Audi weighing options for luxury small car launch in India

German luxury car maker Audi is weighing options for the introduction of its best selling small car A3 and upcoming A1 in India.

Although, according to the Audi’s preliminary assessment the Indian automotive market is still not ready for the luxury small cars, the company is waiting for the appropriate time to go ahead with the launch of such cars, possibly in 2010, according to a top company executive.

“Market dynamics in countries like China and India are fast changing. In the emerging markets, it would take just half the time it took to develop a market for such cars in Europe,” Mr Martin Birkner, Vice-President (Marketing), Audi India, told Business Line, hinting that the company’s current plans could be reviewed.

“We have no plans to sell compact cars at least until 2010 as we first want to establish ourselves as a luxury brand. But things can change according to the market situation,” he said.

Audi’s entry level luxury car A3, which is credited with creating an entirely new market segment of premium compact car in Europe, and the upcoming super mini car A1, claimed to be highly economic with its hybrid powertrain, are considered to be best fit for its strategy to expand its presence in developing markets. A1 is likely to be launched in 2009 or early 2010.

China
Faced with the stiff challenge from BMW and Mercedes-Benz in China, Audi which dominates the luxury segment in that country is mulling the launch of A3 in China this year. Audi sold more than one lakh cars in China in 2007.

Indian market
In US market, A3 price starts at US $25,930 (Rs 11.25 lakh) while the price of A4, the least expensive Audi car available in Indian market, starts at Rs 29 lakh. Audi, part of group, seems to be following its top-down strategy. Volkswagen came to India with Passat in the luxury segment, launched Jetta in the D segment and is working on an India-specific premium compact car on Polo platform.

Another group company Skoda has made significant inroads with premium hatchback Fabia, which sells around 600 units a month. “As a group, we have presence in almost every segment. We are in no hurry to launch Audi’s compact cars. Our focus is currently on establishing our luxury brand image,” he said.

“In India there is no market for small expensive cars. We know that it will be growing. But now, it is a little early to launch such products,” said a source in Audi India.

However, in its long-term India strategy, Audi cannot do without A3. Out of 9.64 lakh cars the company sold globally in 2007, A3 contributed 2.31 lakh. Audi sold 350 cars in India in 2007. In the current year, up to July, the company sold 595 cars.

New car sales strategy from Maruti-Suzuki

In the wake of decline in car sales owing to rising inflation, Maruti Suzuki Motors is now amending its marketing strategies. It is working out many plans to increase the car sales and has tied up with different car dealers across the country.

Car Sales in India is witnessing a dip and the reason is rising inflation. The competition to position strongly in the Indian car market segment is getting very tough.

During this period of high inflation, Indian auto leader, Maruti Suzuki Motors is amending its marketing strategies. The company is turning to 15-20-year-old cars to drive new car sales.

The company is working out many plans to increase the car sales and has tied up with different car dealers across the country. And as a part of the strategy, the car dealers have been asked to dispose old cars that they get in exchange of new cars.

The company is also providing an exchange discount of about Rs 40,000.

The old car will be placed for occasion to scrap car dealers. The company feels that this bidding of old cars will benefit their pre-owned car business popularly known as True Value.

The exchange offer has churned out positive results in Maruti car sales. The sales figure revealed a hike of 12 per cent to 20 per cent, resulting in promotion of entry level car models like Alto.

Maruti is now completely relaying on the ‘old for new exchange’ scheme for the sales. May be we would soon see other car makers joining the race.

Electric car from Mahindra and Mahindra in India by 2010

India automaker Mahindra and Mahindra plans on introducing four-seater electric car for India, which is expected to hit the roads by 2010. However, power shortage and electric-drive in the country may cause problems.

The Indian Auto major, Mahindra and Mahindra, known for their sturdy SUV’s, is working on an electric car for India. The E-car is expected to hit the Indian roads by 2010. This four-seater will run on lead acid battery initially and later on nickel metal hydride.

The company claims this E-car will be bigger than Maini REVA brand and also little expensive. Currently REVA comes with the price tag of Rs 3.5 lakhs for the base model in Bangalore and in New Delhi it starts with Rs 2.9 lakhs onwards.

Once the car is settled and achieves success in India, it will be launched in other countries too. It is true that e-cars are the best solution for increase in fuel hike and the pollution level. But practically speaking, it is difficult for the electric cars to sustain in India, as the country is already experiencing power shortage and electric-drive versions are not as economical as CNG vehicles.

