Manufacturers gear up for the next round of car wars

Much of the action in the near future is expected in the upper compact car segment, also called the B-segment. Maruti, which had a major hit in this segment with the Swift, would launch the all new Zen – which is sold in Japan as the MR Wagon – by early next year. The car would be priced slightly lower than the Wagon R, which has received a favourable response after its recent facelift. Maruti is also expected to launch a diesel version of the Swift – powered by a common rail diesel engine developed by Fiat and licensed to Suzuki.

Korean favourite in India, Hyundai also has plans to soon launch an updated Santro as well as a diesel version of premium hatchback Getz, to retain its share in the B segment. Though there is some speculation about a diesel-powered Santro, the company has refrained from announcing it.

Tata Motors is working on the next generation Indica, which would be launched by 2008. The company is expected to position the new version against the Swift and Getz while the older version would continue to be offered to lower-end customers. The next generation Indica would feature common rail diesel engines sourced from Fiat, same as the one to be offered by Maruti on its diesel Swift.

GM has started work on its new plant in Maharashtra, which would roll out the Chevrolet Spark, an upgraded Daewoo Matiz, in the B segment. Ford has already announced that it is not interested in the compact segment as it is too crowded.

Fiat plans to bring out the Grande Punto, which is a major hit in Europe, by the middle of next year. The model would be positioned at the high end of the compact segment and the company has just received government permission to bring in an additional Rs2,000 crore in investments. An upgraded Palio, expected in early 2007 and would be positioned against the Swift and Getz, will precede the Grande Punto. Fiat would continue to expand its marketing and production alliance with Tata Motors.

Volkswagen, Europe's largest carmaker, has just announced its plans for India. The company is setting up a plant at an investment of $530 million, which would roll out the premium hatchback model Polo – one of the most successful models in this segment globally. French auto giant Renault may also look at the compact segment, once the JV with Mahindra completes the manufacturing plant.

Honda may launch a premium hatchback, most likely the Jazz, by next year to mark its entry into the compact car segment. Toyota has reportedly deferred its plan to launch either the Yaris hatchback or the small car Echo till 2010.

Another new entrant in this segment is Hyderabad-based MLR Motors, promoted by auto ancillary group Lokesh Machines. The company is planning an investment of Rs1,300 crore in a manufacturing plant to bring out a diesel powered hatchback.

MLR has acquired the technology from a European company, rumoured to be the Uno platform from Fiat, and has appointed B V R Subbu, former marketing head of Hyundai India, to manage the venture.