S.Korea's Hyundai joins rush for Indian small cars

(AFP PHOTO/Stan HONDA)

South Korean auto giant Hyundai on Wednesday said it would roll out another new small car in India as it jostles with rivals for a larger slice of the fast-growing Indian market.

The automaker, the second-biggest in India with 21 percent of the market, aims to invest around eight billion rupees (170 million dollars) developing the car, which will be built near the southern city of Chennai.

Hyundai Motor Co. officials noted small cars accounted for 78 percent of all sales in India, where the South Korean manufacturer already produces its Santro, i20 and Getz small automobile models.

"We are building this (new) car to address this segment of the market," Arvind Saxena, senior Hyundai India marketing vice president, told reporters in New Delhi.

Saxena declined to give pricing details or when precisely the car would hit Indian roads, but other company officials indicated that a launch would likely be around 2011.

The car will be smaller than the Santro, its current Indian entry level car whose base model retails for around 260,000 rupees (3,466 dollars), and will be built at Hyundai's manufacturing complex in the southern Tamil Nadu town of Sriperumbudur.

But Saxena said the sticker price would not be as low as the Nano, the world's cheapest car, built by Indian rival Tata Motors, which was launched earlier this year at a price of around 115,000 rupees or 2,500 dollars.

"We can't build another Nano," Saxena said.

The Indian market - forecast to triple to six million car sales annually in a decade - is fast turning into a global battleground as carmakers seek new growth regions to offset anaemic Western sales.

Earlier this month, French automaker Renault and its Japanese partner Nissan announced plans to release a low-cost vehicle in 2012 with Indian partner Bajaj Auto aimed at challenging the Nano.

General Motors, Toyota and Ford are also all planning small cars for India in the next couple of years.

Saxena said the company planned to shift some of its production of its latest offering, the hatchback i20, to Europe.

"Part of the i20's production will be shifted to Hyundai's plant in Turkey during the second half of next year, mostly to cater to demands in the European markets," Saxena said.

The i20 was launched late last year and is only made in India.

The move is for logistical and tax reasons, company officials said.

But the company said it would maintain total production volume of at least 560,000 cars a year in India, partly thanks to more exports to other Asian countries.

The company is expecting a 13 to 14 percent jump in its domestic as well as export sales in 2009.

Hyundai is India's largest passenger car exporter and is vital to the country's ambitions of becoming a global auto-export hub.

Hyundai India accounts for 15-17 percent of its parent's total global sales.