Honda To Challenge Suzuki In India With Small Car

Honda Motor Co., Japan's second-biggest carmaker, will start making its first small car model in India in 2009 to enter a segment that comprises three-quarters of all cars sold in the South Asian country.

The new car will be produced at a new factory in the western state of Rajasthan, Masahiro Takedagawa, chief executive officer of the local unit Honda Siel Cars India Ltd., said in an interview in the state's capital Jaipur today. The company will invest about 30 billion rupees ($728 million) on the project, he said.

The introduction of a small car will help boost Honda's presence in Asia's fourth-biggest auto market, where annual sales are forecast to triple to 3 million units by 2016. Honda will compete with Suzuki Motor Co. and Hyundai Motor Co. who control about 70 percent of India's one-million-unit a year car market because they mainly sell hatchbacks.

"With GDP growth and an increase in individual incomes, car sales will continue to grow in India despite some issues like the rise in interest rates and oil prices," said R.K. Gupta, who manages the equivalent of $70 million in stocks at Credit Capital Asset Management in New Delhi.

Honda, which signed an accord with the Rajasthan state government on the plant today, didn't offer any details about the model it will manufacture.

"We have several options and a couple of them we are developing from scratch," Takedagawa said. "We are now in the premium segment, which is 20 percent of entire market; hatchbacks are 80 percent of entire market."

Premium Pricing

Honda's cars in India are typically priced higher than equivalent models from other companies. The top-end Accord is about 17 percent costlier than the Hyundai Sonata Embera. Honda may follow a similar strategy when it starts selling small cars in India.

"We have no intention to compete with Maruti or Hyundai," Takedagawa said, without elaborating.

The Maruti 800 is India's cheapest car now at about 218,000 rupees. Tata Motors Ltd., India's biggest maker of trucks and buses, is developing an even cheaper car to be sold at 100,000 rupees, as it seeks to convert the nation's 45 million users of motorcycles and scooters into automobile owners.

Honda's Rajasthan plant will have the capacity to produce 60,000 cars a year when it goes on stream, Takedagawa said. Honda expects to raise that capacity to 200,000 by 2014, he said. The Rajasthan factory, which will employ as many as 4,000 workers, is expected to see the first car rolling off its assembly line in the October-December quarter of 2009.

Maruti Suzuki To Launch 'Grand Vitara'

Maruti Suzuki will unveil a new version of its SUV, the Grand Vitara in India soon, a top official of Maruti Udyog said.

"We have launched five new models in two-and-a-half years. We plan to launch the 'Grand Vitara' in the next few months," Mayank Pareek, Chief General Manager (CGM), Maruti Udyog Ltd., told reporters during the launch of the company's new A3 segment car, the SX4 sedan here today.

The SX-4 is priced between Rs 6.31 lakh and Rs 7.37 lakh (ex-showroom) in Chennai. Pareek said the sedan had 79 per cent localisation and was powered by the M-Series engine.

To a query, he said the company did not have any plans to launch the diesel version of the car. The SX-4 will be launched in the USA later this year, the CGM said.

Honda To Challenge Maruti In India With Small Car

Honda Motor Co., Japan's second-biggest largest carmaker, will start making its first small car model in India in 2009 to enter a segment that comprises three-quarters of all cars sold in the South Asian country.

The introduction of a small car will help boost Honda's presence in Asia's fourth-biggest auto market, where annual sales are forecast to triple to 3 million units by 2016. Honda will compete with Suzuki Motor Co. and Hyundai Motor Co. who control about 70 percent of India's one-million-unit a year car market because they mainly sell hatchbacks.

"With GDP growth and an increase in individual incomes, car sales will continue to grow in India despite some issues like the rise in interest rates and oil prices," said R.K. Gupta, who manages the equivalent of $70 million in stocks at Credit Capital Asset Management in New Delhi.

Honda, which signed an accord with the Rajasthan state government on the plant today, didn't offer any details about the model it will manufacture.

"We have several options and a couple of them we are developing from scratch," Takedagawa said. "We are now in the premium segment, which is 20 percent of entire market; hatchbacks are 80 percent of entire market.''

Premium Pricing

Honda's cars in India are typically priced higher than equivalent models from other companies. The top-end Accord is about 17 percent costlier than the Hyundai Sonata Embera. Honda may follow a similar strategy when it starts selling small cars in India.

" have no intention to compete with Maruti or Hyundai," Takedagawa said, without elaborating.

The Maruti 800 is India's cheapest car now at about 218,000 rupees. Tata Motors Ltd., India's biggest maker of trucks and buses, is developing an even cheaper car to be sold at 100,000 rupees, as it seeks to convert the nation's 45 million users of motorcycles and scooters into automobile owners.

Honda's Rajasthan plant will have the capacity to produce 60,000 cars a year when it goes on stream, Takedagawa said. Honda expects to raise that capacity to 200,000 by 2014, he said. The Rajasthan factory, which will employ as many as 4,000 workers, is expected to see the first car rolling off its assembly line in the October-December quarter of 2009.

