GM to roll out Spark despite production constraints

General Motors India has decided to go ahead with the launch of the Spark, its upcoming model designed to generate high volumes, despite fears that it will be able to roll out only about 2,000 units every month, initially.

The car will be launched this week with a price tag of around Rs 3,50,000 to Rs 4,00,000. The car will be available with a 4-cylinder 1000cc engine, although Daewoo Matiz, the car it is derived from, ran on a 3-cylinder 800cc engine.

According to industry experts, the company will not be able to produce more than 2,000 units per month owing to manufacturing constraints at its original plant in Halol at Gujarat. The plant has a capacity to produce 85,000 units a year (about 7,083 units a month) where it makes other brands such as the Chevrolet U-VA, Aveo, Optra, SRV and the Tavera.

Under the present situation, the company will have to quantify the production numbers adequately among its brands so that it will not lose out on sales numbers.

P Balendran, director and vice-president (corporate affairs), said, "I cannot talk on production numbers of the vehicle (Chevrolet Spark), but the car will be built at our Halol facility."

"We won't export the Spark.... the vehicle is built only for the domestic market," he added.

GM's new facility due to come up in Talegaon, Maharashtra at a cost of Rs 1,300 crore will be functional only by the the end of 2008, until then GM will have to operate from Halol. The new plant will have an initial capacity to produce 140,000 units a year.

The company is expected to shift partially or fully the production of Spark to the new plant. GM will also produce other mini cars from this facility.

The small car segment (B segment) has, of late, seen an increased activity following following the launch of Hyundai Getz Prime 1.1 litre, Fiat Palio Stile 1.1litre, Chevrolet U-VA  1.1 litre and Maruti Zen Estilo. Manufacturers are tapping in on the lesser excise duty imposed on the small car, as defined by the Union Budget.

The compact car segment (less than 4 meters in length) has grown by 31.42 per cent at 752,916 units in FY07 compared with 572,871 units in FY06. This constituted 70 per cent of the total industry, which sold 1,076,408 units during the same year.