The CNG is readily available at gas stations now. A solution to this is to build up low-carbon electricity technology and the auto companies are looking at tying up with energy companies.

Skoda to introduce 8 new models in India

Auto brand Skoda India will strengthen its position in India by rolling out eight new models in the country in the next five years. Its list of new cars waiting to be launched includes the new Skoda Superb, Skoda Yeti and Roomster.

SKODA INDIA is thinking big for India. In order to strengthen its position in India the company plans to roll out eight new models to India in the next five years.

Skoda made its entry into the Indian market with its popular model Skoda Octavia in the D-segment. It also bags the credit for introducing Pump-Duse technology with its model Skoda Fabia for the first time in India.

Skoda Fabia, a premium hatchback, the most popular and stylish model in India, has created a rave in the Indian auto industry.

The brand is also planning to roll out another small car for the country, which will be cheaper than Fabia.

Every model of Skoda’s model is a success in the country and now Indian users will experience a new model from Skoda every year. The company’s list of new cars waiting to be launched in India includes the new Skoda Superb, which will make its entry in early 2009 and Skoda Yeti from the SUV segment while the Roomster will also hit Indian roads in a couple of years.

Skoda India will also be expanding its dealership across the country. Currently, it has 56 dealerships and by 2009, it will be increased to 75 countrywide.

Ford unleashes new Fiesta

Ford seems to have finally woken up from it's Fiesta siesta. The car had very bland, non-offensive styling and did not bowl over too many people with its design. Until now. Take one look at the face-lifted Fiesta and you will realise that this car could resurrect Ford's success in India.

The aggressive triangulated lower grille with the smart black insert and new headlamps are reminiscent of the 'kinetic design' ideology that prevails in Fords across our shores like the Mondeo and Focus. Interiors have been revamped too with new instrument clusters and the top-of-the-line luxurious SXI now gets soft leather seats and a mahogany central console as standard. Production of the 1.4 litre petrol has been discontinued, leaving only the 1.6 DuraTec petrol 1.4 DuraTorq diesel.

Ford claims that the new 1.6 petrol engine with its re-mapped ECU gives similar fuel consumption figures to the old 1.4 engine. The petrol models available now are the 1.6 EXI, 1.6 ZXI and the 1.6 SXI while the fuel-efficiency minded consumer can choose from the diesel 1.4 EXI, 1.4 ZXI and the 1.4 SXI TDCi variants.Safety has become a high priority with the new Fiesta. The SXI versions have dual airbags and inertia reel seat belts as standard. ABS and EBD (Electronic Brake-force Distribution) also feature on these Fiestas.And there's an all-new 'sports' model – the 1.6 S - with tweaked suspension which delivers better feedback and control.

Ford seems to have got the suspension set up right since the car doesn't shock you over the bumps. Sporty elements like a spoiler, body kit, chrome-tipped exhaust and cooler 15-inch alloys also come standard on the 1.6 S. Low-profile 195//55 R15 tyres augment the sporty nature of the car. All in all, finally a desirable Fiesta has morphed into being. Given that the Indian consumer is getting more picky about style and driving dynamics, the new Fiesta seems like a sure winner in this increasingly competitive segment.

Setback for country if Nano forced out of WB: Industry leaders

Top industry leaders today warned that the country would suffer a big setback if Tata Motors was forced to withdraw the small car project from West Bengal.

Joining the ranks of protesters from the industry against the threat to industry, two days after RIL Chairman Mukesh Ambani threw his weight behind Tatas, were Sunil Mittal, Jamshyd Godrej, C K Birla, Gautam Thapar, Venu Srinivasan apart from K V Kamath, President of CII.

"Tatas pulling out of West Bengal would be unfortunate for India...immediate political dialogue to find a solution towards keeping the project in West Bengal is imperative," Bharti Chairman and Group CEO Sunil Mittal said.

If the house of Tatas, known for its values and care for society, can face such resistance, the much needed fresh wave of industrialisation in the country would suffer, he added.

Expressing similar views, Godrej & Boyce Manufacturing Co Ltd Chairman and Managing Director Jamshyd N Godrej said,"... Nano's moving out would be a setback for not just West Bengal but for the entire country."

The small car project was a statement of the coming of age of Indian manufacturing, he said, adding "it is, therefore, very unfortunate that the entire project is facing a political situation which it does not warrant".

Sundaram Clayton Managing Director Venu Srinivasan said the controversy which was effectively stalling an 'iconic project' like the Nano was very unfortunate.

