Home > Auto > News > Small cars create big buzz
Small cars create big buzz
Small cars create big buzz

Small cars create big buzz

India has come a long way from Maruti 800. It is now a global hub and a red-hot market for affordable passenger vehicles. Sumant Banerji reports. Little big machines

When Japanese major Toyota launched in India last Tuesday the Etios Liva - its smallest and cheapest car yet - it marked a new milestone in the country's romance with small cars that began humbly with the Maruti 800 nearly three decades ago.

The Etios Liva is the 14th model to hit the country's super hatchback segment, a category that in a mere six years has shown India not just as a car-crazy nation, but also as a technological hub for anything small.

There has been a procession of challengers to Maruti over the past 15 years or so (see chart), but Liva, thanks to its Toyota muscle, is considered a game changer by many -- one that will provide not for the first time a stern test to the hegemony of Maruti Suzuki.

But it is competing directly with the Swift, Suzuki's last global success and one that turned a rage in India by kickstarting the segment.

Liva's performance would indicate whether Toyota, which has traditionally concentrated in making bigger cars such as Corolla and Camry and left the small cars to its sister concern Daihatsu, can adapt to an expected global shift towards small cars.

More small cars are on the way. Toyota's arch rival Honda is bracing up for something similar with its Brio for which India will be the second destination. The Indian market is small but how a car fares here clearly has global ramifications, as the Swift, Hyundai i10 and i20 have shown.

With an eye at emerging as the world's largest carmaker in years to come, Volkswagen, Hyundai and Renault Nissan are all hoping to exploit Toyota and General Motor's weakness in making small cars - and the first battleground invariably is India. In the case of Toyota's Liva, India is the first place for test and launch.

'We always knew that our line-up in India (mostly big sedans and SUVs) was not enough to meet the growing demands of this market,' said Hiroji Onishi, president, Toyota Motor Co., Asia-Pacific. 'Not only the Liva, we will need more small cars….This is a very competitive market but our plans are not restricted to India alone."

India is a small car maker's dream. It offers low labour costs and fiscal incentives while the market has always favoured small, affordable and fuel-efficient cars. As much as 80% of cars sold in India are compact, compared with 24% in China and only 3% in the US.

Tata Motors' Nano, launched with a $ 2,500 (then R 100,000) tag, captured the world's imagination but other examples such as the Ford Figo, Hyundai Santro, Suzuki Alto, Honda Brio and Toyota Liva have shown that India is a key manufacturing hub for small cars. Some like Nissan have shifted the production of the Micra from the UK to India to benefit from the low cost of production. Others are driving in fast as well.

The Volkswagen group is making its car smaller than the Polo for emerging markets with an eye on India, while France's Renault and Peugeot Citroen are making their own India-focused small cars. GM has just shelved its plans of a car smaller than the Spark, but Ford, buoyed by the success of the Figo, is working on making it a global platform through which more such cars could be made. Hyundai, which has been the most successful after the Suzuki in India, too is working on its smallest car yet, codenamed H800. It will first hit the roads here.

If fuel prices climb globally, fanning demand for cheaper transport, "India could find itself well-positioned to fulfill the needs of the small car segment on a global scale," said John Humphrey, senior vice-president at industry research firm J.D. Power and Associates.

Of course, it all started with the Maruti 800 in 1983.

From a mere 45,000 units in 1983-84, car sales have jumped to almost 2 million in 2010-11, showing a compunded annual growth rate of over 20%.

"India has quickly become one of the largest and fastest-growing automotive markets in the world," Humphrey noted.

While M800 kicked off the small car revolution, Matiz, Santro, Indica, Alto, Wagon R and i10 have been among the leading architects of the boom. The next round of growth is almost certain to come from another batch of compact cars from the Nano to the Liva and Honda Brio.