had imagined. This has been not only because of its relatively small size but also because of the presence of a rather thriving second-hand car market, the phenomenon of one manufacturer controlling over 80 per cent of the market share and the failure of the mid size car segment, which they thought had the maximum potential. But most of them are ready to face the Indian market with better strategies now and with several new models lined up for launches, the current year could see some new hope in the market.