"We have in Ratan Tata one of the most socially conscious business leaders of our times. Their record of caring for all stakeholders in general and the community in particular is unparallelled. Considering the national importance of this project, it would be unfortunate if political considerations, come in the way of India's progress," Srinivasan said.

Honda launches premium 8th Generation Accord

Honda Siel Cars India Limited, leading manufacturer of premium cars in India, today unveiled its premium, upscale All-new Eighth Generation Honda Accord for Gujarat market.

Speaking on the occasion, Zonal Head (West) Munaf Meghani said, "We are delighted to launch the eighth generation Honda Accord in Gujarat. While dependability, quality and reliability define every Honda product, that solid-base empowers the Company to exceed customer expectations by providing styling, performance, safety, refinement and value that few competitors can match across the board." "Since 1976, when the first-generation Accord was launched globally, Honda has sold more than 16 million Accords in 160 countries. Of these, more than 16,000 units have been sold in India since 2001," he informed.

The new Honda Accord will be available in three types in both Automatic and Manual transmission Accord 2.4, Accord 2.4 Elegance and Accord 2.4 Inspire.

The new Honda Accord has been completely redesigned, with a larger wheel-base and advanced and powerful new exterior styling. The car has spacious interiors, with upscale luxury features.

The overall length and width of the car has been increased by 80 mm and 25 mm respectively, making its dimensions best in the class, he explained.

The new vehicle comes with 5-speed Manual Transmission and 5-speed Automatic transmission with Paddle shift, to give the exhilarating experience of F-1 racing. The AT now has Shift Holding System, which avoids unnecessary gear shifting on winding roads and helps in hassle free drive.

The new Accord is equipped with best of safety technologies, with intelligent six airbags, including side curtain air bags, Advanced Compatibility Engineering (ACE) body and G-Force Control Technology (G-CON) for enhanced safety of the vehicle occupants during a collision, Mr Meghani added.

Tata Motors may face penalty in Europe on JLR emissions

Tata Motors may face penalty for excess emissions from its newly acquired high-end Jaguar and Land Rover (JLR) vehicles with a stringent environment law being enforced in Europe by 2012, reports Economic Times.

In an initiative aimed at reducing CO2 emissions from new passenger cars by 19 per cent, the European Commission had adopted a proposal for legislation in December 2007.

The manufacturers can, however, make cars with emissions above the permitted limits, but have to balance by vehicles which emit less than the set standards.

Thus Jaguar-Land Rover, acquired by Tata Motors in March this year, will have to reduce their emissions. The emission standards are crafted in a way such that heavier cars have to improve more than lighter cars.

Under the proposed legislation, a premium of 20 Euros per gm per km has been proposed in the first year (2012), rising to 95 Euros by 2015.

Shares of the company declined Rs 10.55, or 2.43%, to settle at Rs 422.8. The total volume of shares traded was 134,343 at the BSE (Wednesday).

GM to launch new small car in India in 2009

General Motors Corp plans to launch a new small car in India in the second half of 2009, but has no plans to take on Tata Motor's low-cost Nano, its India head said on Thursday.

It will be a global car meant primarily for emerging markets and will have design inputs from India, Karly Slym said on the sidelines of a news conference.

Annual passenger vehicle sales in India are forecast to expand to more than 2 million units by 2010, with small cars accounting for more than two-thirds of sales.

Hyundai launches "Kappa Challenge"

Hyundai Motor India, the second largest passenger car maker and the largest exporter of cars from India in a first-of-its-kind initiative has thrown open the 'Kappa Challenge' - a unique concept to touch, feel, drive and experience the all new powerful i10 equipped with Kappa engine to all its existing and potential customers. Set to prove the supremacy of Kappa engine as compared to its competitors in its category, the 'Kappa Challenge' will start from 23 August, 2008 across 10 different cities in India.

One of the first event to be organized at Andheri Sports Complex in Mumbai on the 23 - 24 August, the challenge is open to all the existing and potential customers. The participants will go head-to-head completing a set of challenges and also driving other cars to find out which is the better car of the lot.

Throughout the session the participants will be test driving the i10 Kappa and the competitor cars in different driving and parking conditions and will be assessed on their driving and parking skills. All the participants will be handed out an assured gift apart from the grand prize of an i10 Kappa to be won through lucky draw.

