GM bets on mid-sized cars to boost Indian sales
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GM bets on mid-sized cars to boost Indian sales

GM is set to release a hatchback version of the Aveo, and the Optra sportback later this year.

india Updated: Mar 16, 2006 18:41 IST

General Motors Corp is looking to rapidly grow its share of the Indian car market, launching new models in the mid-sized sector on Thursday which it hopes will compensate for its lack of a small car.

The world's biggest car maker launched the Chevrolet Aveo sedan, with 1.4 and 1.6-litre petrol engines, and is set to release a hatchback version of the Aveo, and the Optra sportback later this year.

"We are very committed to bringing in a mini-car (the Spark)," Rajeev Chaba, president and managing director of GM India, told a news conference. "But in the meantime, we are leaving no stone unturned for the launch and marketing of Aveo."

All three mid-sized cars will be made at the firm's plant at Halol in the western state of Gujarat.

GM currently makes the multi-utility Chevrolet Tavera, Optra sedan, Corsa and Corsa Sail in India while it imports the Forester.

As it moves towards entering the small car market, the firm has said it would either retool the Gujarat facility to make the Spark or set up a new plant after abandoning a bid for Daewoo's car factory in India last year.

The Aveo, based on the Kalos model developed by GM Daewoo in South Korea, will retail at between Rs 5,55,000 and Rs 6,85,000, cheaper than the Ford Fiesta and the Honda City sedan.

It comes to India shortly after being launched in China, and GM is also looking to redesign the Aveo for the US market, where sales of low-cost, fuel-efficient cars are rising on the back of higher fuel prices and demand from younger car buyers.

But the Aveo's arrival in India follows a recent tax cut on small cars -- to 16 per cent from 24 per cent -- which analysts say may slow demand for mid-sized cars.

"Time will tell what impact it will have, but yes, it has skewed the market and may discourage people from upgrading to mid-sized cars," Chaba said.

But despite the government's tax move GM is confident that demand for the Aveo hatchback will match that for market leader Maruti Udyog's Swift and the Hyundai Getz.

GM, which is aiming at 10 per cent of the Indian market by 2010, expects to sell 50,000 units in 2006, of which it hopes the Aveo models will account for 20,000 units. The Indian car market is expected to double to 2 million units a year by 2010.

GM sold 30,837 vehicles in 2005, up 17 per cent from the previous year. Its output at the Halol plant is being increased to 85,000 units a year from 60,000 units.

First Published: Mar 16, 2006 18:41 IST