GM to Spark off price war

General Motors India's Spark, scheduled to be launched tomorrow, will drive into the already crowded compact car segment.

Designed to generate high sales volumes, Spark is expected to be priced in the range of Rs 3,50,000-4,00,000, and aimed at a market traditionally catered by Hyundai's Santro and Maruti's Wagon R and Zen, and a bevy of new entrants.

Maruti Zen Estilo was launched on December 6, 2006, just after Tata Motors' Xeta range of the petrol Indica and before Chevrolet Aveo UVA. Hyundai launched Getz Prime on April 3, 2007, and Fiat India, its Palio Stile on April 4, 2007.

The compact car segment for FY07 has grown by 31.42 per cent at 752,916 units as compared with 572,871 units for FY06. This constituted 70 per cent of the total industry, where it sold 1,076,408 units during the same year.

According to an industry analyst, the manufacturers are keener on introducing a product in the B or premium B segment where better margins can go with volumes.

"The pricing of the vehicle will affect the existing players' models, which are in the same price band, but not in a big way. The deciding factor here would be the company's volumes. About 2,000 cars against a segment total of 50,000-60,000 units a month is not big enough," said Ashutosh Goyal, auto analyst, Edelweiss.

"Our product portfolio is strong enough to take on the competition even if they are priced lower than our offering. Pricing will not be the only deciding factor for any manufacturer to gain market share. None of our products is expected to get affected," said Arvind Saxena, vice-president, marketing and sales, Hyundai Motors India.

The spokesperson for Tata Motors, which launched the 1,200 cc Xeta range last November, declined to comment, saying, "No comments on the issue, let the car get launched."Maruti too declined to comment on the launch.