In a report by Economic Times, India’s bull run in small cars this year has made it the second biggest compact car producer in the world after Japan. India’s April-November sales has left Europe behind in the mini car pecking order.

According to auto industry sources, the country’s cumulative domestic sales of small car during April-November have already hit 5.2 lakh units, up nearly 23% from 4,23,954 units sold in the same period last year. Include exports, and the figure will be around 6 lakh units.

Though India’s small car rally puts it way ahead of Europe’s annual compact car production of 5 lakh units, it is still a distant second to the 1.7-1.8 million mini cars cranked out per year by Japan.

Small cars (comprising models like Maruti 800, Alto, Santro, Indica, WagonR, Swift, Getz etc.) have enjoyed faster growth this year than the overall growth of just under 22%. Small car exports have clocked over 84,000 units till October this year. Last year, small car exports touched 93,844 units in April-November. As for domestic sales, the compact car curve has not been evenly steep year-on-year. It grew from 3,97,682 units in April-November 2004-05 to 4,23,954 units last fiscal, up just 6.6%.

Says Jagdish Khattar, MD, Maruti Udyog: “The strict CO2 emission rules due in Europe by 2010 is prompting global OEMs to look for small car options from markets like India to offset the fuel efficiency and other averages in their existing stable. That’s why more and more companies are looking to build compact car manufacturing facilities.”

Suzuki has already announced plans to make a new small car in India for domestic sales and export for itself and Nissan. Renault has also announced plans to set up a 5-lakh unit facility with M&M, in which Nissan is expected to become a partner. Honda has announced that it will set up another facility for a small car (probably the new Jazz) in India, while Toyota is said to be thinking of a second facility dedicated to a compact model.

Hyundai is expanding its capacity, while GM is setting up a new plant in Maharashtra for small car Spark. Ditto for Volkswagen, which is setting up a compact car facility near Pune.

The small car rush and the build up of capacity may also have its impact on the global auto pecking order, says Arindam Bhattacharya of Boston Consulting Group. “The biggest growth segment in the next five to 10 years will be the small car in developing markets where many global OEMs are disadvantaged,” he says. That could lead to the ascent of players like Tata Motors of India and Chery of China.

Source: Economic Times