India's Tata Motors set the subcontinental car market alight in 2009 with the ultra-small, ultra-cheap Nano.
Since then, competitors from all corners of the globe have rushed to cash in on this seemingly lucrative market, with new models and upgrades appearing almost every month.
But their enthusiasm has created a market so saturated with small, cheap cars that today sales are falling across the board. Tata announced last month the launch of an upgraded Nano model in an attempt to combat the decline.
The company sold 134,026 Nanos from its launch in March 2009 until October this year - but with just 33,244 sold in the past 11 months.
Maruti Suzuki, India's largest car maker, has announced plans to launch a range of sub-800cc cars. The company plans to showcase its two cars in the segment at the New Delhi Auto Expo next month.
Called Palette and MR Wagon, both models are powered by 660cc Suzuki petrol engines.
The company plans to launch the cars, designed for Indian conditions, after listening to consumer feedback at the expo.
"Although they are powered by small 660cc petrol engines, they are not [as] low-priced as the Nano," said Mayank Pareek, the managing executive (marketing and sales), Maruti Suzuki India. "We are bringing these cars in the expo to study consumer feedback."Suzuki said yesterday sales of its mini-cars, which include the 800, Alto, A-Star and Wagon R, plunged 27.2 per cent last month to 38,921 units. But these declining sales trends are not putting off manufacturers.
Another Japanese company seeking to enter the small car market is Honda. Yasuhisa Arai, the Honda Research Institute president, said on the sidelines of the Tokyo Motor Show on Wednesday the company's focus would be on compact car segment for India. The company recently launched its compact car Brio there. Renault, the French car maker, and its alliance partner Nissan are also planning new small cars for the Indian market.
Fiat India is likely to launch a small car to compete with models such as the Indica from Tata. According to latest update, Fiat plans to launch a small car for the global market, which will also be launched in India,early next year.
The cost is estimated to be 300,000 (Dh21,409) to 500,000 rupees.