GM’s small car may sport Rs. 4 Lakh tag

General Motors India is looking at pegging its new small car, which will hit the street by the year-end , in the sub-Rs. 400,000 band. The pricing of the small car, first unveiled at the Geneva Motor Show earlier this year, will be just above Spark, which carries a tag of Rs. 2.6 lakh to Rs. 3.4 lakh range.

While the parent company in the US is struggling to stave off bankruptcy by a government bailout, for GM India, “Its business as usual and all investments are on track,” according to the company president and managing director Karl Slym. In March, GM India sold 5,001 units, a 5% growth over its February sales. In fact, he says: “We are seeing a slight revival in the sector” . There is no proposal to phase out the Spark as of now, he said, and it continues to be their entry-level car.

In an interview the GM India head said, the company will launch its high-end salon, Cruze, in the Rs. 12-13 lakh price point. The small car, which Mr Slym refers to as the mini-car , will be launched in both petrol and diesel versions . The engine for this car will be made in India by middle of next year at its factory at Talegaon. Even before its engines are made in India, the mini car will have a localisation of around 65%.

GM is steadily increasing locally sourced components in all its models, except the Captiva, which is imported as a CBU. The Talegaon factory has a capacity of 160,000 powertrains which can be doubled as demand rises. GM had invested US$ 200 million for the engine manufacturing unit.

The powertrain will be in the 1 liter to 1.5 liter capacity, which is where the mini car is positioned. Its other factory at Halol makes 85,000 units of all models.

On the sidelines of a dealership launch in Bangalore, Slym said, the company was expanding into the used car segment and alternative fuels, and is looking at a growth of 10% this year.

GM is quite bullish on its India sales for the year ahead. “We sold 65,702 units in the calendar year 2008,” said Ankush Arora, VP, marketing, sales and after-sales . Slym expects the growth rate to be flat this year for the industry, adding that the company expects to outstrip the industry growth rate by maintaining a 10% rate, the same as 2008.

Foraying into the used car segment, Slym said, a pilot of 10 stores was already on. Customers can exchange their cars for new ones, and buy company-certified used cars at these stores. GM’s push into new segments comes days after Skoda India announced the impending launch of its small car in India , and also launched the V6 petrol and diesel versions of the Superb last week. Skoda will also launch a new model of the Laura by June this year, and a new version of the Octavia later. GM India is also banking on alternative fuels for specific regions to boost its growth this year.

Source: Economic Times