General Motors, Volkswagen

General Motors Corp., the world's biggest automaker, started sales of its first minicar model in India in April and Volkswagen AG plans to introduce a hatchback based on the Polo model by 2009.

Honda currently assembles the City, Civic and Accord sedans at a plant near the capital, New Delhi. The factory, which began production in 1997, has a capacity of 70,000 vehicles a year, the number of cars the unit expects to sell in India in the current fiscal year that began April 1, Takedagawa said.

Honda is constructing the new factory to meet growing demand for cars in the South Asian nation where only seven in 1,000 own an automobile compared with 500 in Western Europe.

The carmaker sold a record 61,327 vehicles in the fiscal year ended March 31, a 44 percent increase from a year earlier. India's car sales in the last fiscal year rose 22 percent to a record 1.076 million, according to data provided by the Society of Indian Automobile Manufacturers.

Honda's Indian unit made a profit of about 3.4 billion rupees in the last fiscal year on sales of about 48 billion rupees, Takedagawa said.

Rates, Rupee

The company's car sales are unlikely to be hit by rising interest rates because 70 percent to 75 percent are businessmen, Takedagawa said. The appreciation of the Indian rupee is favorable for some models such as the CR-V sport-utility vehicle as a large proportion of its parts are imported, he said.

Honda joins Nissan Motor Co., General Motors, Volkswagen and other automakers who are expanding factories or building new factories in India where demand for vehicles is growing with an expanding economy and rising incomes. Automakers last year announced a combined investment of more than $5 billion by 2012.

General Motors is investing more than $300 million to build a factory in the western state of Maharashtra, while Bayerische Motoren Werke AG started its first factory at Chennai in the south in March to assemble its 3-Series and 5-Series cars.

Tokyo-based Nissan is joining France's Renault SA and India's Mahindra & Mahindra Ltd. in building a 40 billion rupee factory in the South Asian nation.

Indian Government To Exit Maruti By This Month

The Indian government has revealed that they now plan to exit the Maruti Udyog Ltd venture by disinvesting their stake in the company by May this year.

Maruti is the largest automaker in the country and is partially owned by the Japanese automaker Suzuki. A senior government official said in a statement on this decision: “The expression of interests have come. We have to complete it (the share sale) by mid-May. Financial bids will be called soon.”

Heavy Industry Minister Santosh Mohan Dev added: “The floor price has not yet been finalized. Experts will determine the price and time.”

The government at this moment owns around 10.27 per cent residual stake in the Maruti Udyog Ltd (MUL).

Market sources claim that the government expects to get a premium price over the current prevailing market price for their stake in the company. They are expected to sell this stake to Indian public sector financial institutions, public sector banks and Indian mutual funds.

Maruti To Re-enter SUV Market In Grand Vitara

The country’s largest car maker Maruti is expected to re-enter the SUV market, with a new model of Grand Vitara. The company had phased out the earlier Grand Vitara model in December last year, but now plans to get the new model to India.

The new Suzuki Grand Vitara model is expected to touch Indian shores in the next 3-4 months. "We do plan to get the SUV to India very soon. The new model has new features specially suited for the Indian market," said a Maruti spokesperson. But the company has no plans to manufacture the vehicle from India.

The Grand Vitara will be imported in completely built form from Japan. According to sources, the SUV is expected to cost between Rs 18-20 lakh.

With the Grand Vitara's re-launch and the likely launch of SX4 in the next month, the company will have presence across nearly all major segments. "We always had a presence in the SUV market and it is an area of focus. The launch of this new fresh look of Grand Vitara, shows our interest in this segment," the spokesperson said. The new Grand Vitara was launched globally in the last few weeks and is a five-seater SUV.

However, experts feel that Maruti should rather focus on their new SX4 model, than the SUV segment. "It is a good car, but definitely not better than competition and SUVs like Honda CR-V. I do not think that the SUV model is a focus for Maruti," said Hormazd Sorabjee, an automobile analyst.

The SUV segment in the country is expected to see major action with other players like Mahindra & Mahindra and Nissan. M&M is expected to launch its new SUV, Ingenio, later this year and recently launched the new-look of its entry-level SUV Bolero. Nissan has also announced its plans to launch an SUV for the Indian markets. With these new launches and new looks, consumers are sure to be spoilt for choice.

Maruti Launches SX4 at Rs 6.18 lakh

Maruti's three-box car Suzuki SX4 has hit the Indian roads. Targeted at the A-3 segment, the all new SX4 sedan, from the country’s biggest car manufacturer, has been launched in two variants sporting 1.6 litre engine. The lower version of SX4, VXi, is priced at Rs 6.18 lakh while the higher variant, ZXi, comes at a price tag of Rs 6.89 lakh. The upper version of Zxi has been priced at Rs 7.24 lakh.

Maruti SX4 belches out a total of 102 horse power with the help of Suzuki's advanced, next generation M-series global engine. The car sports a 16-valve, DOHC, 1.6 litre engine which is capable enough to meet the stringent Bharat stage-IV emission norms. Plus, the car can be made compatible with the forthcoming Euro-V emissions norms too, if needed.

