Carmakers redefine entry-level options for India

Murali Gopalan Mumbai | Updated on March 12, 2018 Published on March 28, 2012


In January 2008, the Tata Nano was unveiled at the Delhi Auto Expo and the world was well and truly hooked. It was the Rs 1-lakh price tag that intrigued carmakers. The sceptics scoffed while the likes of Mr Carlos Ghosn, the CEO of Renault-Nissan, sat up and took notice. The unanimous view was that India's entry-level car had arrived.

Or had it? The Nano promised plenty but has not exactly set the sales charts afire. Tata Motors believes it has the potential to deliver more, which could well happen once its diesel sibling joins the stable. The Nano is still India's most affordable car but global automakers have since redefined their own low-cost priorities for the country.

Low-cost options

A week ago, Nissan announced its intent to revive the Datsun brand, which would be positioned for entry-level customers in India, Indonesia and Russia. The cars here will be under Rs 4-lakh and will not sport the Nissan brand to clearly drive home the Datsun positioning message.

Within a couple of days of this announcement, a senior Volkswagen official was quoted saying the company was exploring a low-cost option for emerging markets such as India. As in the case of the Nissan strategy, the VW brand will not be associated with this range.

Renault, likewise, will share the platform with Nissan to launch its own entry-level car in India which will find its way into other global markets. The product is expected to be aggressively priced (under Rs 3 lakh) and the French automaker is hoping it will do the trick in generating the big numbers.

Reference point

Clearly, the Maruti Alto is the reference point for most companies keen on entering the low-cost car segment. There are eight versions (including three CNG options) of the car with price points starting from Rs 2.5 lakh and going all the way to Rs 3.5 lakh. The Alto is the top-selling model in India with monthly numbers averaging 25,000 units.

It is in this product category that Hyundai targeted the Eon, which is slightly dearer than the Alto. It has got off to a relatively slow start but observers believe the car can notch up higher numbers as word gets around in the market.

How it will pan out

What then is in store for the Datsun? These are early days yet but Nissan is expected to pull out all stops in offering a value-for-money proposition. If the script unfolds according to plan, it will actually end up (re)building the brand and not the other way around. A large chunk of India's young buyer base has no emotional connect with Datsun, a brand which was knocked off from the Nissan line-up over three decades ago.

VW was expected to weave its magic with Suzuki in India's compact car segment but the partners have since fallen out even though they have not separated yet (and it may be a while before this actually happens). The German carmaker's low-cost brand drive could become a reality over the next 4-5 years.

Fiat had also planned a low-cost car (again with a different badge) for India and other markets but there has been no word on this subject for sometime now. Ford and General Motors have made it known that they will look at more affordable compact car options for India.

The notable exception has been Toyota, which launched the Etios in India two years ago. Last week, President, Mr Akio Toyoda, made it clear that the company would steer clear of the low-cost space in emerging markets. According to agency reports, he said Toyota did not have Tata Motors's ability to make affordable cars. The focus, instead, would be on quality and reliability while focusing on a specific customer base.


Published on March 28, 2012
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