The small car segment in India has exploded spectacularly. Last year, for instance, saw the delivery of an estimated 4,50,000 small cars. Take a look at the roll-in: it started in January with the launch of Chevrolet's Beat. The car was priced between `3.34 lakh and `3.94 lakh. Volkswagen's Polo drove into the country in February, while Ford Figo was later launched on March. This was followed by the launch of Nissan Micra in July.
The small car category, says an observer, is driven by a very simple motive. When one starts doing well in life, he or she announces it by acquiring a car. He adds, "While a car in itself may be the license to escape the everyday mundaneness of life, it can't be a pure indulgence purchase solely. Upfront cost, running cost and cost of upkeep are all very important purchase drivers and only small cars fit the bill."
He also adds that in this market those who were looking at a slight difference from others, chose a Figo or Polo or Punto, while the rest decided to stay with Maruti and Hyundai.
Even richer households, that typically own bigger sedans, opt for a small car as their additional vehicle, either for female members or youngsters or for smaller trips. Many times even those who can afford a sedan actually prefer buying a smaller hatch-back on account of chaotic traffic and parking constraints.
All these factors make the small car segment very important for the industry. Additionally, international players are also very positive on the prospects of small car segment in India.
Helping all this is the abundance of raw material and cheap labour in addition to the 100 per cent Foreign Direct Investment (FDI) permitted in the sector.