Honda is considering a low-cost budget car below its Brio compact for the Indian market which could be based on one of its Japan-only 660cc Kei cars, reported the Times of India.

Hironori Kanayama, president & CEO of Honda Cars India, said the entry car market will continue to remain strong, and added: “We are studying the market... (but) we do not have such a small engine, except for the Japanese market where we have the 660cc Kei cars."

He said, however, that the option of a 660cc engine may not be viable in India, because customers have different tastes. "We need some time to make a decision on what needs to be done in this market. But we know that this market will be very stable, and will grow more."

The budget segment is dominated by cars such as the Maruti Alto, Hyundai Eon and Tata Nano. The paper noted Honda has so far struggled to keep prices of products under check, but a recent focus on localisation and India R&D has made the company confident of making cars at competitive cost.

Asked whether the company will develop a new engine for the new small car, Kanayama said that appears to be the most probable option. "We have not yet made any decision, and this depends on the market and the result of our study.”