Later this month, German luxury car maker Mercedes Benz will launch its premium small car A class, opening up a segment in India that is becoming a rage in Europe.
Following the introduction of the B class last year, basically a bigger version of the A, the latter will also be the cheapest Merc till date with an expected price a shade below Rs. 25 lakh.
Mercedes, which has been falling behind Audi and BMW in the sales charts, expects its compact cars to do the trick for it in India.
A diesel version of the B class (1.8 litre engine) will also hit the roads in June.
And it will not be alone.
Close on its heels, arch rivals BMW will also launch its 1 series (engine capacity not yet decided), a direct competitor to the A class (1.6 litre petrol and 1.8 litre diesel).
"We are interested in the premium compact car space and will launch the 1 series in 2013. It will be assembled at our factory in Chennai," said Philipp von Sahr, president, BMW Group India.
"We expect it to be one of our best-selling cars here. It will command a premium price positioning."
However, history is against it. Indians are averse to paying anything over Rs. 8 lakh for a small car and prefers a sedan or a SUV for a higher price tag.
"I do not expect these cars to be big volume churners," said Pradeep Saxena, executive director, TNS Automotive.
"Indians put a lot of value to the boot. We have seen the City outsell the Jazz. Only a few will be attracted by the strength of the brands."
There are precedents that go against these cars. Fiat Cinquecento (500) and Volkswagen Bettle have both been non-starters and their European legacy meant nothing in India.
"I do not think India is ready for this," said Michael Perschke, head, Audi India.
"I would rather have the A3 sedan here than a hatchback. I think a sedan has a better chance of clicking in this market."
Companies, however, feel the pull of the brands and the strength of the products will lure customers into their fold at least in the more evolved urban centres.
"We are aware of the perceptions but the new A class is a very exciting product," said Eberhard Kern, managing director and CEO, Mercedes Benz India.
"This car has changed perceptions in many other markets where people were averse to paying a high price for a small car. We hope it will have a similar effect in India too."