The 'Kappa Challenge' will also offer several other interesting options to choose from such as Special Finance Scheme counter, Product Demonstration & Sales counter, Used Car counter, Accessories zone and Children's fun-filled zone. The customers will also have the advantage of availing the benefits of Always Around activity of getting their cars cleaned-up, polished and basic mechanical inspection done at the venue itself.

Speaking on the occasion, Arvind Saxena, Sr VP, Marketing & Sales, HMIL, said, "Our new i10 with the Kappa engine is the best in its class today with more power, less fuel consumption and lower CO2 emissions. We have created this event to provide an opportunity to all our existing and potential customers to find out for themselves about the superior features and driveability of the i10 and compare it to other cars in this class. We as manufacturers might be absolutely convinced about our product but it is very important for us to instil the same level of confidence in our potential customers as well. We are convinced that anyone who takes the challenge will go away convinced that the i10 is the best product in its category."

The Kappa i10 was launched in three variants the Magna, Sportz and the Asta with all top end features like the sunroof, 2-Din audio system, a unique red pack for the Sportz interiors and some class leading safety features like anti-lock braking system (ABS) and dual airbags. The new Kappa i10 is also available with an automatic transmission and it is sold along with the existing Epsilon 1.1 litre engine variant and is available in a range of 10 colours.

Indian A-Star is Suzuki's new Alto for the world

News of the fifth generation Suzuki Alto is out, and surprise, it is naught but the A-Star, designed by Maruti Suzuki and seen in its concept form earlier this year at the Auto Expo in Delhi. The car is scheduled for launch in Europe and India in October 2008, and we expect it to fortify Maruti Suzuki's dominance of the small car space in India even further, besides putting plush minis like the Hyundai i10 squarely in its gunsight.

There is an interesting Indian connection to the story apart from the design as well. The new car will be made exclusively in India for export to the rest of the world. Nissan's strong interest in the project has already reaped its benefits - a deal with Maruti is in place under which the Indian company will make 50,000 units of this car, which will be sold badged as a Nissan in its international markets.

What will it run on?

The new Alto will sport a spanking new 1-litre, all aluminum three-cylinder power plant. The new engine will make about 60PS of power, and its light structure will make it more frugal and also much cleaner to adhere to international standards. Sources are not ruling out another version of the car with a 1.2-litre engine (soon to be seen in the Suzuki Splash), which will give it even more firepower against the similarly powered Hyundai i10 Kappa.

Volvo plans to launch new models in India

Volvo Car India (VCI), a division of Ford Motor Company, is planning to strengthen its dealer network and launch new models in the Indian market, the company’s Managing Director Paul de Voijs has said.”Currently we market our products in India through three dealers: one each in Delhi, Mumbai and Chandigarh. Now we are planning to expand our business in places like Hyderabad, Bangalore, Pune and Cochin. We will disclose our business details within the next two weeks,” Voijs said here Saturday.

“We will monitor our business progress in India for one more year then based on the response we may also open an assembly unit at some appropriate place in India,” he said.

However, all this depends on the response and support that we will get from Indian business facilitators.

“Permits for constructions and other business requirements here are very complex and vary from state to state,” he said.

Eyeing the rich Punjab market, Voijs said: “Punjab is one of the flourishing states of India and we consider it as a potential market for us. We are particularly planning to intensify our business operations in this state. I believe that the rich populace of Punjab prefers quality products and the unmatched Volvo cars will be the first choice for them if we market well in this region.”

VCI has ten luxurious models in its portfolio and they have plans to introduce 2-3 more models by the end of this fiscal year, Voijs said.

He said VCI believes in direct marketing and direct promotional activities right at the doorstep of the potential buyers rather than blind advertising. We intend to sell 400 to 500 Volvo cars in India by the end of this fiscal year.

“The Volvo Ocean Race will also cross India this year for the first time to promote the Volvo brand,” Voijs said.

The Volvo Ocean Race is an yacht race that goes around the world and is held every three years. This year it is being sponsored by Volvo.

The race starts from Spain and runs for 8-9 months covering various countries across the globe. It will cross Kochi at the end of 2008 and will finish in Russia in 2009, Voijs said.

VCI presented its S80 3.2 model car to India’s first Olympics individual gold medallist, Abhinav Bindra Saturday.

“We will also try to promote sports in India. Indian boxers have also done well in the Olympics, we will also try to felicitate them in the near future,” he said.

Tata’s to launch New Indica Today

Tata Motors’ much awaited new Indica which is christened Indica Vista will be launched today.

