India's Small Car Dream
The term "small car" is both relative and subjective. A small car in the US or the Middle East is regarded as big in countries such as India and Indonesia. Within a particular country, too, the small car market has fairly heterogeneous products. While a car equipped with the latest technology such as the Suzuki Swift is a small car, the basic Nano, which is available at one-third the price of the Swift, also belongs to the same segment.
A car that has limited or no luxury features and is more functional, offering customers basic mobility and value for money, can be considered a small car. Excise duty rules in India define a small car as one that is shorter than 4,000 mm with an engine size smaller than 1,200 cc, if gasoline, and 1,500 cc, if diesel. From a price perspective, it is difficult to objectively define a small car. According to the standard Indian income classification, any car costing up to INR 500,000 can be considered a small car.
For the purpose of discussion and research, we have considered the Society of Indian Automobile Manufacturers' (SIAM's) segmentation, according to which the mini segment and the compact segment constitute the Indian small car market.
The Small Car Market in India
India is primarily a small car market, mainly due to the country's demand fora cost- effective mode of transportation. Of every four cars sold in India, three are small. Domestic sales in the small car segment more than doubled from 0.54 million units in FY04 to 1.2 million units in FY10. The small car segment is also driving India's car exports, contributing 95% to the country's total exports. |
In 2009, India surpassed Japan and became the largest small car market in the world, accounting for the sale of around 900,000 small cars, as compared to 700,000 sold in Japan. India is now the second-largest exporter of small cars, behind only Japan. Led by small car... [continues]
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