Chery may drive into India with small car

Likely to join hands with Delhi-based ICML to launch the car next year.

Chery Automobiles, China's largest car-maker, is likely to team up with Delhi-based International Cars & Motors Ltd (ICML), makers of Sonalika tractors, to introduce a small car in India next year.

L D Mittal, chairman, ICML, said his company was negotiating with several car manufacturers to introduce the right kind of compact car. He did not deny that Chery was one of them.

"We are planning to launch a premium hatchback in the Rs 3-4 lakh price range, which is the fastest-growing car segment in India," Mittal told Business Standard.

Chery, with factories in Iran, Russia, Malaysia, Egypt and Pakistan, is keen on a footprint in India in its bid to become a large Asian car-maker. "Chery has a bouquet of small cars that suits the Indian market. It dominates the compact and hatchback segment in China and specialises in the small-car technology currently in demand in India," a source said.

Industry sources said ICML is planning to manufacture Chery products at competitive prices from its tax-free production facility at Amb in Himachal Pradesh. "The 24 per cent excise break will translate into a major price gain for the ICML-Chery marriage. We are also in constant touch with ICML for any potential ancillary supplies for new products," a component manufacturer said.

ICML-Chery will be competing for the A2 segment which accounts for 80 per cent of the passenger car market, up from 54 per cent in 2003.

Competition in the segment is growing with Toyota, Honda, Ford and Mitsubishi planning to launch small cars. Currently, Maruti, Tata Motors and Hyundai control about 85 per cent of the 1.38 million small-car market.

Chery is targeting more than one million cars by 2010, of which 40 per cent would be driven by overseas sales.

Most of its cars like Eastar, A5, Cowin, V5, and QQ are in the small and mid-size segments. Automobile experts say its cars are 20-30 per cent cheaper than those made by Maruti, Hyundai, and Tata-Motors.

"We will have the price advantage, but we would not compromise on performance, safety and service. We will bring the best possible technology to cater to the growing car market, which is expected to be over 2 million units by 2010," Mittal said.

He added that his company's aim is to enhance its product profile and emerge as a complete automobile manufacturer, beyond tractors and utility vehicles.

To this end, the company would also shortly introduce an SUV "with a state-of-the-art CRDi diesel engine".