The launch, which is almost a year late from its initial schedule, comes at a time when sale of the 10-year-old Indica brand is declining in recent months. Indica reported a 32 per cent drop at 7,525 units in July.

India’s first indigenous car Indica was launched in 1998 and the millionth car on Indica platform was launched in November 2007.

It is reported that the Indica Vista comes with three engines — 1.2L Safire (petrol) and 1.3L Quadrajet (diesel) which are sourced from Fiat and the 1.4L TDI which currently powers existing Indica. Indica Vista which will be available in three variants is expected to be priced between Rs 3.5 lakh and Rs 5 lakh.

The car will be pitched against Hyundai Getz and Maruti’s Swift at the high end of compact car segment. “To a certain extent, the launch of new Indica may help the company revive its passenger car sales which off late showed 14-15 per cent decline particularly since it happens after so many years,” said an analyst.

“However, pricing will be an important factor in the success of the new launch. It also depends on how bug-free the new car is. Every manufacturer has some loyal customers who are waiting for the new launches. Therefore, there would be an increase in sales for the first three months,” he said.

Orissa opens doors to Nano project

Hours after Ratan Tata threatened to pull the Nano car project out of Singur, both ruling and opposition parties here in Orissa on Friday have declared that the state’s doors are open for the Tatas to shift their much awaited Rs 1 lakh car project.

Unlike the conflict between the Left Front government and the opposition Trinamool Congress over Tatas project at Singur in West Bengal , both the ruling BJD-BJP and opposition Congress in Orissa spoke in one voice to welcome Tata’s Nano project.

“If they come forward to set up car project here, Orissa government will provide all kinds of support ,” said state Industry minister and senior BJP leader B B Harichandan . The state government would not say no to the small car project by Tata at Gopalpur, where the company’s huge chunk of lands remains unutilised, he said.

Eicher, AB Volvo venture finalised

Eicher Motors Ltd and AB Volvo (Volvo) finalised their joint venture deal with the closing of definite agreements that were signed between the two on May 26.

EML has transferred its commercial vehicles business along with its related components and engineering design services businesses to its joint venture company with Volvo, VE Commercial vehicles Ltd. (VECV). In addition to the businesses being transferred from EML, this venture will also contain Volvo Group’s Indian truck sales operations and the truck and bus service operations. The operations of VECV are effective from July 1, 2008.

Harita to tieup with Fehrer

CHENNAI based Harita Seating Systems Limited, an automotive seating solutions supplier has signed a letter of intent for a Joint Venture in the country with F S Fehrer Automotive, the international specialist for vehicle interior components with headquarters in Germany.

The JV, expected to be operational in three months, would be called Harita-Fehrer Limited with Harita Seating System holding 51 per cent and Fehrer 49 per cent, release said here on Friday.

Harita-Fehrer Limited would be based in Chennai. The production programme of the JV includes polyurethane moulded foam pads for seats and plastic components for the Indian automotive market as well as motorbike seats.

The production locations were in Hosur and Pune. The partner companies also plan, to expand the capacities for the seat bolster production and extend the product portfolio by armrests and headrests for the Indian automotive market.

"Harita-Fehrer" combines leading and reliable Fehrer expertise in the complete value added chain with the distinct market closeness of Harita. Thus, the joint company guarantees custom-made products for India's automotive industry, which meet international quality requirements", Fehrer Group CEO Dr Bernd Welzel said in the release.

Redesigned Honda City for India

The all-new Honda City will be here soon. The City has absolutely dominated the mid-size car market, but has been criticized in some quarters for losing the fun-to-drive character that made it so popular when it debuted in India. With the new car, Honda is certain it will win back buyers who choose a car with their hearts and their heads.

The high seating and tall stance will be replaced by a sleeker silhouette, although not as low as that of its older sibling, the Civic.

Honda's range of twin-spark i-DSi engines may not make it under the hood of the new car. Instead, Honda's renowned VTEC power plants are expected to be standard across the model line. Whether the City will continue to have a continuously variable transmission option isn't clear, as C-segment buyers haven't shown a preference for it in the past.

BMW Opens a Studio in New Delhi

In an effort to offer a pioneering brand experience to its customers BMW India established a studio in New Delhi that will offer an all round experience and facilitates interaction between the company and its customers, thereby reinforcing the emotional bond between BMW and its enthusiasts. In addition to displaying the BMW car, the studio shall also offer lifestyle products such as BMW shirts and jackets, sports products in golfing, kids’ mobility equipment, car miniatures, original accessories, baggage and luggage.

