Japanese automaker Honda announced Monday it would unveil a new small car targeting emerging market consumers at an auto show in the Indian capital next month.
The announcement comes days after Japanese rival Toyota, the world's biggest carmaker, said it would take the wraps off a new entry-level small car also aimed at drivers in emerging markets, at New Delhi's Auto Expo in January.
The "Honda New Small Concept" vehicle has been developed especially for India and other emerging nations, Honda said in a statement, giving no other details.
With sales in developed nations in the doldrums, global carmakers have been steering toward India to tap its rapidly expanding market where consumer incomes have been growing quickly.
The manufacturers have been focusing on India's fastest-growing small car segment as they seek to lure newly affluent middle class buyers.
French carmaker Renault and its Japanese partner Nissan announced in November they would seek to challenge head-on India's Tata Nano, billed as the world's cheapest automobile, which retails for around 2,500 dollars.
Honda already sells various cars in India including the City 1.5 V, Civic, Accord V6 and the SUV CR-V.
Toyota's low-cost compact car, which it aims to sell in such places as India, Latin America and Russia, is codenamed the "Entry Family Car" or "EFC" and is expected to be priced at well under 10,000 dollars.
Toyota has said it plans to start making the low-cost car at its Indian plant on the outskirts of the southern city of Bangalore.
Automakers doing business in India face stiff competition from Japanese-owned Maruti Suzuki which has 50 percent of the market.