No Low-Cost Minicar From Honda

NEW DELHI -- Honda Motor Co. said Wednesday it doesn't plan to make a low-cost minicar in India to compete with Tata Motors Ltd. and the alliance of Renault SA and Nissan Motor Co.
[indiahonda] Associated Press

Honda Motor Co. President and Chief Executive Takanobu Ito looks on at a press conference in New Delhi, Wednesday, Nov. 11, 2009. (AP Photo/Saurabh Das)

Instead, Japan's second-biggest car maker is developing a small car that will cost less than its existing Jazz hatchback model, President and Chief Executive Takanobu Ito told a news conference.

The starting price of Jazz is 698,000 rupees ($15,067.7) at showrooms in New Delhi.

Mr. Ito said the new car will be targeted at countries in Asia, with India as a key market.

"We would like to offer to as many customers as possible, a product at their price expectation level," he said, but didn't give any time frame for launching the new car or a likely price range.

Tata Motors--which controls Jaguar and Land Rover luxury brands--currently sells the Nano minicar, the world's cheapest car, with starting prices of about 115,000 rupees at showrooms in New Delhi.

The popularity of the car amid rising demand for fuel-efficient, affordable vehicles has prompted other auto makers such as Renualt-Nissan, General Motors Co. and Hyundai Motor Co. to announce plans to develop their own low-cost cars.

Renault-Nissan Chief Executive Carlos Ghosn said Tuesday that a new minicar, to be designed and manufactured by Indian motorcycle maker Bajaj Auto Ltd. and distributed by Renault-Nissan, will be the cheapest car in India when introduced in 2012.

Honda Siel Cars India Ltd., the Japanese company's local unit, produces the Jazz hatchback model at a factory at Greater Noida in the northern state of Uttar Pradesh. It makes also the City, Civic and Accord sedans at the same factory and imports the CR-V sport-utility vehicle.

Separately, Masahiro Takedagawa, president and chief executive of Honda Siel Cars, said the auto maker has started exporting engine parts to its parent company from this month.

Honda Siel had previously said that the engine parts--connecting rods and crank shafts--for the Jazz and City cars will be exported from its second factory in the northwestern state of Rajasthan.

The company had in July said it will start production at its Rajasthan factory by the end of 2011. It had delayed start of production at the Rajasthan plant due to a weak domestic demand last year. The plant was initially scheduled to start by the fourth quarter of 2008.