To quote from the Assocham study: “Consumers are more inclined to buy budget cars to satisfy their quest for prestige. Metro consumers feel that these cars would not only serve their needs better and tend to their requirements efficiently, but also provide safety compared to two-wheelers.” Prospective two-wheeler buyers are even postponing their purchases in anticipation of the small car. “Ninety per cent of respondents in the semi-urban segment categorically stated that they would rather manage their movements with their existing possessions than invest in a two-wheeler as the ‘small car’ is likely to hit the market in a year.”

To the uninitiated, the 19 lakh sales figure might appear huge. After all, the entire passenger vehicle segment amounted to 13.8 lakh in 2006-07. But what is certain is that this car will, for the first time, pose direct competition to two-wheeler manufacturers. Two-wheeler industry heavyweights like Hero Honda and Bajaj Auto, too, have awoken to the challenge and are preparing to protect their turf. While Bajaj is in talks with French automaker Renault to manufacture its own low-cost car, Hero Honda remains unperturbed.

“A small car can never match up to the benefits of a two wheeler, such as low cost of running and fuel efficiency. No car can give a mileage of 80 kilometers a litre, and that will continue to remain our USP,” said the grand daddy of two-wheeler manufacturing in the country, Hero Honda chairman Brij Mohan Lal Munjal.

The threat to carmakers like Maruti and Hyundai is a lot more serious. With the car expected to expand the market, both the companies, which do not have any product to rival the Tata car, could lose market share. But as was evident at Maruti Udyog’s recent annual general meeting, the company remains unfazed, though there are rumours that prices of its flagship Maruti 800 may be cut in case the Tatas get their act together.

... contd.