SX4 car has been especially groomed with Swift-like modern looks to take on the current segment leader, Honda City. The extended version of the same platform is being used for the SX4 that will currently be sold in China and India.

The company claims the new SX4 to be the tallest, longest and the widest car in the 'C' segment. With enough of legroom and headroom in the offering, it will be a complete driver's car. Cherry on the cake is its high ground clearance of 190mm. The short overhangs and the large glass area also adds to its beauty and makes it more featurish.

The interior of the sedan has been a given dual-tone theme of grey and skin colour. Unlike other Maruti cars, the quality of upholstery used seems to be pleasing. Leather seats are optional in the top-end ZXi variant and the music system comes as a standard feature.

BusinessWeek profiles world's cheapest cars

What a difference a day makes, or a few years at least. While many automakers were rushing to add premium models to their lineups just a few years ago, today the buzzword is affordability. Perhaps a ripple effect of high gas prices, or the green movement, or even the emerging third-world automotive markets, everybody seems to be thinking cheap. In response, BusinessWeek has compiled a list of super affordable vehicles that will be available over the next couple of years. The common factor here is that all will have an MSRP of less than $10,000. Some as low as $3,000!

BusinessWeek credits Renault with launching this new wave of cheap cars with its Logan sedan back in 2004. That initial sedan has proven popular and spawned a range of six different models. The cheap-car list includes names like GM, Hyundai, Chery, Dacia, Suzuki, Geely, Fiat and Tata. But new entries from Nissan, Fiat, VW, and Toyota are in the works, showing the increasing importance of this segment. Renault-Nissan has even announced it is planning to build a car for under $3,000, perhaps as low as $2,500 according to Chief Executive, Carlos Ghosn. He made the announcement at a plant-opening ceremony on April 4.

Don't expect supercars or luxury rides at these bargain basement prices, but you might actually get more than you realize for your money. These are reasonable alternatives to eight-year-old Civics and Corollas, rather than the equivalent of modern-day Yugos. And the list isn't filled with just microcars, either. Sure, there are small cars aplenty, but the list includes sedans, SUVs and even a minivan.

Maruti reduces price by up to Rs5,000

India's biggest car maker Maruti Suzuki has reduced the price of its products by up to Rs 5,000 following increased tax sops offered by Haryana, where its facilities are located.

"We have passed on the benefit of the reduction in sales tax by Haryana from 3 per cent to 2 per cent effective April 1 to dealers, who in turn have passed it on to customers," a company official said.

The reduced sales tax would translate to a price cut in the range of Rs3,000 - Rs5,000 across various models, the official added. Haryana had in the beginning of the month reduced sales tax from 3 per cent to 2 per cent coinciding with the reduction in central sales tax from 4 per cent to 3 per cent.

Maruti Udyog All Set To Launch SX4 Sedan

Maruti Udyog Ltd., is set to launch the SX4 Sedan in the first half of this month, ahead of its commercial launch in Europe.

Suzuki Motors holds majority stake in Maruti Udyog Ltd. Sources said the Sedan was most likely to be launched in India in the second week of this month. Its commercial launch in Europe would be in autumn this year.

In Japan, the launch would happen later this year, these sources added. SX4 Sedan would be Suzuki's second world car to be launched in India after Swift.

Made on a global new platform, SX4 Sedan is fitted with technologically advanced and next generation M series engine. The SX4 Sedan to be launched in the European market would also have the same engine as in India, sources said.

The 1.6 litre engine SX4 Sedan with the 4 valves would produce a high power of 102 bhp @5500 rpm. The Sedon would offer features like integrated music system, auto climate control, audio control on the wheels, glass antenna and adjustable steering.

"Suzuki has designed this engine by picking up the best features of the engine series used so far in Suzuki vehicles and incorporating them in this latest series of future ready engine," sources said.

In India, the car would be manufactured at Maruti's world class manufacturing facility in Manesar, which had gone on stream in February.

Maruti Q4 Net Profit Up 24%, Beats Forecast

Top Indian car maker Maruti Udyog Ltd. (MRTI.BO: Quote, Profile, Research reported a 24 percent rise in quarterly net profit on Tuesday, as cost cutting and strong sales of its fuel-efficient small cars offset volatile raw material costs. Maruti, 54.2 percent owned by Japan's Suzuki Motor Corp. (7269.T: Quote, Profile, Research, said it earned a net profit of 4.49 billion rupees

($109 million) in the January-March quarter, up from 3.61 billion in the same period a year earlier.

That beat a forecast of 4.23 billion rupees in a Reuters poll of 11 analysts.

Sales of Maruti vehicles, including the best-selling Alto and Swift hatchback, rose 30 percent to 200,112 units in the quarter.

Shares of Maruti, which has a market value of around $5.3 billion, fell nearly 12 percent in January-March, mirroring the decline on the sector index (.BSEAUTO: Quote, Profile, Research and trailing a 5.2 percent fall for the benchmark (.BSESN: Quote, Profile, Research.

($1=41.2 rupees)