Auto makers say sedans make sense

To maximise the use of new platforms developed for compact cars, international car manufacturers such as Toyota, Honda, SkodaAuto and Nissan are working on affordable sedans that can be positioned in the volume segment.

All the above-mentioned companies are developing compact cars, which will be launched over the next 12-18 months. These cars are being developed from scratch, entailing huge investments.

The strategy to make dual use of the same platform for building a sedan will shorten the time for return on investment incurred on development of the platform.

These companies are keen on having a presence in the segment below their current range of premium sedans, whose market is relatively smaller in size. The A3, or mid-size segment, grew by 11 per cent during April-December, selling more than 190,000 cars. Experts say although demand for sedans is not as robust as for compact cars in India, the segment has registered steady growth over recent years.

Though the sedan segment is not as populated as the compact car one, manufacturers such as market leader Maruti Suzuki and Tata Motors have continually recorded a robust demand for entry sedans like the Swift Dzire and Indigo CS (both are entry-level models priced in the range of Rs 375,000-491,000).

In addition, cars such as the Ford Ikon and Fiesta, Chevrolet Aveo, Hyundai Verna, Fiat Linea, Maruti SX4 and Mahindra Renault Logan have also been selling in the segment, albeit in small numbers. Tata Motors renewed its presence in the segment last year with the launch of the Tata Indigo Manza, a semi-luxury sedan at an attractive price.

Toyota Kirloskar Motors will be launching a sedan based on the concept compact model, which it had showcased at the recent Auto Expo held in Delhi. Company officials decline to reveal the targetted price, but state it will be available in the same range as the Swift Dzire, which is Rs 490,000-550,000.

Similarly, Honda Motor Company is planning a sedan on the same platform of the new mass-market compact car which it intends to launch in India in a little more than a year. The compact car will be priced below Rs 500,000, while the sedan based on the same platform will plug the gap between the compact and the best-selling City sedan.

Speaking to Business Standard, Fumihiko Ike, chief operating officer of regional operations, Asia Oceania, Honda Motor Company, said: "There will be multiple models coming out of the small car platform after its launch in 2011. We will explore a sedan, too, using the same platform to make maximum use of our resources."

While Japan's third largest auto company, Nissan, had stated earlier that it would also pull out a mid-sized sedan from the small five-seater car that it would launch this May, Czech-based car maker SkodaAuto is also working on a car which it is keen on positioning below the Octavia, a premium car sold above Rs 10 lakh (Rs 1 million).

According to a senior company executive, the new sedan will help close the wide gap between the Fabia (a compact car) and the Octavia. The company is also working on a small car to be priced below the Fabia, which will debut in 2011-12. However, it is not clear if the new sedan will be based on the platform being developed for this small car.

Thomas Kuehl, board member, sales and marketing, SkodaAuto India, said: "There are two huge segments in India which we would like to explore - the B and C segment. Our new small car will work in the small car segment, whereas our other car, which will be a sedan, will be in the C-segment. Currently, we are working on the car that will be positioned below the Octavia."