Compacts crowd car market

Small cars corner 77% of Indian roads, top four models grab 60%.

Big cars might be descending on Indian roads by the dozen, but it is the small car that is fattening its market share.

Four small cars-Maruti's Alto, Hyundai's Santro, Tata's Indica and Maruti's WagonR-have raised their share from 52 per cent of all cars sold in 2005-06 to over 60 per cent in April-December 2006.

All told, small cars sat on 77 per cent of the market during April-December 2006. The four top selling models have directly gained from the lower 16 per cent excise duty on small cars. The others are taxed at 24 per cent.

Numbers put out by the Society of Indian Automobile Manufacturers (SIAM) suggest that despite rising incomes and aspirations, the Indian buyer still prefers cheap and efficient small cars.

"Rapid growth in the small car segment reflects the nature of Indian consumers. And manufacturers have successfully tweaked products to meet the aspirations of personalised transportation," SIAM Director-General Dilip Chenoy said.

Maruti, which recently launched a new WagonR and the Zen Estilo, is betting on this segment.

"The common strategy to regularly upgrade models to meet customers' aspirations has led to a stronger market share. Already, the process is on to upgrade the current line-up, which will take a year. And Maruti will bring in newer models by 2008," said a Maruti Udyog executive.

Improved sales of small cars have forced the global automobile giants to reinvent their strategies for the Indian market. General Motors, Toyota, Honda and Ford are all bringing in compacts.

"The Indian car market is set for an exciting future. While the real growth potential lies in the premium hatchback segment, bigger cars eventually will gain acceptance and will generate a strong customer base," said Arvind Saxena, vice-president (marketing and sales), Hyundai.