Small cars are making big designs

Mumbai: Car companies are tinkering with engine size and length to take advantage of the recent budgetary move reducing excise duty on small cars to 16 per cent from 24 per cent. Cars up to 4000 mm in length, with engine capacity up to 1200cc (petrol) and 1500cc (diesel), qualify for the duty cut. The reduction is also expected to fuel competition in the already crowded small car space.

Auto experts feel it will hasten a number of projects that have been in the pipeline for a while, including GM’s Spark and maybe even Toyota and Honda’s small car projects.

The country’s largest carmaker, Maruti Udyog, and Korean major Hyundai are planning to speed up the launches of the diesel versions of Swift and Getz respectively. Sources also indicate that models such as Esteem may sport a lower capacity engine (currently, 1300cc) and a modified length.

Though both Swift and Getz fall within the 4000-mm parameter, they have larger petrol engines, making them ineligible for the excise benefit. Getz has a 1341cc petrol engine, while Swift a 1298cc petrol engine.

Says a Mumbai-based automaker, ”Many car manufacturers are thinking of ways to avail of the excise benefit. If a manufacturer uses a new power train, or a new engine, it has to be calibrated and that involves a huge cost. However, if the company has an alternative engine option within its portfolio it may be more viable,” he said.

Japan’s biggest carmaker, Toyota, has made no secret of its ambition to capture 10% market share in India by ’10.

“Without a small car, it’s impossible to gain substantial presence in the Indian market,” said a Toyota Kirloskar official. Honda too — after its success in India with City, Accord and CR-V — is keen to get into the small car segment with the launch of its premium hatchback, Jazz model.

Meanwhile, car manufacturers attribute the slower sales growth last year to higher base volume and competing investment needs for the consumer.

Source: The Economic Times
 
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