The BMW Studio can be used exclusively by BMW owners for organizing business/personal meetings and events. A library of BMW books, BMW music and BMW films will also enhance the brand appeal of the Studio.

Commenting on the occasion, Mr. Peter Kronschnabl, President BMW India said, “The BMW Studio is conceptualised to offer an experience that fully meets our customers’ requirements and make best use of the brand’s strength. We are confident that the BMW Studio will provide an exclusive BMW experience coupled with excellent service and the perfect ambience. The BMW Studio has evolved from fresh thinking that will align our thoughts and actions to the evolving aspirations of our customers.”

Hero Honda hikes 100cc bike prices by upto Rs 850

Two-wheeler market leader Hero Honda on Thursday, August 7 increased the prices of its 100cc bikes by up to Rs 850 on account of rising input costs, reports agency sources.

The company, however, maintained the price hike has been restricted only to its 100cc bikes as of now.

Rising input costs have forced bike makers to hike prices even though market conditions remain challenging due to high interest rates and tight retail financing.

Toyota to launch hybrid sedan Prius in India

Toyota Motor Corp plans to introduce its hybrid sedan Prius in India as an answer to soaring fuel prices and growing concerns over emissions, a top official at its Indian joint venture said.

"We are preparing to bring Prius into the Indian market though we have not set any timeline yet," Toyota Kirloskar Motor Ltd vice-chairman Vikram Kirloskar told IANS in an interview.

"In the run-up, we have to develop skills to service it and make spare parts available across the country," he added.

The 2008 version of Prius has been adjudged the most fuel-efficient midsize carUS. Sold in over 40 countries across regions, the hybrid variant has also been rated as the third least carbon dioxide emitting vehicle in Britain. in the

Kirloskar described Prius as a "great car" but admitted it was "expensive upfront".

"In the long-run, it is economical, with higher mileage and lower maintenance cost. We are confident of its acceptability in the Indian market as it runs both on electricity and fuel."

Positioned between Toyota's Corolla and Camry in the luxury segment, Prius uses an all-electric compressor for cooling. Classified as a super ultra low emission vehicle, the eco-friendly car can be propelled by either petrol and electric power.

"We are aware that Honda is launching its hybrid variant in the Indian market soon despite high import tariff. We can also do it with due preparation. As I said earlier, we have to gear up to service such a premium car by training our personnel and stocking enough spare parts with the dealer network," Kirloskar said.

As the first commercially mass-produced gas-electric hybrid, one million Prius vehicles were sold by April worldwide, including 592,000 units in the US and 315,000 units in Japan.

In India, Toyota Kirloskar already markets Corolla and Camry in the premium segment, besides Innova in the multi-utility and Prado in the sports utility segments.

Corolla and Innova are manufactured at its Bidadi plant, about 40km from India's technology hub of Bangalore, while Camry and Prado are shipped from Toyota's production facilities in Japan in completely knocked down form and assembled here.

"Though we entered the Indian market over a decade ago, we chose to be in niche and premium segments. As a marketing strategy, we first introduced Qualis, which was a run-away success in the multi-utility segment," Kirloskar said.

"We launched Innova by discontinuing Qualis and yet maintained market leadership in the segment. In the second-hand or used car market, Toyota brands commands highest price even today because of their value and durability," he said.

Denying that Toyota "missed the bus" or lost market space to global rivals such as Honda, Hyundai, Suzuki, Ford and General Motors by not being present across segments in India, especially in the dominant compact segment, Kirloskar said there was enough room to grow in a developing country where the automobile industry was maturing.

In the passenger car segment, the combined installed capacity of Indian automobile sector is about two million as against Toyota's annual worldwide capacity of 10 million units.

"With the Indian economy poised to grow over eight-nine percent, we see immense potential to grow, thanks to increasing purchasing power, higher aspirations among the generation next, better road connectivity and migrant-driven urbanization," Kirloskar said.

Toyota Kirloskar is setting up a second plant with an upfront investment of Rs.14 billion ($329 million) at Bidadi to manufacture a range of models, including its long-awaited compact car to take on dominant players like Maruti Suzuki, Hyundai and Tata Motors.

With an installed capacity of 100,000 units per annum, the new modular multi-platform plant is set to commence production in 2010.

The small car will be different from Toyota's existing models in the same segment, as it is being designed exclusively for the Indian market, Kirloskar said.