India to overtake Japan as largest small car hub

Mumbai: India aims to become the small car hub of the world by dethroning Japan, the biggest maker of compact cars, a majority of which is consumed domestically.

Last year, it had pipped Brazil to become the second-largest producer of such cars.

While Japan produced 3.4 million small cars between January and December in 2009, India manufactured 1.48 million units in the same period.

According to a top official from Tata Motors, the country’s biggest vehicle maker, India would certainly become the biggest manufacturer of compact, fuel-efficient cars, as there is a growing demand for such versatile cars worldwide.

Top manufacturers like Maruti Suzuki, Hyundai Motor India and Tata Motors collectively sold 720,000 units of compact cars during the first six months of the year, reporting 32 per cent growth compared to the same period in the previous year.

The industry also collectively exported 191,000 compact vehicles during the first half of the current financial year. This was lower than the previous year by 2.6 per cent when the industry reported exports of 197,000 vehicles, primarily because of lower penetration levels, coupled with a stagnant demand in the European market.

“India will become the production centre of the world for compact cars, whose share could be as high as 80 per cent. The country will become the biggest manufacturer of small cars,” Tata Motors Managing Director and Chief Executive Carl-Peter Forster said.

Forster, who was brought on board by Chairman Ratan Tata earlier this year to steer the company’s global ambitions and to propel the businesses of Jaguar and Land Rover, was speaking on the sidelines of the launch of Aria, a crossover vehicle. Tata Motors plans to launch another small car in the coming months, which could be slotted between the Nano and Indica Vista.

“There are multiple segments within the small car segment, which could be explored and one of the segments is below the Indica Vista but above the Nano,” Forster added.

The company has been working on such a car for the past 3-4 years. Maruti Suzuki is presently the biggest manufacturer of compact cars in India, with a share of 53 per cent. Korean car maker Hyundai was till recently exporting half of its produce in India to overseas markets such as Europe.