Mahindra, Renault, Logan and lower C class

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Ford Ikon, Maruti Esteem and Tata Indigo - sedans, or cars with boot that cost around Rs.5 lakh, are what could be classified in India as lower C segment. The upper C segment spans to cars like Fiesta, Aveo and City.

Have you noticed that except the Tatas who don't have many choices under their umbrella, manufacturers are paying little attention to these cars lately? Esteem has gone old and is begging for a replacement, but is still donning the road. Ford Fiesta was meant to replace Ikon, but there was such a big price gap between them that Ford decided to keep both cars. General Motor's Opel Corsa was phased out by Chevrolet Aveo. Another car that costs a little more - Hyundai Accent was globally replaced by Verna but Accent lingers on in India.

Most car companies are looking at the pricier section of the sedan market with cars costing more than 6-7 lakhs ex-showroom and neglecting the ones that cost around 5 lakhs. Reasons could be many. When GM phased out Corsa or Hyundai introduced Verna, they were only imitating their parent companies' actions. That automatically meant introducing a bigger car, whether or not it suits India. We must also admit that more and more people are buying larger cars in India and there is a growing market for these cars. There is also a new segment of premium hatchbacks like Maruti Swift and Hyundai Getz that cost the same as smaller sedans but are newer, more nimble, more advanced and easy for driving in the congested city roads. These could eat up a portion of the market share enjoyed by lower C segment.

But does that mean there is a bigger market for those big cars than the smaller one? Does that mean premium hatchbacks can eat up the market of lower C class cars? Numbers say otherwise. Tata Indigo, the latest of the cars in this segment is still doing good, and sells more than the cars in upper C segment. It also sells more than Getz but less than Swift. Infact, if you exclude smaller hatchback cars, Indigo is one of the top selling cars in India(Nov-06 sales figures). If Ikon and Esteem do not have such numbers, it is simply because they are dated.

In fact there is a small void opening up in this segment, with little competition to Indigo. No one seems to be in a hurry to fill this void either. Ford, Maruti, GM or any other company has no plans to bring in new models in this market at the moment. That's where Mahindras seem to have seen a window of opportunity.

Introducing Renault Logan seems to make perfect sense in every aspects. India has a booming car market, and there are many people willing to upgrade from a small hatchback or buy an inexpensive sedan as their first car. And this segment of the market has little competition unlike the crowded upper C segment or the small cars. It also gives a good opportunity for Mahindras to enter car market and for Renault to enter India. And more than everything, it gives the consumer an option to buy a newer car instead of a stale Esteen or an Ikon.

If Logan meets some basic expectations in terms of cost of buying and ownership, performance and maintenance, it could be a big hit with the consumer. The word now is that the Logan will be priced below 5 lakhs and that seems to be a perfect number. We have to wait for a few more months before we see what Logan can do to our car market.