India to be the small car hub

The Indian market has now evolved as major hub for the small car segment. The famous brands like Maruti Suzuki India, Hyundai Motors and Nissan have shifted the production of some of their small cars to India and are likely to bring more. Apart from the cost advantage the major brands are recognising that the demand for the small cars in India will never come to an end inspite of the exponential growth in the past six years.

According to the reports by global consultancy IHS Global Insight, the production of small cars in India will increase to about 2.2 million by 2014. With this India will account for 29% share of the world's small car manufacturers. To describe it in other words, one in every three small cars produced would be manufactured in India by 2014.

Deepesh Rathore, managing director for IHS Automotive in India said that with the production of 2.2 million hatchbacks in India, the country will represent about 29% of the total 7.7 million cars manufactured each year in the global market. With this it is expected that India would be exporting about 5 lakh A-segment cars by 2014.

If we take a look at the market we can see that the major car maker in India Maruti manufactures Maruti A-star only in India and sells it to its fellow Japanese car manufacturer Nissan, which then sells this car in the European market with a new name Nissan Pixo. Not only Maruti, Hyundai Motor also does the same as it makes Hyundai i10 and Hyundai i20 in India and then exports it to other markets. Nissan also ceased the production of its Micra in UK and started it here in India at its Chennai facility.

The main reason why the country became a known destination for small cars, is mainly due to new excise duties which were put favouring the small cars. The excise duty on these small cars was just 10% which is about half than on the cars of other segment.

But still there are some hurdles, Mr Rathore from IHS claim that the export of the B-segment cars and the Micro truck will be more. The low response to the Tata Nano in the country has brought down the expectations of export of this small car from India.

Read More on : Chevrolet Beat 2013