India Today reports that 17 new car models will be launched in India along with their variants and special editions of old models.

During the last quarter of 2002 alone, Toyota Kirloskar launched the Camry (price 1.8 million rupees), General Motors India the Opel Vectra (1.55 million), Telco the Indigo and Daimler Chrysler India the Mercedes E Class (4 million) and SL 500 (8.5 million).

India Today expects that every car company will launch one new car during 2003 due to the increase in demand in recent months.

Between Jun and Nov 2002, car sales went up by 11.2 percent to 350,000 units. Over 78% of the demand was for cars priced below 500,000 rupees but 15 of the 17 cars launched were priced above that figure even though that sector of the market accounts for less than 20% of total sales.

India Today said that Indian car companies have found the import of completely built up (CBU) cars or completely knocked down (CKD) kits for local assembly cheaper than full manufacturing locally.

A manufacturing facility may take 20 months to build and cost 3.5-5 billion rupees. The CBU route may not make economic sense for small and medium sized cars due to India’s high excise duty but is more suitable for low-volume luxury cars.

For example, Toyota Kirloskar sold 214 Camrys in two months after launch in Oct 2002 while 10 Mercedes SL500s were sold during the period despite their prohibitive cost of 8.5 million rupees apiece.

Most of the launches planned for 2003 are what are known as ‘utility vehicles (UVs)’ in India. Maruti Udyog is planning to launch Suzuki’s Grand Vitara, Hyundai the Terracan and Honda the CR-V.

India Today said the new launches are expected to shift the companies' focus from ‘product push’ to ‘customer pull’. As in many more developed markets, generous discounts ranging from 10,000 to 150,000 rupees, cheap finance, offers like free insurance for one year, extended warranty and holiday packages and special exchange offers of a new car for the old are driving sales up.

But, in a situation that will surely strike a chord with US car company executives, India Today notes that, though sales have been increased by such incentives, the car companies are pushing sales at a heavy cost and cannot hike prices due to their fear that will depress sales.

The industry is hoping that the Indian government will reduce excise duty on cars in the 2003-2004 budget. The present retail price includes 52 percent taxes and, of this, excise duty alone forms 32%, considered to be the highest in the world, the report noted.